Victor’s Insider Scoop on Why, Even If You Aren’t Ready to Sell, It’s Not Too Soon to Start Thinking About Selling …
October 1st, 2009 | top of page
It will pay to have all your ducks in a row when you are ready to market your property for sale. It is not unheard of for a deal to die if critical due diligence materials are missing or for a buyer to exact a price reduction in order to close without a specific document. What may not be so clear is what this preparedness entails.
Before acquiring a property you should be aware of the terms and conditions of the loan you finance your acquisition with. An onerous yield maintenance fee comes to mind immediately which will preclude any deal with a TIC buyer. But what if there is a change in the control of a joint venture? If your partner wants to sell but you don’t will a change in the control of the
property trigger loan acceleration or require lender consent?
Does your idea of a sale mean you are going to sell the real estate assets or sell your ownership interests? Consider that your choice here will restrict the universe of prospective buyers since each buyer comes with their own specific needs.
Although I am loath to say this as a broker you may want to exclude one or two prospective buyers from a listing agreement. If a group has been contacting you every six months or so just to see if you are “ready to sell” you would not want to pay a full commission to a broker for contacting this buyer who can’t wait to get your property into his portfolio. Under the assumption that an electronic War Room will be employed to house the due diligence materials make sure it is stocked by individuals familiar with your documents. Problems are often encountered in these areas:
• Title policies and commitments and exceptions thereto
• Surveys that turn out to be site plans vs. engineer produced documents
• Incomplete leases and loan documents
• Outdated physical or environmental reports
• Estoppel certificates
Make sure the war room includes all the documents you would expect to find when you are the buyer.
Many federal and state statutes can affect a sale. These can include tax, securities, antitrust, labor and employment laws. Make sure your legal counsel is familiar enough with your business to know if any of these issues will come into play.
A final area of concern peculiar to these specific times is financing. If the offer is contingent upon the buyer obtaining new financing are the buyer’s expectations realistic? There is no point considering a LOI contingent upon loan terms that are just not available in the marketplace. In conclusion, remember that although you cannot anticipate the requirements of every possible buyer, the time you spend on the front end preparing for a buyer’s reasonable requirements will pay off during the escrow period.
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PS – If you are ready to begin to thrive again by getting off the sidelines and putting your money to work give me a call at 602-320-6200. I see lots of deals and may have just what you are looking for.