- If you think the roof is worn, get it inspected before signing a hard contract (if the Seller permits). If there’s any sign of hail damage, request that the Seller process an insurance claim and work with you if they deem there is, in fact, a loss due to hail damage. The listing broker or your attorney should have language or an agreement where the Seller will work with the Buyer and assign insurance proceeds.
- Verify the personal property list in due diligence and ensure anything you’d like to keep at the property is on the list.
- Post-closing prorations: Delinquent rents are far more common today than pre-Covid. That said, given the uncertainty of Buyer collecting or timing of collections, there are a few options when negotiating the Purchase and Sale Agreement. It’s still a Seller’s market, so they may ask for a credit at closing for all delinquent rents. The fairest approach is for the parties to agree, at the closing, that—after application to current rents—any dollars received by the purchaser, post-closing, are applied on account of the rents for the period of deferral, regardless of when such amounts are actually paid, and to apportion such amounts to purchaser and Seller in proportion to their respective loss factors.
- Water and Sewer bills: Expect to put down a sizeable refundable deposit when transferring utilities. If you don’t have this cash available, it’ll take time to transfer utilities. The Seller will get stuck with the bill, but it will a post-closing adjustment.
- When buying a portfolio, negotiate price allocation up-front and ensure it’s in the purchase agreement.
- When selling a property, remember to make arrangements to remove or ship personal property before closing, and the Buyer assumes ownership.
- Be aware of all service agreements that must be assumed, especially those that cannot be terminated without penalty and have an associated monthly expense.
- Ensure there are no down units before going under contract. Also, define what a down unit is, as this may differ (heavy rehab vs. missing sheetrock or subfloor).
- Be organized, submit your loan application after signing a purchase agreement, pay the extra expense to rush third party reports, close in less than 60 days, and make your broker look like an all-star. I promise you will buy more deals this way.
- Don’t retrade at the “ninth hour” or try to go after the broker’s commission. I promise you will buy LESS deals this way.
About the author:
Mark Allen is an Executive Managing Director at Greystone | Investment Sales Group in Dallas, TX. If you want to learn more about our Off-Market Opportunities, Multi-Family Listings, Land Sale Listings, Property Valuations, Debt Platform, or meet for coffee to exchange value-add ideas, contact our office:
Greystone Investment Sales Group
6320 LBJ Freeway, Suite 228, Dallas, TX, 75240