The market for commercial real estate in Music City is currently hot. Nashville commercial real estate trends for 2022 indicate sky-high demand for retail, office, industrial and multi-family properties. People who have owned a commercial space for a long time may find themselves in a position to sell. Nonetheless, investors and sellers need to take steps to prepare their property and get the best price possible.
To reap the highest profits and have a smoother closing process, several steps are taken to comply with buyers' expectations concerning due diligence, title documentation, and preparing the property itself. Want to have a smooth sale? Keep reading to learn everything you should do to prepare your Nashville commercial property to be sold.
Give Previously Occupied Properties a Makeover
Sprucing up the interior and facade of a commercial property slated to go on the market can add to its aesthetic appeal and monetary value. Cleanliness goes far, even amid industrial and warehouse-type spaces. Especially in today's world, buyers want to invest in properties that look and feel clean to maintain employee health and comfort levels when working there.
Consider investing in fresh paint, floor polishing, professional carpet cleaning, pressure washing services, and other touches that help buyers actually "see" themselves operating their business in the space. Make unmovable spaces like bathrooms or kitchens more comfortable and inviting. If in doubt, employ a commercial design professional for help and guidance concerning making the most of property makeovers.
Get Commercial Properties Appraised and Surveyed
There are many strong legal reasons for getting commercial property surveys. If it has been a while since a perimeter measurement has been performed, consider employing a professional for a new one or an update. The survey not only helps with pre-purchase negotiations, but it gives all parties a better idea of the commercial property's value.
The survey will be a part of the appraisal process, where a realistic market value is determined by the property's location, size, age, and desirability in the Nashville property scene.
Because commercial real estate appraisals are more complex than residential ones, there will be an initial inspection, as well. This takes time, as the appraiser looks at the reports above along with zoning records and public ownership to determine the actual value.
Title Searches and Title Insurance Considerations
Obtaining title insurance and running a title search are pertinent aspects of making sure a property title is cleared for sale. Title insurance lets examiners find and identify any possible hindrances or predicaments that need to be addressed.
Some issues can make a title foggy, and these must be resolved before the sale of commercial property in Nashville or anywhere else. Experts recommend starting these processes as soon as possible so that the title can be cleared of obstacles, including:
- Wild deeds
- Easement conflicts
- Judgments or pending litigation relating to the property
- Contractor liens
- Code enforcement liens
- Delinquent taxes
Organizational Documents Related to the Property
All of the documents above need to be accurate and current before putting a commercial property on the Nashville real estate market. This includes the title and surveys and copies of zoning regulations, tax certificates, seller financial records, and documentation of ADA compliance.
In organizational documents, these are necessary for any enterprise or trust with a current interest in ownership of the property or the seller. A closing agent and the future lender will need to review documents that evidence the selling party's organizational structure.
Ensure ADA Compliance in Commercial Properties for Sale
Small and large businesses are required to comply with the Americans with Disabilities Act (ADA). In general, compliance with ADA standards indicates that a company has made reasonable accommodations to aid people with disabilities. It aims to prevent discrimination against such persons in the ream of public accommodations and commercial facilities.
Most businesses deal with either Title I or Title III of the law, with Title I applying to those with 15 or more employees. Title III generally applies to nonprofit service providers and businesses that provide goods and services directly to the public. Having documentation of ADA compliance or making changes to the property to fall into good standing are great selling points for commercial properties.
Obtain Environmental Reports
Site assessment reports and related environmental studies should be reviewed to provide potential buyers with any possible environmental repercussions the property may cause. If none exists or the property is new construction, hire a certified inspector to create a report.
Check for Upcoming Lease Renewals
Sellers must carefully review any leases in place and handle any tenants with current agreements or are up for renewal. This step also confirms any existing contracts with options to purchase the property, rights of first refusal, or lease extensions that favor current tenants or occupants. These should be promptly addressed if there are rents to prorate or security deposits to contend with at the closing of the deal.
Communicate with Current Mortgage Lenders
Properties subject to a mortgage will require sellers to locate information about loan holders to confirm whether there will be additional payments required. These include any amounts related to prepayment penalties and yield maintenance obligations in addition to existing payments for principal and interest—identification and resolution of these items in advance help structure buyer contracts in ways more favorable for sellers.
Sell With Success in the Nashville Commercial Real Estate Market
Of all the things new commercial real estate investors need to know, the most important takeaway is to begin with the end in mind. The goal of property ownership should always be to build equity. If you're selling your commercial property soon, make the most of your investment and property improvements by properly preparing your commercial space to be sold.
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