Selling a commercial property
Introduction to commercial property disposals
If you have a commercial property to sell, there are numerous factors to be aware of. You will need to have an understanding of the legislation surrounding commercial property sales, local property values and an awareness of what commercial property buyers are looking for from sellers.
Commercial agents: Specialists in the acquisition and disposal of leasehold and freehold commercial (non-domestic) property.
Disposals: The process of selling a commercial property.
Preparing to sell
Just like you would with a residential property, it is important to prepare your commercial property in order to sell it. All clutter should be removed, so your property is presentable enough to appeal to a wide audience and so that prospective owners can imagine running their business from the premises.
Preparing buyer information
Before you can market your property, it is important to understand what your buyers will be looking for. Their main considerations are likely to be location, suitability and property price. It can be a good idea to prepare a buyer pack to give to prospective buyers, so that they have everything they need to make a decision.
Items to include:
- Planning Permissions, Use Classes and lawful use certificates
- Commercial energy performance certificate (EPC)
- Details for business rates, stamp duty land tax and any other costs the buyer will be liable for
- Asbestos survey (if applicable)
For more information on what to provide to prospective buyers speak to your chosen commercial agent/surveyor.
Instructing a Commercial Agent
It is highly recommended that you choose a commercial agent who is a member of an accredited trade body, such as Royal Institution of Chartered Surveyors (RICS).
All reputable agents carry personal insurances, which covers seller’s damages if you receive negligent advice. A commercial agent will normally provide you with a detailed valuation report before looking to market your property.
As well as your commercial agent, you will need a solicitor. Your solicitor will be responsible for a number of processes during the commercial sales procedure.
Their job involves looking after any deposits, arranging the exchange of contracts, confirming monies have been transferred and answering any questions you may have along the way.
In order to ensure a quick and efficient property sale, it’s important to choose the right solicitor. Your solicitor is there to provide assistance throughout the process, so feel free to ask them any questions.
Marketing your property
You can market the property with an agent of your choice, but it is important to make sure that your agent understands exactly what you are looking to achieve.
It can be useful to provide your agent with the initial relevant information to assist in marketing your property. Your agent will normally add to this with detailed descriptions and photographs, using their in-depth knowledge and history of previous sales.
We would also recommend looking to see how the agent advertises their existing commercial stock on Rightmove.
Whether you are planning to sell an office or a warehouse, there are costs you must consider.
- Commercial Agent Fees – commercial agents are in competition with each other, so it is worth discussing this with the agent before instructing them to sell your property (agents tend not to change fees much)
- Solicitor fees – solicitors usually carry out conveyancing for a fixed fee, but you may be able to negotiate to a lower fee, so it is worth getting a number of quotes.
- Mortgage redemption fee – if you have a mortgage on your commercial property and you pay this off early, you may be liable to pay a redemption fee.
- Capital gains tax – you should speak to your financial advisor if you are selling an investment property as you might be liable to pay capital gains tax.
- Mortgage arrangement fees – if you cannot transfer your existing mortgage for any reason, you may be liable to pay mortgage arrangement fees for any new mortgage you require.
- Removal costs – if you have equipment, furniture or other assets in your commercial property and these are not part of the sale, you will need to arrange for these to be removed at your costs.
The amount your commercial property is worth is subject to a range of factors, which include:
- The price of recently sold properties in the surrounding areas
- Market trends
- Availability of similar properties
- The condition of your property
Accepting an offer
All offers you receive for your commercial property should go through your commercial agent. They are required by law to inform you of any offers.
Your agent will be able to formally advise you of any offers, but if you receive more than one the following points can help you figure out which buyer would be the best option.
- Considering the position of the buyer and their financial status
- Whether they are a cash buyer or have a mortgage
- If their mortgage is already in place, or if they have a mortgage offer
If you have accepted an offer, a draft Sale Agreement will be prepared for you and the purchaser to approve.
Exchange of contracts and completion
Once contracts are exchanged, your buyer will pay a deposit to the solicitor and a date for completion will be agreed. On the day of completion, all legal factors of the sale are completed and the mortgage lender will release the remaining money to the solicitor.
This is a typical description of the commercial sales process, but it is worth noting that all sales are different, as they depend on the nature of the sale.