This could be largest purchase of your life! Having a seasoned, knowledgeable and credible real estate professional in your corner, that will look out for your best interests, is priceless!
Understanding the Client & Crafting Result
It is critical that the needs of the client be understood. A residential client may want a home in a specific area with specific features or amenities, such a modern design, a pool or good schools. A commercial real estate client may want a property that fits their specific business needs or an investment property that generates a certain amount of cash flow or perhaps have low turnover risk and management. Communication and asking the right questions about a property that the client likes or dislikes makes finding the right property for the buyer go much smoother and quicker. This understanding is paired with our understanding of real estate opportunities, risk, design, construction, finances and market trends.
Market Data & Analysis is Crucial
Just like with sellers, knowing the market and information such as sales history, prior use, zoning, permit history, income/expenses, and maintenance history is critical. Understanding general economic trends is also important. If you make too low of an offer, you will get beat out in a seller’s market. If you make too high of an offer, you will overpay!
Working with an experienced professional in the industry is crucial. We have vast networks and resources within the real estate industry. We have access to off market as well as on market opportunities and maintain good relationships with real estate agents that may be on the sell side that can help a buyer get an offer accepted. We do not just understand real estate from an aesthetic perspective but also understand construction, income/expenses and market risks.
See the About Page to see our experience, breadth of contacts, and affiliations in the real estate industry.
The Art Of The Offer
Having a well prepared offer from a credible agent goes a long way in a competitive environment. A well put together offer package inspires the listing agent that the buyer is serious about the property, that there is strong relationship between the buyer and agent, and that the agent is a credible and experienced real estate professional that can get the buyer to closing. Offers should be clearly and accurately written and supplemented with helpful information about the buyer.
Having been on the sell side many times, inexperienced buyers or agents do not come off as strongly and often make offers with little preparedness and detail. In residential transactions, some of the larger online brokerages often match first time home buyers with newer agents they have just met to show a property to them and then the agent writes an offer without really knowing the interests, motivations, and tolerances of the client. In other cases, the agent writing the offer or having the relationship with the client did not see the property. Knowing that often does not inspire confidence in the buyer’s offer package.
Having access to correct forms for an offer is important. The California Association of Realtors forms are not always used or preferred, especially in commercial real estate. For example, listing agents of commercial real estate may prefer a different form and use of the incorrect forms may indicate inexperience. It is important that the offer also addresses the risks of the transaction, specific needs and contingencies of the buyer, and that language concerning such is well drafted so that it protects the buyer. Most agents are not able to legally and confidently articulate and draft important provisions in the purchase agreement unless they are lawyer. If a party demands a custom contract, it is also important to make sure it is well understood for risks that may deviate from more common contracts forms.
Diligence
There are many things that can impact the value of property such as location, lack of building permits, violations, defects, construction, soil or environmental issues, HOA/condominium issues, title issues, zoning, and leases. The purchase contract must be drafted adequately so that the buyer has enough time to research these matters without risk of the initial deposit. Failure to thoroughly investigate the property may result in finding a material issue after closing and there may be limited or no recourse for the buyer.
Financing
There are different lenders for different kinds of property and buyers. Residential loans are different than commercial real estate loans in terms and required qualifications. Single family residence loans are different than multifamily loans and many lenders will not do tenant in common loans. Some lenders are very conservative with buyer qualifications.
There are some single family home lenders that can close a single family home in as soon as 8 business days or even guaranty the purchase! Some lenders may not require income documentation. Having contacts to numerous lenders will provide buyers with the right lender for the buyer profile.
Commercial property loans are more difficult to obtain especially if one does not own commercial property and/or have a strong relationship with a lender. One exception are Small Business Administration loans which allow owners to put as little as a 5%-10% down (and in some cases no money down). Generally interest rates are higher, terms are shorter, and there are prepayment penalties with commercial loans.
Having a good relationship with lenders, knowing the financing timelines, and making sure timing is considered given the particulars of the transaction are crucial to not losing a buyer’s initial deposit and/or putting the buyer in a position of asking for gratuitous time extension from the seller, which the seller may reject.
