Situation · Owners
Someone made an offer on my building. Is it a good price?
An unsolicited offer is a buyer approaching you before you list. One way to look at it is to divide your net operating income by the offer price. That’s the capitalisation rate (cap rate) the buyer is paying: $150,000 of NOI on a $3,000,000 offer is 5.0%. Compare it with recent sales of similar buildings.
For: Owners
Go deeper
Plain-English definitions with BC sources, from the encyclopedia:
- How commercial property is valued in BC (guide)
- Negotiating a commercial deal in BC (guide)
- Cap rate
- Deposit
- Term (loan)
- BC Financial Services Authority (BCFSA)
- Rent roll
General information only. This page is not legal, tax, accounting or financial advice, and it isn’t an opinion on your situation. Laws, rates and figures change, and examples are illustrative. Get advice from a lawyer, accountant or other qualified professional before you act. Reading this page doesn’t create an agency or client relationship. Cam Appleton is a Commercial Real Estate Agent licensed by the BC Financial Services Authority (BCFSA RE611549) with Coldwell Banker Prestige Realty. Terms and disclaimer.
Check the offer’s cap rate
An unsolicited offer is a free data point, not a deadline. It can help to do your own math too. Use your real NOI, with vacancy and a management fee, then compare the implied cap rate with 3 recent comparable sales. See cap rates and the cap rate calculator.
Look past the price
Price is one term. Look at the deposit, the conditions, the timeline and who pays what. A lower price with a firm deal is sometimes better than a higher one full of subjects.
Counter, test the market or say no
| Take the offer | Market-tested sale | |
|---|---|---|
| Price | One buyer’s number | Competing buyers set it |
| Terms | The buyer’s draft | Negotiated across offers |
| Time | Can be quick | Usually longer |
A short, quiet marketing period can help show whether the offer is in line with the market. See selling commercial property.
How to handle the buyer
- One buyer isn’t a market
- A buyer who came to you has the leverage. Testing the offer against a few qualified buyers on a set timeline can show what it’s really worth.
- Ask why they want it
- The buyer who approached you may value it most: a neighbour, a user or a developer. Their reason can tell you how far they’ll go.
- Get it in writing with a deposit
- A written offer with a refundable deposit filters out tire kickers. It’s usually best not to cut your price before there’s a written offer.
- Price is only one term
- Deposit, conditions, timeline and closing date all matter. Many sellers lock the main terms before the buyer’s deep dive.
- Know your walk-away number
- Decide your minimum cash number before the first meeting.
- Treat the offer as data, not a deadline
- Get the rent roll and leases organised and an independent value before you answer. Assessed value isn’t market value.
Have a lawyer read any offer before you sign it, and get your accountant to show you the after-tax result.
Cam is a licensed real estate agent, not a lawyer or accountant, so take the legal and tax questions to them.
Keep it confidential, and remember disclosure
Talking to a buyer generally doesn’t commit you to anything, but be careful what you sign or put in writing. Many owners share financials only under a confidentiality agreement. If you do sell, BCFSA says known material latent defects have to be disclosed. Count tax and selling costs too, see what is my property worth.
Common mistakes
- Replying with a number before you know what the building is worth.
- Sharing tenant or financial details without a confidentiality agreement.
- Accepting a high price with long conditions and a small deposit.
- Not checking tax before you say yes.
Underwrite the letter before you react
An unsolicited letter is not a valuation. Rebuild net operating income from the rent roll, subtract real capital expenditure, and test a cap rate a buyer would actually use—including vacancy at the next rollover.
Example only: a round number that ignores a soft tenant or a deferred roof is not a price. It is an opening line.
If the number is interesting, reply with a process: information under confidentiality, a timeline, and room for other interest. I can help you pressure-test the math before you answer.
Questions people ask
How do I know if an offer is fair?
One check is to work out the cap rate it implies from your NOI and compare it with recent sales of similar buildings.
Does talking to them commit me?
Generally not, but what counts as binding depends on what’s signed or agreed. Ask your lawyer before you sign anything, including a letter of intent.
Should I counter or test the market?
If the offer is close to what comparables suggest and the terms are clean, a counter can work. If you’re unsure, a short market test can help.
In practice
How I help with an unsolicited offer
This page is for you if someone has offered to buy your building and you weren't planning to sell.
- Happy to give you a read on whether the price is in line with what the market might pay.
- We can compare holding with selling and reinvesting, over the same time frame and after tax and costs.
- I’ll help you respond, test the market quietly, or negotiate terms.
What to watch for
- A short deadline designed to stop you checking the market.
- Long subject periods that take the building off the market for weeks.
- A low deposit that makes it easy for the buyer to walk.
The steps, in order
- Don't sign anything yet.
- Get a value and tax picture.
- Decide: decline, counter or test the market.
Good questions to ask
- What would other buyers pay?
- What will I net after tax and costs?
- What would I do with the money?
Lease and property law has BC-specific wrinkles, so for anything legal, check with a BC real estate lawyer before you rely on it. This page is general information, not legal, tax or financial advice. Cam Appleton is a licensed real estate representative with Coldwell Banker Prestige Realty.
Next step
Got an offer?
Send it over. I’ll pull comparable sales and give you my view of the number, free.
Search