Once you’ve made the decision to sell your commercial property, finding a buyer and closing the deal quickly become a priority. Whether you’re selling the property to generate cash; to fund a 1031 property exchange; to act on a new opportunity; or to establish an income stream, seller financing can be an attractive alternative.
Here are four reasons to take a closer look at seller financing:
1. Bring more buyers to the table
The highest hurdle for a buyer of a commercial real estate property is securing the necessary capital. Seller financing offers the buyer an easier way to purchase the property. When the seller works with a mortgage broker, financing arrangements can be negotiated with lenders while evaluating potential buyers. The property may be more attractive to a buyer when financing the property is made easier. Buyers who may not ordinarily be in the market to acquire another property are likely to reconsider when the seller is underwriting the financing.
2. Property becomes more attractive
Even properties that need rehabilitation become more attractive to buyers. It can be easier for the buyer to secure a short term loan to fund the improvements while the seller retains the original mortgage. Once the property is updated, the buyer is in a better position to secure a larger loan. In commercial real estate, the income stream is one of the most important loan criteria. An updated property may command higher rents and higher occupancy rates, all of which add up to an easier path to long-term financing.
3. Pre-qualifying the buyer
For the seller interested in a quick sale and the revenue that comes with it, vetting the buyer before earnest money is accepted becomes very important. Once the deposit is paid and an agreement has been reached, the seller must take the property off the market. If financing falls through, the seller has invested considerable time only to restart from the beginning the process of finding a buyer. Seller financing requires vetting of the buyer. A mortgage broker can be a tremendous resource to review the credit worthiness of the buyer and avoid the false start.
4. The value of a mortgage broker
A mortgage broker can serve as a matchmaker of sorts bringing a seller and buyer together. Understanding the objectives of both parties, securing the capital within the desired time frame will save both buyer and seller in the long-run. The broker has a network of lenders that specialize in lending for the type of property. The relationship and the specialized knowledge all contribute to a speedier closing.
W Business Capital treats each commercial real estate transaction as unique. After decades securing capital for commercial real estate properties across the nation, we have developed a large network of reputable lenders. We begin each transaction by understanding the objectives of the seller and the buyer, then go to work to develop an attractive, affordable solution. We’d like to hear about your property or your next project. Contact us at 208-297-7794.