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The RENT blog gives you the resources and tools you need to make the best decisions regarding your real estate needs.  We cover a broad range of subjects regarding office space, tenant needs and what to look for when investing in property.

service contracts, purchasing commercial real estate, REVIEW ALL EXISTING SERVICE CONTRACTS WHEN PURCHASING COMMERCIAL REAL ESTATE

REVIEW ALL EXISTING SERVICE CONTRACTS WHEN PURCHASING COMMERCIAL REAL ESTATE

The purpose of the due diligence process is to discover the potential problems with a property, reveal any hidden profit potential, and to verify all information you have obtained.  This intelligence will enable a buyer to make an informed decision.

As part of the diligence process, buyers should carefully review all service contracts in effect and make sure that they are cancelable with 30 or 60 days’ notice.  Make special note of any that is self-renewing for long terms such as one year or longer.  If you come across any of these types of agreements, make sure that the seller understands that he will be responsible for any costs incurred for early termination or be prepared to live with them for the duration of the remaining term.  You want to have the flexibility of bidding other outside vendors and replacing the old ones if you feel you can strike a better deal with another vendor.

Make sure you receive all the current service contracts that are in effect at the building including, but not limited to:

  • Elevator Maintenance Contract
  • Roof Maintenance Contract
  •          HVAC Maintenance Contract
  •          Interior Plant Maintenance Contract
  •          Landscape Maintenance
  •          Piped in Music Service Agreement
  •          Janitorial Service Contract
  •          Parking Company Contract
  •          Trash Removal Contract
  •          Property Management Contract
  •          Pest Control Service Agreement
  •          Hazardous Waste Removal Service
  •          Security Service Contract
  •          Metal & Stone Maintenance Service Contract
  •          Property Taxes Appeal/Property Tax Consultant
  •          Utilities Contract
  •          Union Contracts (make sure that you understand if they are to be continued, which will result in higher operating expenses)

Buyers should retain a qualified commercial real estate broker experienced in their property type and market to advise them on the due diligence process.

At Golden Group Real Estate, we specialize in buyer representation real estate services for office space users in the Chicago area, helping local business owners find office space and negotiate lease and purchase agreements. We never represent landlords, so we are prepared to negotiate aggressively on behalf of our tenant clients.

For more on Golden Group Real Estate, read about our real estate services.  Let us know if we can help you find office space for rent or buildings for sale.  Call us at (630) 805-2463, email us at troy@goldengroupcre.com, or enter your office space search criteria below.

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