Cities are generally eager to keep properties from becoming vacant eyesores. When that happens, it can negatively affect the property rates of the entire surrounding area.
Maybe that’s why Glendale city authorities were willing to sell a property it bought in 2008 for $735,000 to investors for a mere $25,000 today. The new investors — unlike others who might have been willing to pay more but inclined to hold onto the empty property until they could realize a better return — have promised that they’ll have a business operational on the premises within six months. The prospective owners also have promised city officials that they will make repairs, promote business in the city’s downtown and try to recruit other companies to come into the area.
For city officials, it seems like a deal they shouldn’t refuse — especially considering the lackluster real estate market in the area right now. If the new owners are successful, it could give the city a much-needed economic boost.
However, the Goldwater Institute, a think tank group that focuses on public policy, says that city officials are basing their decision on hopes and dreams — not reality. On top of that, the sale may actually be illegal. The Institute is considering a lawsuit to block it.
The criticism of the sale rests largely on the fact that there’s no evidence that the buyer can do anything to actually promote business growth in the area. In addition, selling the building for a price so far below its apparent value — without so much as an appraisal or an attempt to find another buyer at a higher price — violates the state’s constitution.
Commercial real estate investment is always tricky — but it seems like this is a case where the deal seems a little too good. Selling — or buying — any property without an appraisal is one of the first things that most real estate attorneys would advise against. Beyond that, a more careful exploration of the city’s right to make this gamble with what amounts to a public asset — without even trying to get more for it — would have been warranted before a deal was made.
Don’t let yourself get caught up in a real estate fiasco. An attorney can help you avoid the dangers of a commercial real estate investment gone awry.