Off Market Sale of Commercial Real Estate for Seller, Buyer & Brokers: Due to Real Estate Appraiser

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Off Market Sale of Commercial Real Estate Made for Seller, Buyer and Dual Representation Brokers: Due to Real Estate Appraiser Help in Decision Making for All Parties.

Sellers and Buyers of Commercial Real Estate when selling and buying Real Property need and want an Arm’s Length, Neutral / Third Party Commercial Real Estate Appraiser to know and understand the current, objective Fair Market Value Sale Price of a property.

2 main reasons a credible / supportable Real Estate Appraisal / Valuation are needed for a Subject Property to make an informed decision for parties to a purchase and sale agreement transaction:

1: Off Market (Not actively Marketed / Not Currently For Sale to the world) - Sellers have no idea of the present market level sale price worth as the property was purchased many years ago and Buyer pricing through negotiations, evidenced by written purchase offers has not yet been received / tested for the best combination of both Price and Terms (All Cash or No Loan and Appraisal contingency requirements). Sellers do not know if they are leaving money on the table by selling too low and also Buyers are unaware if they are purchasing too high as recent sale comparables and rent comparables are needed to fully understand constantly changing real estate market dynamics.

2: On the Market (Actively Marketed / Currently For Sale to the world) - Sellers as much as possible want to ensure that a future Purchase Money Loan and Appraisal will go through as do Buyers so there is no wasted time, energy and money required: Price reduction, Additional equity Cash Infusion or worst case, cancellation of the sale escrow. Also, when both Seller and Buyer are represented by the same dual agent Real Estate Broker, the parties want to make sure the price is honest and at market levels, not being too low or too high.

These unknowns can typically be very easily answered from a professional, Real Estate Appraisal report / Valuation or Real Estate Evaluation that is credible and supported from an experienced Appraiser or Valuation Advisor / Consultant that is knowledgeable of specific subject property location, specific use and submarket nuances affecting value.

Actual Case Study Client Issue(s) and Findings from a Commercial Real Estate Appraiser in Los Angeles with 37+ Years of Experience: Brokers had a dilemma, was representing both Seller and Buyer, in addition, the property was an off market sale. Client was the Buyer who wanted to ensure an offer was submitted comparable to recently sold area / competitive properties and also Seller who was not sure what the proper price to sell the property was. The buildings were both partially owner occupied and also vacant Commercial Property: Retail and Office use improvements. There were no Tenants in place and no Rental Income generated in the Mid Counties submarket of Los Angeles in Southern California.

3 Key Questions that Buyer Client needed to be answered, for a fair Off Market purchase offer and acquisition:

1: As Buyer, I own the property next door and will be buying as assemblage to enhance my current real estate holdings, what price should I confidently offer to purchase in comparison to similarly / recently sold comparison properties? Likewise, Seller felt a higher sale premium should be achieved due to the adjacent property being purchased to assemble additional property?

2: Buyer and Seller felt, great that the Real Estate Brokers for the Buyer involved provided their estimate of sale price with a detailed BPO (Broker Price Opinion) / BOV (Broker Opinion of Value), also known as a CMA (Comparative Market Analysis). However, both parties agreed to not have sale pricing tainted to have meeting of the minds with reassurance from an objective Valuation / Appraisal for peace of mind, what is the right price? There was no separate / independent Buyer's Broker or Seller's Broker due to dual agency representation.

The Appraiser analyzed and researched recently sold Sale Comparables with similar location and physical characteristics and provided a concluded Fair Market Value Real Estate Appraisal report, sold at the property’s Highest and Best Uses.

Answer for Optimal Buyer Client Solution: Property Values in the specific area / location increased moderately over the years, in comparison to very high sale price appreciation for general Los Angeles County commercial properties. It made sense to submit to submit a written purchase offer and initiate negotiations for a purchase. The Appraiser concluded / reconciled slightly higher than the opinion of value provided by the brokers. End result, there was no longer uncertainty and concern for a transaction to smoothly occur as Seller already knew the next door neighbor owner was a very good fit, financially well qualified with authority and need: The right buyer. The ideal solution was provided to make an informed decision for the parties due to neutrality and move forward with a sale.

Above based upon an interview with an Experienced Commercial Real Estate Appraiser, a State of California licensed Real Estate Advisor, designated with an MAI - Member of the Appraisal Institute to share his extensive market insight on how he was able to successfully help clients once well informed for Internal Underwriting, Asset Monitoring and Decision Making, once armed with solid knowledge of the next step to take.

Background / Qualifications: A Real Property Appraiser Consultant with 37+ years’ practice, he also closely works with other specialty Appraisers: Business / Goodwill Valuation, Discounts of Corporate Partnerships and Fractional Interests. Providing Planning for Estate, Trust and Probate: Succession Gifting / Inheritance, Transfer of Shares, Death, Divorce and Partner Buy Out / Separation, Bankruptcy / Reorganization. All Real Estate Types: Retail, Industrial, Office, Medical, Multi-Family Apartments, Vacant Land and 4+ Units Income Producing Residential Property Types. Throughout 6 Counties of Southern California: Los Angeles, Ventura, Orange, Riverside, San Bernardino and San Diego.