LISTING SERVICES
Deciding to put your church property on the market can be a gut-wrenching proposition. You and your team have probably delayed this decision for months or years as you tried other less-painful alternatives, cost-cutting measures, ministry repurposing and other initiatives. However, you are now seriously considering selling – what do you do?
We at Church Realty have 40+ of experience helping congregations chart these troubled waters. We understand the implications for you and your congregation and have successfully shared on this journey with congregations over the years.
Here are some questions that our clients have asked us through the years, which may be going through your mind as well:
Our company, Church Realty, has helped hundreds of churches and non-profits in Texas for over 30 years to buy, sell or lease their Real Estate facilities. As such, we understand the different situations that local bodies of believers go through in the course of their ministry life as related to their physical plant. Many of our consultants are also ministers and uniquely understand the stresses of ministry upon local pastors. Please visit our corporate website at www.churchrealty.com for more information.
Religious-use properties are very unique and a number of factors are involved in a value determination. The size of the building(s), the size of the lot, the age and condition of the structures, the number of seats in the sanctuary, the number of parking spaces, the presence of specialized venues like fellowship room, kitchen, and classrooms, and the geographic location must all be considered.
The determination of an initial asking price for a church property at a specific moment in space and time is determined by 1. The price level at which other comparable properties on the market are being priced at that moment; and 2. The actual sold values of comparable properties in the recent past. In other words, asking price must take into account the current competition as well as what lenders and their appraisers have valued similar properties.
When a commercial property (including religious-use) is sold on the market in Texas, the final sales price is typically not revealed to the public. In fact, many times the very asking price is not disclosed upfront either. There is no centralized database of transactions in which brokers voluntarily report the transaction details (like in the residential market). Hence, commercial real estate practitioners must rely on the information provided by well-known industry portals (when available) or rely on their own, private proprietary information.
Church Realty owns an extensive database of religious properties across the State of Texas and their associated real estate transactions through the years. Consequently, We are in a position to price accurately any church property, no matter how unique and specialized.
When we conduct a price determination exercise for a particular property, the delivery will take the form of a Market Analysis document or a Broker price Opinion. These documents will provide the exact price recommendation along with supporting documentation for you to make an informed decision.
We will make sure that your church property will be positioned at the optimum price point on the market.
The costs associated with the sale of a church property include the following:
- Broker’s compensation – depending on the size and complexity of the transaction, these fees may come up to 5% to 7% of the eventual sales price.
- Title costs – a typical Title Policy paid by the seller on behalf of the buyer will run 0.75% to 1.0% of the sales price. Rates are set by the State and there are public calculators available. The lender involved will require additional policy endorsements that may increase the cost.
- Other closing costs – Title attorney, document preparation, recording charges and so forth. These vary by transaction.
All in all, a seller must anticipate 7.0% – 8.0% in transaction expenses overall. This does not include any additional counsel that seller may decide to retain, or any repairs /remediation necessary as determine by property or environmental inspections, or the need to provide a new survey.
There is a direct relationship between asking price and time on the market. The higher the price point, the longer the property will probably stay on the market. Additionally, there typically is a direct relationship between the size/dollar volume of the property and the time needed to sell, since the bigger the property, the pool of potential buyers who could benefit will decrease. And there is a direct relationship between the condition of the property (and its degree of obsolescence, typically related to the age of construction) and the time it takes to find a new owner.
What we tell sellers upfront is that the marketing cycle for a specialty property such as a church may take 6 -12 months to get the property under contract. If other detrimental factors exist (condition, structural, legal), it may take yet a few more months to sell.
Once a contract is in place, it will take 60 – 120 days to close on the property, on average. Buyers will typically require a due-diligence period of 60-90 days to do the different inspections needed and to process any financing that is required.
We understand – you are hesitant to consider selling before you know where to go next. No question – this is probably the single most-daunting issue that churches face when considering a sale, knowing that the prospect of failing to execute a seamless transition will adversely affect the congregation and the ministry flow.
In our experience, there are three possibilities that churches typically consider for life-after-selling:
- The congregation can buy another property or build using the proceeds.
- The congregation can lease property, temporarily or permanently, after the sale.
- The congregation may dissolve or change ministry direction so that no physical facility of any kind will be needed going forward.
If the congregation is set on buying another property, they may need to allow to assemble in a temporary space for a time, to give it time to identify, purchase, and condition their new permanent place. In other words, the church may need to “go portable” for a while – leasing retail space, meeting at a school or community center, using a hotel meeting room, or using the facilities of another church. This transition needs to be carefully implemented. If the congregation wants to build instead of buy, this transition will be longer and more involved.
If the congregation’s plan is to lease permanently after the sale, a suitable place can be identified in advance, a lease application can be presented and negotiated possibly even before closing on the sale, so that the church can have time to do the necessary build-out and obtain the necessary permits, ready to start meeting at the new place maybe even before their property closes.
Sometimes the possibility of leaseback the property after the sale for a limited time can be negotiated with the buyer in advance. These arrangements are typically for 6 months or less, but can be useful in bridging the gap and provide more time for the next steps.
We can come alongside to help you compare the options available to you and your congregation at any given moment. We can provide you with a comprehensive look of the global costs and the cashflow timings involved with the double-transaction, approaching this with a long-term project management perspective.
We have guided congregations through this process countless times and are ready to discuss options with you and your team.
At the Listing stage
We start with a Listing Agreement, which gives us the legal authorization to act as your agent. There are other notices and disclosures needed along the way, which the buyer will probably ask for. There is a Commercial Property Condition form that may be required to be completed as well. The State of Texas requires the seller (and buyer) to sign an Information About Brokerage Services page, which explains how brokerage services work in Texas.
At the Contract stage
At the time of a contract, the buyer will present a standard Commercial Contract document containing all terms and conditions, or present a simpler Letter of Intent document that gives the general contours of a deal, details to be negotiated at a later stage. Upon reaching an agreement for all terms & conditions, a final Contract will be produced and signed by the parties, along with all Addenda and Disclosures.
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Yes, remaining at the property as a tenant of the new owner for a short period of time is possible, but it has to be negotiated upfront as part of the overall understanding. A typical leaseback term is 6 months, but we have been involved with much longer terms such as 2 years or more. A leaseback can be a very beneficial element of a contract for the seller, as it provides more time to maybe close on a new facility or remodel the new place. The monthly lease is negotiated between the parties, typically aligned with market rates.
To start the process, let us get together in person. You can call us at (281) 744-0644 to schedule a courtesy, no-cost initial consultation.
Or you can fill out your information below and we will be in touch immediately. Thank you for giving us the opportunity to serve you!
Please remember: the Church is not a building, and buildings are only tools in building God’s Church.
Some day, 2 or 3 years down the road, you will look back and say: “I’m glad we did it when we did it. We didn’t know the final outcome when we signed that Listing Agreement, but God directed everything one step at a time”
All our buildings will someday not be needed anymore, and will instantaneously lose their value. But the holy work done now inside those buildings will endure forever.
Countless churches have traveled this road with us before.
Reach out to us to get clarity and truth.
