Selling commercial and retail real estate requires a strategic approach that includes creating an information memorandum. This document serves as a crucial component of the marketing and inspection process. Not only does it expedite the sales process, but it also acts as a powerful selling tool in the world of professional brokerage. However, the question remains: are your information memorandums comprehensive and professional enough to entice potential buyers?
Getting the Right Information Around You
While it is typically the commercial property agent's responsibility to prepare the document, it should be compiled from information provided by the property owner, their solicitor, and their accountant. To ensure accuracy and reliability, it is crucial to verify all the information displayed in the sale document. If any doubts arise, don't hesitate to ask follow-up questions. It's prudent to have the property owner certify the accuracy of the information before the commencement of property marketing.
Preparing the documentation takes time and effort, and it's only fair for agents to charge a fee for their services. This fee can be discussed during the listing process, with an average IM fee being around $1500 or more. It's worth noting that while agents often include disclaimers at the end of the memorandum to protect themselves from potential misinformation, it is accurate information that truly shields all parties involved from legal claims. To ensure a smooth sale process, meticulously check and double-check every detail and keep thorough notes throughout the marketing phase.
The Elements of a Comprehensive Information Memorandum
A well-crafted information memorandum should contain essential details about the property. Here are the main items that should be covered:
- Title details for the property
- Recent survey plans regarding location and boundaries
- Plot details and land location
- Property's history and previous owners
- Tenancy mix and existing tenancy profile, including current lease incentives
- Accurate lease documentation, tenancy schedule, and lease profiles
- Vacancy status and lease negotiation updates
- Outgoings estimation and reconciliation history
- Current pictures of the property and surroundings
- Property improvements, building structure, and functionality
- Up-to-date rental information and incentives
- Detailed depreciation schedules
- Encumbrances, rights of way, easements, orders, notices, and obligations
- Current rates, tax information, and unimproved property value for rating purposes
- Relevant consultant reports, such as heritage, environmental, structural, and topography assessments
- Sales details and customer visitation information (for retail properties)
- Energy ratings and compliance factors affecting property performance
- Market rental assessments and local business community demographics
- Income and expenditure results, operating budget, and tenancy mix analysis
- Operational cost history and changes
- Capital expenditure plans and spending records
- Risk and compliance-related facts about property, income stream, occupancy, and tenant mix
As you can see, compiling this list of information can be a complex and time-consuming process. It often takes days, if not weeks, to gather all the necessary facts.
Fees for Preparing the Sale Document
It's important to note that it is customary for real estate agents to charge a fee for preparing the documentation. This fee is typically collected as part of the overall marketing costs before the property promotion commences. Additionally, as a best practice, it is highly recommended to have the memorandum checked by the property owners or landlord and their solicitor to ensure the accuracy of the information provided.
By following these guidelines and crafting an information memorandum that is both captivating and comprehensive, you'll maximize your chances of achieving a successful sale in the competitive world of commercial and retail real estate.