Due to the complexity of commercial real estate transactions, purchasers often make mistakes during the process. Fortunately, however, many of these mistakes are easily avoidable, particularly with the assistance of an experienced Connecticut real estate attorney. Below is a list of common real estate purchasing mistakes to avoid.
- Failing to check local codes and regulations – Buyers of commercial property often make improvements to fit the needs of a particular business. However, during this process, buyers sometimes discover that a piece of property is not compliant with existing laws. When this happens, the cost of bringing a piece of property into compliance can often transform a profitable investment into an unprofitable one.
- Failing to make sure the lender will accept inspection reports – The purchasers of commercial real estate often assume that lenders will accept inspection reports from specific third-party vendors. However, lenders often reject such reports and require that only approved vendors be used. Therefore, before hiring a company to perform an inspection, purchasers of commercial real estate should first obtain lender pre-approval.
- Improperly valuing the property – Valuation is extremely important when it comes to commercial real estate. Therefore, purchasers of commercial real estate should ensure that they have properly valued a piece of property prior to purchase. The valuation process should involve working with commercial brokers in the appropriate market and conducting a review of sales comps.
- Failing to identify all existing issues with a piece of property – Although sellers are required to disclose all problems prior to selling a piece of property, purchasers should not expect them to do so. Rather, the purchasers of commercial real estate should ensure that a thorough investigation is conducted prior to finalizing any purchase transaction.
- Failing to inspect each unit of the commercial property – When purchasing commercial property, each unit should be inspected. Without inspecting every unit, there is no way to tell what types of problems a piece of property may be hiding.
- Failing to analyze the competition – In order to ensure accuracy in valuation, a thorough review of the competition must be conducted. An investigation into the competition often uncovers red flags relevant to the valuation, such as discounts or lease concessions.
Connecticut Real Estate Attorney
Commercial real estate transactions can be extremely complicated, and it’s important to ensure that no details are overlooked during the process. One way to ensure that your commercial real estate transaction goes according to plan is by hiring an experienced Connecticut real estate attorney.
At the Law Office of Benjamin S. Proto, Jr., our experienced and capable Connecticut real estate professionals keep both buyers and sellers apprised of their rights and duties as they navigate the commercial real estate transaction processes. Therefore, if you are contemplating a purchase or sale of commercial property in Stratford, Bridgeport, Milford, Trumbull, Shelton, Fairfield, Orange, Derby, New Haven, or anywhere else in Connecticut, please contact our office for an initial consultation.