BUYING COMMERCIAL LAND
MYRE, LLC. understands the importance of hiring the right real estate team for your commercial land acquisition. Our company has experienced agents who are professional land advisors who can help you every step of the way.
The most common reason a buyer will purchase commercial real estate will be for future development, expansion, or to grow their business. Even if you have experience purchasing residential property, make no mistake about it; purchasing commercial real estate takes more planning, research, and is a much longer process.
Commercial Land Buying Guide
Step One: Hire an Experienced Real Estate Broker
Contact MYRE’s experienced land Broker to begin the process of locating the right commercial property. When searching for commercial real estate there are a limited number of resources available to assist buyers in locating potential properties. Our broker & associates have availability to various resources and up to date information to locate prospective properties that will meet your needs. We understand the importance of staying current with market trends and changes.
Step Two: Property Type & Location
The buyer will disclose to real estate broker the size of the property, the intended use, type of zoning, suitable locations, utilities that are necessary, and property condition or type.
Step Three: Pre-Approval Letter
Before the buyer should begin the process of locating unimproved commercial property it is important to obtain a Pre-Approval letter from a bank or lending institution. The due diligence of obtaining a Pre-Approval letter will give the buyer more leverage in negotiations with the Seller.
Step Four: Making an Offer
Once a prospective piece of real estate is located, you should get a land valuation and a Land Information Memorandum (LIM). These two reports are very important because they will help you determine the value of the land you want to purchase and whether or not you are making a wise investment. A MYRE agent can also conduct a Comparative Market Analysis (CMA) to assist in the buyer’s decision. When making an offer it should also include specific terms that are essential to the buyer. It is important to have an attorney review all documentation prior to making an offer on any real estate transaction.
Step Five: Negotiations
A very important step in buying commercial real estate is negotiating the right price. To achieve a successful negotiation can be overwhelming and stressful. We are professional negotiators and will relieve you of this stress by acting as a buffer. It is important that the buyer not become too emotionally attached to the commercial property during negotiating. The buyer should always be prepared to negotiate.
Step Six: Acceptance & Due Diligence
Once a buyer’s offer has been accepted there will be a due diligence period to conduct a title search; obtain reports, environmental study, inspections, financing, appraisal, physical inspection, zoning permit/review, and survey.
Commercial Land Due Diligence Check List:
It is important to check the surrounding area to make sure that the property is NOT zoned differently or will be comparable to buyer’s future development plans.
2. Market Data
Collecting market data of future industrial or commercial development in buyer’s potential market area will attribute to future expansion and possible elevated value.
Several necessary utilities may or may not be available in your market area. Property located in rural areas may not have easy access to water, sewer and electricity. These utilities can normally be provided by the utility providers for a fee.
4. Emergency Services
The accessibility of emergency services within a reasonable distance is an important factor concerning health and safety of your employees.
5. Neighboring Properties
It is important to find out who will be your future neighbors? It doesn’t matter what size lot or acreage you will be buying. Your neighbor’s upkeep will impact your value even if you cannot see them from your property.
Who has access to your property? This can include: Utility Companies, Oil Company’s, Natural Gas Company’s, and deeded easements for access to neighboring properties. The location of any appointed easements will affect where you can build your commercial investment.
7. Environmental Hazards
Property should be observed for any possible environmental hazards. These include: environmental hazards such as asbestos, formaldehyde, radon, mold, lead-based paint, fuel or chemical storage tanks, oil spills, and/or contaminated soil or water. A Phase I Environmental Site Assessment (ESA) can be performed for a fee to assure buyer of no contamination on the property. The Phase I ESA will include a visual valuation of the site, a review of present and past uses of the subject property, a site investigation, a review of public records concerning the subject property and neighboring properties.
Conducting due diligence and ordering a survey through a reputable an experienced survey company is a very important step in purchasing your unimproved property. The survey can locate all of the property lines; it will show any encroachments and easements.
9. Flood Zone or Flood Way
Floodplain and floodway areas are designated by FEMA on the Flood Insurance Rate Maps (FIRMS). You can search the flood maps in your area using FEMA’s Map Service Center, or call FEMA to determine if your property is within a floodplain or floodway.
What is a Flood Plain?
A flood plain is any area that is vulnerable to being flooded by water from any source. This is the area adjacent to any waterway that is subject to flooding when there is a significant run-off of water.
What is a Flood Way?
It is a waterway of a river or any other water source that carries the deepest and fastest water downstream.
10. Title Company, Title Insurance and Title Policy
When buying an unimproved property we recommend always closing through a reputable title company. The title company will make sure that there are no liens on the property and will conduct all of the research pertaining to present ownership. We also recommend using an escrow agent. The fees to the escrow agent are very minimal and they will make sure that both parties are abiding by the terms of the contract.
Title insurance offers financial protection against title issues that could not be found in the public records, are inadvertently missed in the title search process, or those that may arise from deception or falsification. Unlike most forms of insurance which protect policyholders from future events, title insurance protects you against defects that could already exist.
A Title policy is required by a lender and only covers the lender’s interest in a property.
A real estate appraisal is an unbiased estimate of the true value of a property. It is best conducted by a licensed, certified professional. Before obtaining a loan, a lender will order an appraisal of the property. The appraisal that will be required will be Market Value. An appraiser usually provides a written report on this value to his or her client and the report will be used as the basis for a mortgage loan. An appraisal can confirm whether the property is worth the amount you are paying.
Financing for commercial unimproved property is offered by banks, lending institutions, credit unions, mortgage companies and the Small Business Administration. The size of the land, location, zoning, intended use, the availability of basic services, access, and any impediments to eventual construction will be a deciding factor for the lender.
The final step to procurement of an unimproved commercial property is receiving a detailed HUD-1 settlement statement. This document will be prepared by a reputable title company before closing. The closing statement will summarize all fees for the Buyer and Seller involved in the transaction. Property ownership will transfer from the Seller to the new Buyer at closing.
My Real Estate Expert, LLC.