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When does the seller make concessions in selling commercial property?

Real estate buyers may ask for certain concessions to make the deal more appealing, or the seller may offer them to sweeten the deal. This can involve lowering the price or adding other benefits the buyer wants. Conversely, the seller may not want to provide the concessions because they believe that the price is generous enough. While the concessions can close the deal, asking for them could jeopardize it.

When to ask

There may be circumstances where it is a buyer’s market, which means sellers have less bargaining power. Common elements include:

  • There are several similar properties in the area.
  • The number of properties available exceeds demand.
  • There are properties in the area in the same price range but with more desirable features or locations.
  • There is a shortage of interested buyers.

Sellers looking to close may need to adjust expectations if they wish to close the deal or attract more interest.

When to say no to concessions

Sellers in a seller’s market may not need to make concessions if the following is true:

  • There is little inventory in the area and many interested buyers.
  • Properties in the market move quickly.
  • Nervous buyers may raise their offer over the asking price.
  • The property is unique and stands out from others.
  • The property is well maintained and therefore requires few updates or less maintenance.

Sellers may strategically choose a fair market price in a tight market to generate more interest, leading to a bidding war. It also gives the seller the option to choose a buyer with a lower offer but better financing, leading to fewer headaches if the transaction moves forward.

The signs are not always clear

There may be disagreements among agents, lenders, or those involved in transactions because they do not see the same indicators or don’t understand the market. Considering the amount of money involved, it is wise for those looking to buy or sell commercial or premium properties to work with a team that can add valuable insights in negotiating the sale or determining a fair market value for a specific property.