How to Identify and Verify a Real Commercial Buyer

Selling a commercial property is a significant transaction that can bring in a lot of money, making it attractive to scammers and fraudsters. Therefore, before entering into any agreement, it is crucial to verify the buyer's legitimacy to avoid any potential loss or legal issues. In this blog post, we will explore how to determine if a commercial buyer is real and the cautionary measures to take.

1. Check the Offered Terms

One way to identify a genuine commercial buyer is to evaluate their offered terms. If the terms seem too incredible to be true, it's a potential red flag. Scammers may offer unusually high prices or other favorable terms to lure sellers into a trap. Therefore, consider seeking professional advice before accepting any offers that appear too good to be true.

2. Be Suspicious of High Earnest Money

Additionally, beware of buyers who offer a large amount of earnest money. It could be a bait-and-switch tactic, where the supposed buyer lures the seller with large deposits only to back out of the transaction later. Verify the buyer's credibility using a reputable verifier to avoid such risks.

3. Short Closing Time

A real commercial buyer understands that closing the deal takes time, and any request for an unreasonable short closing time should be handled with caution. Scammers may pressure the seller to agree to a quick closing, which may cause the seller to overlook details and miss fraudulent activities. Finally, always opt for reasonable closing timelines to avoid such scenarios.

4. Verify the Source of Money

Ensure there is a clear path to the money source, such as a verifiable 1031 qualified intermediary. If the buyer fails to provide a clear indication of where the cash is coming from, it could be a sign of risk. Always verify the provided information using reputable sources.

5. Check the Expertise

Be cautious if the buyer is acquiring property outside their area of expertise. It may signify a lack of knowledge or funds flow volatility, leading to complications throughout the deal. Consider asking the buyer questions to access their level of knowledge and experience.

6. Agent Commission Split

Also, if the buyer's agent is not concerned about commission split or documentation, it could signify fraudulent activities. Commercial real estate transactions are all about money, and agents who aren't concerned about their earnings may be working for fraudulent entities. Always scrutinize agent documentation and commission payment credentials for authenticity.

7. Verify the Lender

Finally, a significant portion of commercial real estate transactions often involve bank loans, so you need to verify the lender's credibility. The lender should be reputable, experienced, and regulated; this ensures they comply with necessary regulations and protocols. Consider seeking professional advice in verifying the credibility of potential lenders to prevent issues down the line.

In conclusion, verifying a real commercial buyer is essential when dealing with property transactions. Always take caution if the offered terms are too good to be true, the buyer's hard-earned money seems excessive, the closing time is too short, or there is doubt over the money source. Check the buyer and agent's credibility and hire reputable experts to verify the provided information. Remember to take your time in every step of the process and never leave out essential due diligence protocols.

Contact Shawn Wilmoth REALTOR® today for help finding exactly what you're looking for.

www.shawnwilmoth.com