While networking at various events, I meet a lot of real
estate agents. Every one of them tells me that home inventory is low and homes
are flying off the market. Some have
also told me that the home is often sold before an open house can be scheduled.
That is good news for Northern Ohio homeowners.
I wish I could say the same for commercial real property.
However, whether the property is on the market for sale or being refinanced,
the process often moves at a snail’s pace. Much of that has to do with the extra due
diligence that has to be conducted by a buyer and/or a lender before closing.
An owner of commercial real property needs to make the
diligence review by a prospective buyer or lender as painless and easy as
possible, by keeping good financial record, having a fairly report of an
environmental Phase I review and ALTA survey on hand, and possibly even a
recent appraisal.
No one likes unpleasant surprises. Conducting this review
ahead of time allows an owner to better prepare for the sale or refinancing
process. Significant issues can be resolved before the property goes on the
market and armed with the knowledge of the remaining issues allows a seller or
his or her agent to approach the right buyers and prepare answers for any lender.
The speed of any sale or refinancing can also depend on
which lender is chosen. Smaller regional lenders and community banks or S&L’s,
can typically, but not always, move more quickly. One lender of a regional bank recently
informed me that they were able to close on a commercial real estate mortgage
loan in two weeks because the borrower was so organized and had all the diligence
and financial information ready that they needed to take to their approval
committee for review.
While no property owner can ultimately control the speed
with which a buyer or lender can act, the odds of a timely, painless closing
are substantially increased when the owner is organized and prepared.
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