Short sales in commercial real estate (CRE) can be a great option for investors looking to maximize their returns. While they are often complex transactions, with the right team of professionals and proper guidance, short sales can be an attractive way to acquire properties at discounted prices.
What Is a Short Sale?
First, let’s talk about what a CRE short sale is. It is simply when an owner of real estate sells their property for less than they owe on the loan against it. In general, these transactions are initiated by lenders who want to avoid foreclosure and the additional costs associated with it. The seller must agree to the “short sale” in order to avoid foreclosure and all parties involved must come up with a deal that works for everyone. Some short sales require approval from multiple entities such as banks or other creditors.
Short sales are advantageous for buyers because they offer greater discounts (up to 30% lower than market value) when compared to typical real estate transactions. Additionally, many lenders will waive certain fees associated with closing costs such as title fees, escrow costs, and transfer taxes. This can result in substantial savings for buyers.
Given the complexity of CRE short sales, investors should seek professional guidance from an experienced real estate broker or attorney before entering into any such transactions. They should also be prepared to negotiate all terms and conditions of the sale with lenders and other creditors to ensure they are getting a good deal. Buyers should also consider doing their own due diligence when it comes to researching past sales in the area and market trends in order to ensure they are making a well-informed investment decision.
Overall, short sales can be attractive options for savvy investors looking for discounted properties. With careful research and planning, investors can make sure they get the most out of their CRE investments while also avoiding potential pitfalls associated with short sales. If you need financing for a short sale, contact the team at Royall Capital Funding. We offer a wide range of funding strategies and solutions for commercial real estate investors.