It’s Signed, Now What?

Sometimes getting to contract can feel like a major accomplishment when you finally get the signed, sealed contract back in.

But this is just the beginning.

Due Diligence periods are the actual make it or break it moments where turning over the material facts about a property, then having them verified through inspections or having the necessary entitlements get put into place to make the deal transact can be some of the toughest things to accomplish in order to deliver a successful closing.

Depending on the deal time, this can take 30-45 days with an investment sale or owner operator acquisition. It can take several years depending on a rezoning and development deal.

But three things that stand out as to why properties fail to close are the following:

1. Actually having vetted the buyer (sorry buyer’s), but a buyers ability to close, not just a want or desire to is a major factor in selecting the right deal partner.

2. The due diligence reports come back and its bad news due to :

   1. Title Issues

   2. Contamination / Building Disrepair

   3. Wetlands are larger than anticipated.

3. Developer / Entitlement Issues

   1. Slow Rolling the development of a property is a major stress factor for a seller. The buyer at time of contract knows what they need to do. The problem is the speed at which they do it. Closing for development now is usually conditioned on having all permits for construction. That means you can be in the closing period and also be in limbo as the buyer is now at the mercy of local government and regulatory review boards.

Having the right broker who understands this and explains the different paths forward (depending on the type of sale) is crucial in a transaction. Communication on these issues will help both in the short, medium and long term hauls of a commercial real estate deal.