Top 10 mistakes in commercial real estate (CRE) transactions

  • The deal team matters: Focus should be on getting the right team on board. This includes a CRE attorney, a broker and third-party service providers such as environmental engineers, title companies and surveyors. Transactions are complex and a number of factors could make a deal fall apart. A high-quality broker could get the highest price in the market while ensuring your interests are protected at all stages of the deal. As new problems arise, as they would in every transaction, an experienced broker can navigate them to keep the deal moving forward. Similarly, hiring the right CRE attorney — an expert in the particular type of property — is crucial.
  • Compile due diligence material early: All due diligence material should be compiled and reviewed by the deal team before going to market. This includes the full lease and all amendments. Do not rush to market — get all due diligence material together and make sure your deal team has reviewed it thoroughly and all marketing clearly reflects all elements of the deal.
  • Disclose material facts upfront: Ensure you disclose any property-specific issues upfront, so there is no conflict later. These issues could include late rent payments, disputes with townships, deferred maintenance and unexpected Reciprocal Easement Agreement (REA) obligations. Waiting to disclose such issues until well into due diligence would almost always cause a buyer to re-trade the pricing or cancel the deal. Most issues could be worked through if disclosed in a timely manner and presented properly. It may be a seller’s market at present, but this does not mean you should ignore the abovementioned points. Give yourself the optimal opportunity to achieve maximum pricing from a buyer by being prepared for your sale, hiring the right deal team and disclosing all material facts in a timely manner.

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Acuity Knowledge Partners

Acuity Knowledge Partners

We write about financial industry trends, the impact of regulatory changes and opinions on industry inflection points. https://www.acuitykp.com/