Question about an Industrial property purchase - Please help

[James Stinnett]

I have a good friend that is looking to purchase a industrial property for their iron rebar business. There is a property that they like and it is currently in escrow but according to the listing agent it looks to be falling out. The listing agent said that there is a completed Phase 1 ESA but that now a Phase 2 is needed. He said the cost of the Phase 2 assessment is $6K and the buyer would need to pay the entire amount. 

(Here is a good time to say that my 25 years of experience is in residential sales, mortgages, and property management; I have very little commercial experience to speak of.)

My questions are: 

1. Is it normal for a buyer to pay the entire cost of the Phase 1 and/or Phase 2 report? Is this usual negotiable, or are there some customary splitting of costs between Buyer and Seller? The property is listed just under $800K.

2. How are commissions on commercial sales determined, does the Seller or Buyer or a combination of them pay commissions or is it just part of the offer negotiations?

Any insight would be great, thank you!

James

[Mark Creason]

@James Stinnett

I would be concerned if they are asking for a Phase 2.  Usually that takes place because there might be a serious environmental problem.  The reason the first transaction is falling apart is surely the failed Phase 1.  Before moving forward, I would ask for a copy of the original Phase 1 and see what the issue is.  Paying for the Phase 2 can be negotiated.  Commissions are always negotiable.

Mark