Selling Business Property

Selling business property goes hand in hand with selling businesses.

All Business Brokers in California are also either licensed Real Estate agents or brokers. (I happen to be licensed as a broker.) In California businesses or business opportunities are treated as real property and therefore we are regulated by the California Department of Real Estate.

I specialize in selling business property. Many business owners think of business brokers only in the context of their business and assume that they will need to also find a commercial real estate broker to handle the property.

If your goal is selling business property and the your business at the same time here are a few items to ask yourself:

Can the business realistically be moved?

Many businesses are advertised as "relocatable" when in reality they are not. The cost of moving machinery, fixtures and inventory is high and employees usually do not do not want to move. Finding an appropriate space can be a challenge.

Does your business need any permits to operate in it's current location?

Some permits and licenses are very difficult to obtain. Moving may force you or the buyer to go through this process again.

Is your business the best use for this particular property? Would your property appeal to a business buyer or a developer?

Some business owners were smart and purchased their property years ago. If the area has changed, if there is vacant land or if the building is outdated then the property may appeal more to a developer. If the building was build and specifically designed to house the business that currently occupies it then a business buyer may find more value in the property.

Some realities regarding the sale of a business AND business property.

You cannot sell a business that is "homeless". Banks will not finance a transaction unless they are certain that the business has a physical location to operate from. Usually they will require a lease and option combination that totals ten years. The majority of our transactions are bank financed.

Because of this reason we will not take on clients where the property is being sold and we are not involved (in some fashion) with this transaction. We do not want to take on the risk that we will have a deal be DOA when the property is sold.

With that being said here are your options:

Sell the property only - do not sell the business. (close, move, etc)

Sell the property with a leaseback provision. Five years and an option for five more is ideal. Note: Be aware that with this scenario if the lease is greater than the mortgage that the business was paying, this will result in lower earnings and negatively affect the sales price of the business.

Sell the business and become the landlord. Note: This would make the business transaction easier.

Work with a business broker to try to sell the property and business to the same buyer. Note: OK I know - a little self serving, but there are business buyers who specifically seek businesses that own the associated property.

Depending on the property and business, we will create a marketing plan that is designed to locate a buyer that has the desire and capability to complete this type of transaction. I have associations with all of the major commercial real estate firms. In some cases, we will co-broker and work together with commercial real estate professionals to find an appropriate buyer and in other cases we are confident that our efforts can locate the right buyer for your particular property.

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