Best Practices Of Winding Down Church Commercial Property

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Over the past decades, many commentators have observed declining religious attendance, particularly in small towns and rural communities. This has meant empty and underutilized churches and other religious buildings with the added burden of fixed costs.

When contributions from the congregation decline (or vanish completely), this can make maintaining the property unfeasible. If the church has already relocated or permanently closed, the financial pressure is even greater.

If church leaders and the community have decided to sell the property, how does the process work? First, a broker will need to be identified. Church leaders can certainly look to contacts within the congregation, but casting a wide net has many advantages. Brokers from outside the community will offer a more objective view of the property, given the lack of emotional connection. They may also have connections with outside buyers who the congregation may not otherwise find. It is important to ensure the broker has relevant experience – a residential broker is probably not the best choice. If available, a brokerage company with experience in selling old church buildings may be a great option. The church leadership team should heavily weigh the opinion of the broker when deciding on the list price and marketing tactics.

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The broker will also have insight on how to prepare and present the building. This will probably mean clean-up and perhaps minor repairs. Keep in mind that the property will likely be sold for a commercial purpose, so staging is not as important.  What matters is upkeep, maintenance, and displaying the possible use for the space. Since the building has at least one very large, open space, it should be presented as something of a blank canvas.

If the property has been listed for several weeks or months, the broker will probably suggest a reduction in list price. The team leading this process should have a frank discussion about what sort of reduction is appropriate given the demonstrated level of market interest. This conversation should consider holding expenses for the property – basically, a lower price means a quicker sale and fewer expenses.

When an offer does come in, making a snap decision is unwise. The team should have a discussion with the broker to get the expert’s opinion on the offered price and terms. Then the team should privately discuss the offer, again giving consideration to the broker’s opinion and to the costs of holding out for a better offer from another buyer. Of course, every offer comes with a deadline, so there are some time constraints.

A word on the buyer’s intended use for the now-decommissioned church property may be helpful. The leadership team should recognize two things:

  1. They may not like the buyer’s planned use for the property.
  2. They may not even find out what that use is prior to the sale closing.

The buyer is under no obligation to disclose that information. The building could be converted into anything – condos, a winery, a social club, or a nightclub. These uses are something to keep in mind throughout the process, including when identifying a buyer.

Once an offer has been accepted, the sale becomes somewhat easier. A single person should act as the contact to deal with any title and escrow needs. The broker will probably be able to assist with this process, since they deal with escrow and closing regularly. Quick responses to requests for information and documents may be necessary.

After all title and escrow requirements have been cleared, it is time for perhaps the most bittersweet part of the process – the closing. Aside from signing and notarizing many documents, which the escrow company will provide, there is not much for the seller to do. The seller and the buyer may not even sit down at the closing table. However, once the deed to the property is signed, notarized, and recorded, the transfer of title is complete. That means the church property will have been sold. Hopefully, the closing proceeds will be put to a use in keeping with the spirit of the values, traditions and practices of the religious community.

Selling underused or decommissioned religious buildings and properties can be a difficult decision for members of the church leadership and community. The process of marketing and finding a buyer can be even harder. However, with the right team and planning, it can be a rewarding way to wind down a chapter of the community’s history and hopefully provide funds to positively impact its future.

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