Write a Bid for a Small Building
The US Department of Commerce states that over 80 percent of all new construction each year is focused on small buildings, a term used to refer to a structure between 10,000 and 20,000 square feet. In addition to new construction, many communities have a wealth of older small buildings that are currently offered for sale.
Instructions
Write a Bid for a Small Building
1. Bid Preparation:
This step is critical to a successful bid.
Personal Finances: Collect tax statements and payroll documents or business books for the last three years and make an appointment with a lender to determine a prequalification price amount. If cash payment is an option, confirm when the cash will be available. Avoid cashing out investments until the offer has been accepted, but confirm the number of days necessary to obtain the cash. The date the loan will fund will need to be stated in the bid.
Zoning: Make sure the city or county zoning will allow a specific business in this building. Check state requirements for air and water to determine what kind of impact the business might have on the environment. Many areas require a detailed report for certain businesses. Confirm this information before making an offer. Some states require a disclosure form to be filled out and presented to the buyer. Ask if this form has been completed and insist on reading it before finalizing the offer.
Research: Determine a fair asking price for the building by checking tax records. Residential offers use comparable sales for the last six months but commercial bids are different. Confirm the price per square foot for similar properties sold within the last year. If the building is a warehouse, compare the cost per square foot for sales of warehouses. Check also for similar features, such as parking lots, warehouse docks, and elevators.
Permits: Check building permits taken out on the property. If the roof been replaced recently, this will increase the price of the building. Make sure that there aren't any outstanding construction liens on the building. If a construction permit has been taken and it has not been signed off, this is a clue to dig deeper to determine potential liens or building problems.
Outstanding Debt: Taxes must be current on the building. Check local and county tax records and confirm payment for the most recent bill since some municipalities have reporting delays.
2. Find an Agent:
Find a reputable commercial real estate agent or broker to assist in writing the bid. Many people think bid writing is an easy duty, but Realtors are trained to understand the details and nuances in an writing offer and answering counteroffers.
3. Make an Inspection:
Many times commercial sales will not allow buyers into the building without an offer in hand. If this is the case, write the bid "contingent on satisfactory inspection report." This will allow the buyer to discover any problems and back out if the repairs are excessive. Inspect the building using qualified professionals, rather than friends who may have a casual knowledge of building and repairs. "Satisfactory" is a vague term that will allow further negotiations if there are problems discovered during the inspections.
4. Written Details:
Offers should be made in writing. Many states recognize verbal agreements but add protection and put everything in writing.
Determine the Price: Determine a comfortable offering price. Remember once the bid is written and presented, the buyer must follow through with the sale, unless some sort of misrepresentation has been made about the building. The price should take into account comparable sales and how it fits your specific needs. If the building needs modifications to meet any needs, then obtain estimates and factor this into the price offered. Inform the agent the reasons for the price. This may be a talking point in negotiations. The owner might be willing to make the modifications, if the sales price is met.
Establish a Closing Date: The bid should include an exact date on which the contract will close and the building will be turned over to the new owner.
List Included Items: The bid should also determine items that will sell with the structure. In home sales, anything attached is included in the sale. This is not the case for commercial sales. If there are lighting fixtures, interior shutters, sinks or movable walls, itemize these as part of the sale. If an advance tour has been allowed, photograph items. If the offer is based on a paper advertisement, itemize the features listed on the flier. If the offer is "blind," the buyer has not previewed the interior, state "all fixtures to be included as part of the sale."
Avoid Potential Problems: If the building is occupied, include contract language that states, "All conflicting contracts will be voided by the day of the sale" and "an unoccupied building shall be turned over to buyer." Also include a statement that the building is free from stored toxic materials and trash at the time of the closing. This way the buyer won't be stuck with another's disposal problem. Most standard contracts have this language incorporated into the preprinted forms.
5. Make a Deposit:
Commercial real estate agents will be able to determine the amount of the standard deposit for the geographic region and the type of building for sale. This check should be placed in an escrow account and the exact amount should be stated on the offer. Many buyers write, "Deposit for (the address of the property)," on the reference line on the check.
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