Oftentimes, many individuals will end up making all kinds of mistakes involving real estate when they first start their own companies. This is a common occurrence that, unfortunately, sometimes cannot be prevented.
Here are four of the most common mistakes that are often made in commercial real estate deals.
*First and foremost, perhaps one of the most common mistakes made in commercial real estate deals is talking about a deal before any kind of contract or lease is signed. Oftentimes, many prospective buyers or tenants who are excited begin to talk about a deal prior to a lease being signed or getting a property under contract. This is careless talk that can end up attracting the attention of another possible buyer or tenant who may end up making a quicker or better offer and, as a result, being given the deal instead of you.
*Another of the most common mistakes made in commercial real estate deals is not knowing that a client has weak financials. One of the biggest wastes of time is a client that doesn’t actually have enough funds to either lease or purchase a property. When it comes to nonprofit clients, financial information can be easier to obtain due to the fact that they are required to provide this kind of information to the IRS, as well as government agencies and prospective donors. The smaller and more privately-held businesses are what are considered to be the most reluctant to share financial information with a broker. Even though asking about financial information isn’t exactly fun, it remains an important part of the process involving due diligence that brokers need to tackle prior to spending time with a new client.
*One other of the most common mistakes made in commercial real estate deals is not hiring an experienced commercial real estate attorney. While it’s important to hire an experienced real estate broker, it’s also equally as important to hire an attorney who is experienced in real estate. Oftentimes, buyers and sellers expect a broker to draft a contract that uses specific forms in order to avoid having to pay legal fees. What they’re really looking for is their broker to also act as their attorney. While the forms are technically fine and can help to save on legal fees, the truth is that it’s never a good idea for a broker to make any attempt to serve in this kind of capacity.