Selling commercial real estate requires considerable caution; mistakes can lead to the loss of million s of crowns. Learn which mistakes are commited the most often among sellers.
Whether you are selling a commercial or residential property, it is always important to have a market value estimate of the real estate done at the beginning of the sales process. Sellers often mistakenly consider a real estate appraiser‘s opinion as an adequate estimate, but it simply is not suitable for sales purposes.
In practice, appraisers often work with commonly available data and prices, for example, from advertisement or pricing maps. However, such data is not suitable for predicting the true market potential of the property. When choosing comparable properties from advertising information, such estimates are based on the price at which the property was advertised, and not finally sold. The true market value may be significantly higher or lower than would appear according to this data. And last but not least, such estimates are based on the ostensible area of similar properties - the usable area of which is nonetheless unverifiable.
A real estate appraiser doesn’t have personal knowledge of the property (selling properties is not their job), and also are not personally accountable for whether your property will actually sell for their estimated price. Making generalised comparisons is very tricky - there isn’t one „apartment building“ that is the same as the next one, and pricing maps only work with data from publicly available sources - nobody checks whether the data is correct. Market appraisers don’t examine any contracts in detail, they merely use public (and unverified) information. Occasionally, investment property pricing maps contain ridiculous data - for example, the property listed for Zborovská 6 was estimated at only half its true market value.
Expert market appraisers also often evaluate properties in Prague as past their „best-by“ date, or as not yet having reached their maximum market potential. Such appraisals can be based on the fact, for example, that a building is 120 years old, but neglects to considder that it can can stand and be fully functional for another 500 years: its price has been reduced unnecessarily.
Neither do any of the above-mentioned bases of appraisal help homeowners to determine their property’s potential rental income. A responsible approach is to have a so-called market value estimate done by an expert whose specialty is selling precisely that type of real estate. A market value estimate will allow you to learn the amounts comparable properties in your neighborhood have been sold or rented for, and you will be sure that the data is accurate (for example, it is not based on a total area, but rather on usable area, which much more accurately reflects market value).
With a truly qualified estimate, you can easily determine the maximum attainable market price. You get a comprehensive overview of the true price of real estate comprable to yours, and have a basis on which to make good decisions. Owners who do not work professionally often underestimate their property, and unnecessarily end up taking a loss of profit. On the other hand, they might offer a property for an unreasonably high amount, discouraging potential clients and prolonging the entire sales process. Although the owner might think its not a problem to wait 2-3 years to close a sale, in reality this approach will only bring them future price reductions: nobody is interested in properties that have been sitting on the market for a long time.
The best part, is that getting a market value estimate done is not a long process. At Engel & Völkers, we do detailed analyses within 7 days, and totally for free. Our clients then know exactly not only the apparent market value - but the actual achieved sales price - of properties on the market. In the year 2017, clients took advantage our this free service every second day.
If you have the necessary knowledge of law, finance, business and real estate, and personal experience with at least dozens of residential commercial real estate sales, you can successfully sell your property on your own. You'll probably find a prospective buyer with whom you can successfully complete the deal.
You will not be able to be too choosy, however... it is likely that there will be an only a single buyer who will be able to demand a 5-15% discount. Making such concessions is often unnecessary. When you rely on an experienced broker, they will not only find you a suitable buyer, but in most cases they will provide you with as many as 3-5 buyers within a relatively short period of time, all willing to pay the full purchase price. In the end, for you, such a scenario can mean that you close at a purchase price higher than you were originally asking for. This is a powerful reason to choose a broker that approaches the entire sales process with the due care your property deserves.
According to the Czech Statistical Office there were approximately 14,500 real estate agents in the Czech Republic at the end of 2017. This number could populate the whole of Podebrady or Nymburk. With the rising number of brokers, so rises the proportion of those who do not provide quality services, and end up costing clients an unnecessary amount of money.
A quality real estate broker cannot be recognized by his vocabulary and slick talk alone. They must also have other skills and knowledge that are a prerequisite for a successful and rapid sale of your property. A professional real estate broker must have long-term experience in the field, perfect knowledge of the local market, contacts on the Czech and foreign markets, the backing of a sophisticated marketing and sales system, and a thorough understanding of the financial and legal risks of the sale.
To make a final choice of partner for your sale, check out several individuals, and be sure to use a system of comparison. Do not be fooled by the halo effect, giving in to the agent that makes the first or the strongest impression, and thoroughly examine their potential professional skills and experience. Once you finally make a decision, you will do best to work with one exclusive partner. Three months is enough (avoid year-long contracts with nonsensical options for six-month extensions, they make no sense). In the first 3 month period, the broker needs to show you how well they understand and do their work, and then you can decide whether it makes sense to continue working with them. If, in that time, only 2 showings took place, and no interested party was found, you should reconsider your choice of agent.
By way of comparison, with investment real estate, we usually realize more than 20 viewings within the first two months, and find an interested buyer - one who really can buy it - by the end of the those two months.
A frequent complication in the sales process of commercial or residential real estate is to underestimate the importance of the final form of contracts and other documents that are tied to the sale. Their preparation should be done particularly carefully, paying attention to any possible problems that can develop, and taking the current legislation into account. The risk of complications when changing ownership of the property is relatively high, so it is necessary to have a well-developed "reservation contract", which must actually represent an "agreement regarding the future purchase agreement, and, of course, the purchase contract itself. Other possibly similar "reservation agreements" will not truly guarantee the actual reservation as such. These similar contracts are often used to pay for real estate services when the deal does not go through, but do not protect the seller’s interests: be sure that you have an agreement regarding the future purchase agreement in place.
The sale must eventually go through the land register process, and the final practical step of the sale is the handover of the real estate itself, including the transfer protocol. This will only happen when the buyer has the entire purchase price freely available in his account.
If you cooperate with us, you can be sure that the whole sale will take place quickly, discreetly and legally.
Our brokers have 40 years of experience in selling commercial real estate on an international scale, and 10 years in Prague itself. In addition, they will prepare a free and up-to-date market value estimate of your property, take action to optimize the building or its furnishings/equipment to increase the property‘s market value, provide processing and marketing support, and arrange everything with regard to the viewings and communication with potential buyers. In addition, they will also collect or provide all relevant documents (eg floor plans, building permits, easements inventory, insurance contracts, energy certificates, etc.)
Or, if you have doubts, we we will be happy just to prepare you a good cup of coffee or tea, and advise you free of charge about the sale of your commercial/residential real estate. Our reward is not deserved before you actually have earned the money from your sale, and it is sitting safely in your bank account.
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