In this episode of Napkin Numbers, Scott Lundt & Rahsaan Freeman are joined by Bob Fredrickson, the president of Coldwell Banker Commercial Danforth, to discuss the pivotal role of commercial real estate brokers in business property transactions.
Uncovering the Risks: Do Business Owners Need a Commercial Real Estate Broker?
Bob’s expertise shines as he discusses the vital factors that buyers need to consider, including property valuation, compliance, and market insights. He emphasizes the necessity of local market knowledge and the ability of commercial brokers to assess property value and potential risks accurately. On the seller side, Bob highlights the importance of balancing business and property value, stressing the need for realistic pricing and thorough property preparation.
For any business owner or investor in the real estate market – this episode is an essential listen to hear Bob’s valuable insights and practical advice to guide them through real estate transactions with confidence.
Napkin Numbers Talking Points
[2:28] Why Can’t I Just Use a Transaction Attorney
- The transaction attorney can write up the transaction, but they will not do a feasibility study.
- Commercial real estate brokers will look into the property to see if there are other tenants.
- The broker will analyze the leases for all of the tenants to tee up the building and prepare to sell it.
- Bob Fredrickson shares that his brokers put together an analysis of how a property will perform over the next 5 to 10 years, ensuring the buyer knows it is a good investment.
[5:52] Commercial Real Estate Broker Brings Value
- Bob Fredrickson says it is crucial to balance the business’s value versus the property’s value.
- A discussion must happen between the M&A side, commercial broker and the real estate owner and the business to determine that balance.
[7:00] Risks for Sellers
- Bob Fredrickson says it is crucial to balance the business’s value versus the property’s value.
- A discussion must happen between the M&A side, commercial broker and the real estate owner and the business to determine that balance.
[9:02] Including All the Experts
- Rahsaan mentions that a CPA is also a vital component of finding the balance in evaluating the business and the property.
- The CPA will provide guidance from a tax perspective on valuing the business or the property more.
[9:55] The Standoff Between Buyers and Sellers
- Meanwhile, he says, buyers are waiting for the bottom to drop out of the market.
- Neither party is getting their way – buyers are not getting bargain basement prices on real estate, nor are sellers getting top dollar for their property.
- Both sides need to be realistic with their numbers, so if everybody gives a little bit, then brokers know they did a good job because everyone is hurting a little bit.
- Rahsaan shares that the definition of a successful transaction is 90% happy on each side.
A sincere thank you to Bob Fredrickson for being our first guest on Napkin Numbers. For more about Bob and his team at Coldwell Banker Commercial Danforth, click the links below.
If you want to sell a business, please use our complimentary business evaluation calculator to discover what your business is worth.
