Steps to Buying a Commercial Property

Step 1: Never too soon to Find an Experience Commercial Real Estate Agent 

An experienced commercial real estate agent can guide you through the entire commercial real estate transaction. Working together you can explore possible options for your business or investment opportunity.  Researching market availability and discuss options: buying an existing building, buying land and building, passage investment or 1031 Exchange whatever investment you are considering this will position you for the next step. Your Commercial Agent will then make introductions to commercial lenders or a 1031 Qualified Intermediary. 

Step 2: Secure Financing 

Talking with several Commercial Lenders and/or a 1031 Qualified Intermediary will provide options.  Loans are based on different criteria; an owner user or SBA loan, does it qualify for a USDA loan, or an investment property loan? Each loan program will have different requirements.  Discussing this with Commercial Lenders will help you focus on the type of property that fits into your financial forecast.  

Step 3: Look for the Right Commercial Property

Your experience commercial real estate agent will work with you and your budget to find properties for your consideration.  The commercial real estate agent will reach out to Owners or their listing agents and municipalities on your behalf, perform Comparative Market Analysis and send introductions to any services you might require during your investigation period. 

Step 4: Begin Negotiations

Now that you've found the commercial property you want, you are ready to start negotiations. This begins with a Letter of Intent. Letter of Intent (“LOI”) is non-binding and shall serve as a framework to provide the basic economic terms as well as related conditions for the executed of the final purchase agreement. Based on Comparative Market Analysis and research on the property including municipality requirements or if an investment property and it’s NOI and CAP Rate will help decide on the best offer price to begin this process. The LOI process goes back and forth between both the buyer and seller until everyone agrees to the terms and we move to contract. 

Step 5: Contract Process

Once the LOI is signed, the next step is drafting the purchase contract.  Your commercial agent will coordinate between your closing attorney, your lender and the Seller or Seller’s representative. Depending on the type of purchase, your commercial agent will either use the North Carolina Real Estate Purchase Agreement including any Exhibit provided by you or your attorney, or your Attorney will draft the purchase agreement, or some Seller’s will have their own contracts’. 

There is not Due Diligence money exchanged in a commercial transaction, but you'll make an earnest money deposit that goes in escrow to give the seller a sign of good faith and applied to the purchase price.  

Additional Earnest money deposits might be required for contracts with long Examination periods.

Once all the contracts have been signed by both parties and the initial Earnest Money has been deposited then the contract is fully executed, and the examination period begins.

Step 6: Examination Period

The examination period will be different depending upon the type of purchase.  Purchases with existing buildings will require inspections to verify the condition of the building. Land purchases will require environmental reports and if building, will require civil engineers and contractors. Rezoning might be an aspect of the purchase.  Your experienced commercial real estate agent can provide local resources.  

Step 7: Close on Your Investment

Your commercial real estate agent will help coordinate utilities, keys, and any special requirements.  As a team you will both be in constant contact with your lender and attorney. 

Step 8: Continued Relationship

Once you purchase a property, we can continue to help you with your real estate needs.  Do you want to lease out some space?  We are here to help.  Choose an experienced, knowledgeable Commercial Real Estate Agent. They are the key to helping you have a smooth commercial buying experience!