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Deals are still getting done!
But in today’s market, buyers and sellers often have to be more creative to get to the closing table. Here are a few of the things we are seeing help get deals across the finish line.
There Has to Be a Reason to Make a Move
The strongest deals usually start with a need.
A business may need additional space to accommodate growth. An investor may have a 1031 exchange deadline and needs to put capital to work. An owner may be ready to retire or move on from a property.
Whatever the reason, having a clear motivation creates urgency.
In a market where buyers have more options, properties with a motivated buyer or seller behind them tend to have a much better chance of getting a deal done.
Financing Is Becoming a Bigger Part of the Conversation
Financing has always been important in commercial real estate, but it is playing an even bigger role in today’s transactions.
One option we are seeing more interest in is seller financing.
Seller financing can give a buyer more flexibility than a traditional commercial loan. Instead of relying entirely on a bank to determine the loan terms, the buyer and seller can negotiate those terms directly.
For buyers, that flexibility can be significant. A seller may be willing to offer a longer amortization period, a different interest rate, or other terms that make the property easier to acquire and operate.
For sellers, seller financing can provide several advantages as well. It can create an additional income stream through interest, potentially provide tax benefits through capital gains deferral, and ultimately help get a transaction completed that may not have happened with traditional financing alone.
It is not right for every seller or every transaction, and there are certainly risks that need to be evaluated. But when structured properly, seller financing can be a useful tool for bridging the gap between what a buyer can obtain from a bank and what it takes to get a deal done.
And when seller financing isn't an option, buyers are exploring other lending alternatives, including SBA financing, depending on the property and the buyer's intended use.
Terms Matter
Price is important, but it isn't the only factor buyers consider.
For an investor, a property that produces positive cash flow from day one can fall into a completely different category than a property that requires significant additional capital or depends on future rent increases to make the numbers work.
The same principle applies to owner-users. A property that allows a business to expand, control its occupancy costs, or avoid a large amount of upfront investment can justify a purchase that might not make sense based on price alone.
This is why terms matter.
Price Still Matters
Of course, price remains one of the biggest factors!
Banks are being more cautious, buyers are being more cautious, and everyone is paying closer attention to the numbers.
That doesn't mean there is a fire sale happening across the commercial real estate market. There isn't.
But buyers and tenants are more price-sensitive than they have been in recent years. The result is a market where the right property, at the right price, with the right terms and a motivated buyer or seller can still move.
If you're considering how to position your property to SELL or LEASE, give us a call to discuss.
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