( Re-printed from Ontario Industrial Magazine )

If you have commercial space to sell or lease out, some basic preparation will ensure that you attract the maximum number of potential buyers and realize the full market value in a timely manner.

The first step is to decide whether you plan to list “exclusively” or via the Multiple Listing Service ( MLS).

An exclusive listing has, at best, only 2 potential advantages. The first is that you will generally pay a slightly lower commission percentage. However, since your objective is to realize the maximum NET value after selling expenses, this is almost invariably a false economy since the property will only be exposed  to the direct contacts of the Listing Broker. Assuming that the Listing Broker has say a 20% Market Share, then you would miss out on 80% of the potential buyers and your chances of getting full market value would be correspondingly reduced. One option to consider is a ‘collateral agreement’ whereby the property is listed on MLS but with the proviso that you will pay a lower commission rate if it is sold or leased to a client or customer of the Listing Brokerage.

The second and more common consideration for an exclusive listing is where you wish to maintain a degree of confidentiality about the fact that the property is for sale, other than to parties who may have a specific interest in buying it. Under this scenario, most likely for the sale of a going-concern business, the address of an exclusive listing would not be promoted . However, any party making a general inquiry as to availability of such a business through the listing firm would soon be aware of the details and in most industries the ‘grapevine’ would soon spread the rumor, un-fettered by any actual facts !  

If you opt for an MLS listing to gain the broadest exposure, your next step is to create your own basic information sheet. If you do this before ever calling in Realtors for their marketing proposals, it will save you a lot of tedious repetition in answering their questions and ensure that everyone is on the same page in assessing Fair Market Value. Irrespective of whether you wish to sell or lease, create copies of all existing surveys, site plans,floor plans and your most recent property tax bill, then make up a single sheet of paper answering as much as you can of the following.

Zoning ? Taxes ? Lot Dimensions ? Building Age ? Construction Type ? Building Dimensions ? Total Square Footage ? How much Office ? How much Retail ? How Much Commercial / Industrial ?  Sprinklers ? Heat Detectors ? Clear Ceiling Height ? ( If this varies, note how many square feet for each ceiling height ) How Many Dock-Level Doors ? Dimensions ? How Many Truck Level Doors ?    Dimensions ? Outside Storage permitted ? Rail Access? Elevators ? Floor Drains ? Electrical Supply    Volts ? Amps ? Heat Source ? City Water and Sewers ? Number and Type of Washrooms? Changing Room Facilities ? Cafeteria? Number of Parking Spaces ? In addition, for a going-concern business, Financial Statements and Chattels list ? For the sale of Tenanted property, Lease, Expense and Net Income Details?

This information will all be required for the MLS Listing . All of these items as well as information on any underground storage tanks and any outstanding environmental or fire-safety issues will have a bearing on the suitability for potential users and upon the Market Value.

Next , provide this information to each  Realtor who you will invite to tender a marketing proposal and  request from each an opinion of value supported both by factual data on recently completed sales and leases of comparable properties in the vicinity and on currently available properties which will be in effect the ‘competition’ to your property. This step is critical to giving you a fully informed view of what the property is realistically worth so that you can determine who to list with based on their marketing proposal and not make the costly mistake of just going with the ‘Highest Bidder’ in terms of their valuation. In the end it will be neither you nor your Realtor who determines the actual selling price, it will be the competitive situation in the marketplace, so comprehensive factual information is essential.

A related step is to determine the List Price that is most likely to achieve full value. As with a residence, an excessive List Price does not lead to a higher selling price. It merely slows down the process and discourages buyers. Ask each Realtor to review the spread between Asking price and Selling price for comparable properties and observe how long each was on the market.

It is important to discuss how ‘showings’ are to be conducted. This should cover the hours during which showings can take place, how you will be notified, how much notice you will require and who is to be present. For safety, security and confidentiality it is recommended that you document your requirements as an addendum to the Listing Agreement and insist that your requirements be relayed by the Listing firm to all co-operating Brokers in order to protect your interests and correctly assign any liability.

You will often be asked whether you are prepared to ‘take back’ any mortgage financing to help effect a sale Whether you are or not, there is seldom any benefit to referencing it on the Listing.

Lastly, consider the pros and cons of putting a ‘For Sale’ sign on your property. Since a serious prospect will have their agent scouring the MLS for suitable sites, you might question whether a sign will draw anyone but tire kickers and the benefit of this must be weighed against any negative perceptions from employees or regular trade visitors.

Paul Graham is the owner and Broker of Record for BUYERS REALTY INC.  Please direct your questions to paul@buyerscall.com or to his direct line, 905-607-4400