Benefits of Buying Commercial Real Estate in Receivership
Real estate investors seeking to buy properties that are currently on the market are often leery of those in receivership. Actually, a commercial property that is being handled by a court appointed receiver can be one of the safest investments you can make. There are actually several benefits to buying commercial real estate in receivership. Here are just a few.
Court Order Guarantees Property Free from Liens
When the court orders a commercial property into receivership, every aspect is then either approved or vetoed by the court presiding over that proceeding. One of the obstacles that many prospective buyers encounter when making an offer on a piece of commercial real estate is the number of liens a property may have attached to it. Workmen who weren’t paid, back taxes and unpaid mortgages and loans are amongst the most common liens you may encounter. When a court appoints an official real estate receiver such as FedReceiver, it is their job to satisfy all debt prior to closing the transaction and the buyer needn’t worry that those debts will be passed on along with the deed.
Assured Fair Market Value
Many real estate agents falsely inflate the price of a property because their pay is commission based. It stands to reason that the more a property sells for, the higher that agent’s commission will be. When the court approves a property for sale through an official receiver they make it their job to base the list price on fair market value. It is good to understand that the court overseeing the receivership will look at comparables offered by the receiver and then decide if the asking price is within the possibility of fair market value.
Quicker Even than a Short Sale
Some of the most impatient investors in the world are real estate investors. Perhaps this is because many of the commercial properties they invest in are already built and ready to be inhabited by renters of some sort. Whether residential or commercial, a property that is in receivership will often move through the various stages of a real estate contract for sale even quicker than one that is handled as a short sale. This is because the receiver has done much of the legwork prior to listing that property for sale. By the time prospective investors see the listing, much of the required preliminary work is complete. That’s the job of a receiver and a court appointed Federal Receiver takes his or her responsibilities very seriously. There should be no delays due to an oversight.
There really is no reason to fear putting an offer on a piece of commercial real estate that is in receivership because the courts will make sure everything is handled professionally up to legislated standards and that there are no strings attached to the contract. The only problem might be in terms of why that business failed. It could be due to poor planning but it also could be due to an unsuitable location for the type of business being run from that particular location. In any event, there is no reason to be alarmed if you find that a piece of property is in receivership. It could work to your benefit and that’s what you really need to know.