Before Selling Your Commercial Property Directly to Your Tenant, Read This

Selling directly to an existing tenant may seem convenient, particularly when it appears to avoid brokerage costs. But convenience does not necessarily produce the highest net outcome.

Why a Tenant May Value the Property Differently

A tenant may have an incentive to acquire the building below broader market value. Without outside market exposure, the owner may not know whether the tenant's offer reflects fair value.

Commission Savings vs. Net Proceeds

The relevant comparison is not simply commission versus no commission—it is the owner's net proceeds after pricing, marketing and negotiation.

Protecting Equity

A market-supported BOV and broader exposure can help determine whether a direct offer reflects the value of the property.

Case Study

In one ProTech assignment, a tenant with a right of first refusal submitted an offer approximately $300,000 below ProTech's BOV. The property was marketed, a fair-market offer was generated within a week, and the tenant ultimately matched the competing offer. The owner's net outcome improved by approximately $260,000.

Conclusion

Even when the likely buyer is already in the building, understanding fair market value and creating competitive tension can materially affect the seller's result.