Sell for More Trivia is a weekly blog series that playfully presents a trivia question about commercial real estate.
A Re-trade is the practice of a buyer renegotiating the purchase price of a commercial property after initially agreeing to a higher price.
Typically this occurs after the buyer gets the property under contract…during the due diligence period.
This puts the seller in a bad situation where it must either accept the lower price or lose the sale and re-market the property.
Moreover, the loss of the sale can affect an entire chain of related transactions…like when the sale is a down-leg in a tax-deferred 1031 Exchange. This increases the pressure upon the seller to accept the lower price in order to salvage the related transactions and avoid a ripple effect.
There are times when buyers are justified in seeking a price adjustment. Other times, however, buyers may seek to utilize perceived leverage in a transaction to drive the price down. In this scenario, the buyer fails to turn up anything significant…but still wants to lower the price.
Some sophisticated sellers are adopting the strategy of refusing to renegotiate so as not to reward the practice and to discourage re-trade buyers.
On the other side of the purchase/sale transaction, some buyers attempt to distinguish themselves from the practice and pride themselves as having a strict “no re-trade” policy…touting that they do all their due diligence up front and don’t demand last minute purchase price reductions.
As a seller, there are many ways to lower your chances of getting into a re-trade situation…but that’s a bigger topic for another day.
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About Beau Beach, MBA CCIM
Beau is a tenacious Commercial Real Estate Broker, author and adoring father of four. His clients appreciate his no-nonsense demeanor and his legendary work ethic.
Beau leads Beachwood which is a commercial real estate broker for sellers in the Nashville, Milwaukee and South Florida markets.
He’s the author of the books The 3 Reasons: Why Most Commercial Properties Don’t Sell and True Wealth: What Every Seller Should Know About 1031 Exchanges.
Beau can be reached at 800-721-3287, click to schedule a call or Beau@BeachwoodSells.com