Wealth Opportunities in Commercial Real Estate: Management, Financing, and Marketing of Investment Properties
by Gary Grabel
Disposition Costs
After the NOI is capped and a reversion value is determined, the price must be adjusted for a reasonable sales commission. The sales commission is usually expressed as a percentage of the estimated sales price. Typically a 3 percent figure is used; however, on larger properties it is common to use a lower commission percentage or a flat commission amount.
Most analyses reduce the reversion only by the anticipated sales brokerage cost; however, there are other costs that should be anticipated. Most of the other costs in a sales transaction are borne by the buyer; however, a seller will incur closing costs such as legal fees, escrow expenses, title charges, and possibly a defeasance penalty (a charge imposed by the lender due to a premature repayment of the debt).
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