Transcript
Commercial Real EstateSection FiveArt of the Deal
1. Letter of Intent
a. Usually non-binding
b. Specify Commission
c. Buyer or “Assigns”
d. Usually no counter offer – they just scribble on it
2. Purchase Contractsa. C.A.R. – Unusual
b. A.I.R. – Sometimes – if you write anything, have a lawyer review
c. Narrative - Drawn by lawyers, most common
i. Buyer MUST have attorney
ii. Redline versions back and forth – you can draft, but attorney MUST review
iii. Usually takes two weeks to complete
3. Escrow / Title
a. Not like in Southern California
b. Be sure you know who “orders title commitment’
c. Usually don’t get a “closing agent” until the last minute
• Be sure closing agent has wire instructions for your commission
3. Escrow / Title
d. Deposit is not due until contract is signed
e. If buyer wants interest on deposit, you must ask and be sure W-9 is completed
• If they are doing a 1031 and they cancel, be certain interest goes to accommodator NOT to the buyer
4. Finance
a. You open finance. Do it right away (before the contract is done)
b. Be sure you know exactly what they will need and get everything ordered
c. Use a check list – watch it daily!
5. Due Diligence
a. Seller may send disclosure package before the contract is made – ask for it.
b. Look at dates of everything and confirm in writing with the lender that they are acceptable
c. Understand who is going to update those things that are not acceptable to the buyer or the lender
6. Cooperating Broker Agreementa. In California – if other broker is not a member
of MLS your commission is not protected
b. Smart to do before you submit LOI
c. Absolutely required before you go to that state with the client or by yourself
7. 1031/1033 Exchanges
a. Down Leg – Property sold
b. Up Leg – Property bought
7. 1031/1033 Exchangesc. 1031 Exchange – “like kind” properties
i. Money must be received by, and held by accommodator
ii. 45 days – identify 3 properties (or 200% of value)
iii. 180 days – must close escrow (rare exceptions)
iv. Buyer may not personally receive interest from escrow if it cancels
v. Buyer should not file tax return for the year of the sale
7. 1031/1033 Exchangesd. 1033 Exchange – result of eminent
domain
i. No 45 day rule and can have several years to complete
ii. May not need accommodator
iii. Don’t give advice, get advice.
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