When it comes to selling commercial and retail real estate today, creating an information memorandum is crucial for the marketing and inspection process. An information memorandum serves as a selling tool in professional brokerage, assisting in fast-tracking the sales process and generating interest. But how do you ensure that your documents are comprehensive and professional? Here are some tips for creating an effective information memorandum.
Getting the Right Information Around You
While the commercial property agent usually prepares the document for sale, it is essential to compile information from the property owner, their solicitor, and their accountant. Accuracy and comprehensiveness are key when providing information in sales transactions. All the information displayed in the sale document should be checked and verified. If any doubts arise, don't hesitate to ask more questions. Getting the property owner to certify the accuracy of the information before commencing property marketing is a wise move.
Real estate team thinking
Given the time it takes to prepare the documentation, it is appropriate to raise a fee on the vendor as part of the listing process. This fee compensates the agent for the effort and time invested in creating the document. It is not uncommon for an information memorandum fee to be around $1500 or more.
The Items of a Comprehensive Information Memorandum
A comprehensive information memorandum should include the following items:
- The title details for the property
- Recent survey plans and boundaries
- Details of the plot and land location
- Property history and previous owners
- Tenancy mix and existing tenant profile, including lease incentives
- Status and details of lease documentation
- Vacancy details and lease negotiation status
- Outgoings and their reconciliation history
- Current pictures of the property and surroundings
- Property improvements, building structure, and function
- Up-to-date rental information, including incentives
- Detailed depreciation schedules
- Encumbrances, rights of way, easements, orders, and notices
- Current rates and tax information
- Consultant reports regarding heritage, environment, structure, and topography
- Sales details in the case of retail property
- Energy ratings and compliance factors
- Market rental assessments and local business demographics
- Income and expenditure results from the property, including operating budget and tenancy mix
- History of operational costs and changes
- Capital expenditure plans and spending
- Risk and compliance-related facts about the property, income stream, occupancy, and tenant mix
As you can see, this list is detailed and complex. Compiling all the necessary information can take days, if not weeks.
Fees for Preparing the Sale Document
It is customary for real estate agents to charge a fee for preparing the documentation. This fee is collected as part of the marketing costs before the property promotion begins. The property manager is an excellent source of information in preparing an investment property for sale.
To ensure accuracy, it is advisable to have the document checked by the property owners, their solicitor, and their accountant. By doing so, you can obtain their certification that the provided information is correct.
Remember, a well-prepared information memorandum can make a significant difference in attracting potential buyers and expediting the sales process. Invest the necessary time and effort in creating a comprehensive and professional document, and you will reap the rewards.
