1. Un-zoned Raw Land listings – Right now, these are some of the hardest things to sell in Commercial Real Estate. Prices are down about 40% and buyers are not inclined to buy property that will require 9 to 18 months to rezone let alone property which has no utilities or infrastructure.
2. Desperate Sellers – While a motivated Seller might be a good thing, a desperate Seller is another story. Desperate Sellers can be completely irrational. They can be very difficult to deal with and can pose a much higher risk of liability.
3. Bad Phase I Reports – Nothing can kill a deal like a bad Phase I Environmental Report. It is normally just good policy to have a Phase I inspection on a commercial property. When it comes back with a problem, everything can fall apart.
4. Unpaid Real Estate Taxes – This is often a sign that the property is distressed. Distressed properties have their own set of problems which have to be addressed. These transactions require extra care for all parties in order to be successful.
5. Over-zealous Attorneys – It is always good advice to have your client run things past their attorney. That said, sometimes good legal advice is not good real estate advice. While you certainly want your attorney to protect you if he goes overboard, it can make it impossible to every finish the transaction.
6. Bad Appraisals – When a Seller immediately offers to show you their appraisal, that is usually a sign that they realize that it is overpriced and want to try to persuade you that it is not. Bad appraisals create all sorts of problems. I have seen appraisals that included square footage that on floors that did not exist and listed comparables that did not exist. But once a Seller sees a high appraisal, it is nearly impossible to overcome.
Certainly, there are other scary things. Maybe you can share some that have happened to you. Hope everyone had a great Halloween last night. Let me know if you need any help with Commercial Real Estate. I work with Buyers, Sellers, Landlords, Tenants, and Investors and handle Office, Industrial, Land, Investment and Retail properties.
Have a great day.
10444 Bluegrass Pkwy
Louisville, KY 40299
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