02/25/2020 by Heise & Co. 0 Comments
Biggest Mistake Made By Commercial Property Buyers or Lessees in Maryland
At my Baltimore-based real estate law firm, Heise & Heise, LLP, people purchasing or leasing commercial property often ask me to prepare a contract or review a lease after they have negotiated the terms of these documents with a seller or landlord’s agent. Not engaging a Baltimore real estate professional before negotiating a purchase or lease is item number one on the list of the worst things people can do in this type of transaction.
Why do people take this approach to commercial real estate transactions?
- They may think that they are better negotiators than a real estate agent.
- They may think that they have a better chance of purchasing or leasing if they deal with the owner’s agent directly.
- They may even think that they are saving money by not engaging their own real estate agent.
First, assuming that the prospective buyer or tenant is a better negotiator than an agent they still may do worse on terms because they simply do not have the resources a real estate agent has. For example, I can use our commercial database to determine vacancy rates, area demographics and what nearby properties are selling and leasing for to negotiate the best deal available in the market.
Second, if someone thinks they have a better chance of entering into a purchase or lease with just one agent they are mistaken. In most instances commercial real estate agents want to deal with other agents, not end users. Why is this? There are many tasks that a buyer/tenant will need to handle on the way to closing. These tasks may include preparation of a contract, performing environmental and property condition assessments, locating surveyors and title agents, securing zoning confirmations, reviewing due diligence materials, along with many more tasks. The listing agent knows that without another agent involved they will have to deal with all of these tasks or may even conclude that the buyer/tenant is in over their head and has no hope of completing the transaction. This may cause the seller/landlord to wait for a better prepared buyer/tenant. Also, it is important to note that the seller/landlord’s agent is looking out for the best interests of their clients. They may seem agreeable and helpful but their objective is to get the best deal for their client and that isn’t you.
Lastly, buyers/tenants think they will have to pay for a commercial real estate agent to assist them. In a majority of transactions, commercial agents get paid in the same way that residential agents do, from the seller or landlord’s funds. The result is that you get the assistance of a real estate professional that is looking out for your best interests and the person selling or leasing the property pays for it! How does this work? When an agent gets a listing, they negotiate a certain amount that they will keep as a commission and they also negotiate a certain amount that will be paid out to an agent that is working with a buyer or tenant.
If you are shopping for a new commercial property in Baltimore or across the state of Maryland to purchase or lease, contact our real estate brokerage today to find out at 410-255-3690.