What is Re-trading?
When the price to purchase an item, whether it is a business, real estate or any other asset, is negotiated again after agreeing to an initial price of that item to buy it at a bit lower price than earlier then it is known as Re-trading. So in general, Re-trading is the practice of renegotiating the deal price, modification to the previously agreed purchase price.
Retrade commercial real estate
How Re-trading happens?
Normally Re-trading is carried out during the period of due diligence when the property is owned by the buyer under a contract and it is performed very carefully during this period. While Re-trading the buyer raises certain issues carefully, without taking any offensive steps, to adjust the purchase price the same property at a bit lower level. In such condition, the situation of the seller becomes awkward as either he has to sell his property at a reduced price or cancel the deal and put that property again for sale in the market. Furthermore, a number of items related to that transaction, like exchange tax on sale etc, will get affected with the loss in the sale price. In this way the seller of that property will be compelled to sell it at a lower price to avoid the effect of the fluctuations as well as save the changes in the transactions related to that sale.
The information provided in this write-up will help you to know what is Re-trading more precisely.
How Re-trading works?
The buyer of a property is offered a period of due diligence so that he can investigate the worthiness of all warranties, claims and the representations made by the seller very carefully. In this situation, the claim of the buyers for certain adjustments can be justified when he finds that some of the fundamentals in the deal are not found accordingly when they were scrutinized during the period of due diligence. In some cases, the buyers use some influence in that transaction to lower its price to some extent. They usually want to reduce the price of that property even if they fail to find something considerably objectionable by Re-trading it.
Misuse of Re-trading
Some of the buyers have commonly misused this term intentionally during the process of due diligence when the market of real estate is in trouble as experienced in the late 2000s when the Great recession was experienced. Initially, they used to offer a price of the property higher than they intended to pay to get the control of that asset and negotiate its price again after the period of due diligence is over. This strategy not only victimized the sellers desperately but also reduced the number of purchasres in the real estate market.
In order to discourage the Re-trading buyers as well as this practice some of the urban sellers have adopted the policy of declining to negotiate the price of that property again. Then again, some of the buyers strictly followed the policy of no retrade’ so that they can distinguish them from others while buying or selling a property. They support their strategy by doing the investigations done during the period of due diligence in advance instead of demanding reduction in purchase price at the last minute.