There is always a risk that your building could sell and, at some time during the due diligence period, the buyer decides he or she doesn’t want to close. This is a legitimate concern and one that should be expressed to any brokerage listing your property. Your broker should have a clear and precise understanding of these concerns because you are losing valuable marketing time if a transaction doesn’t close and ends up returned to the market place. This is why we recommend interviewing at least three experienced brokers and indentifying your concerns ahead of time so you can ask each competing brokerage how they would handle the scenarios on your list of questions. The best way to minimize your risk is by clearly understanding each and every step and the pitfalls within each step so that you know how to react if these situations arise. Having a full grasp of the due diligence requirements is necessary and any broker should be able to articulate and demonstrate his level of understanding of these requirements from not only the Buyer side but also from the financial institutions perspective. Prequalifying the buyer financially is very important but even more important is ascertaining their desire to close and their willingness to stay at the table if the ride gets bumpy. This sometimes can be determined by their level of ownership and their individual understanding of the process. In the case of a first time buyer, we look at how long they have been looking for a building in order to ascertain their motivation. It can be a discouraging process for buyers looking at buildings only to be disappointed by the condition of the properties available, or the representation of their net operating income. The more buildings the first time buyer has seen and the longer they have been looking is a clear indicator of their desire to purchase. This is especially true when you have multiple offers, when you may lose buyers if the buyer you did pick can’t or won’t close. Dealing with all the possible issues that can arise during the due diligence period is so much easier when those issues have already been addressed during the listing process, and everyone understands their obligations.
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