Buying and selling commercial property in Houston is a serious investment, and it can be easy to get caught up in this real estate venture and want to rush through the process to get to the end results. However, you should ensure you move forward with caution and make sure everything is completed in a thorough manner, and that includes doing a due diligence study before purchase of property.
A professional realtor will be able to guide you through the real estate forms and what your next steps should be. Trust that you want them by your side so that you have a smoother and more proactive experience when you are going through the real estate process. Here we provide you with some information so that you understand why the due diligence period is so important when buying and selling commercial property.
Gathering the Documentation
In order to properly evaluate the purchase of the commercial property, the seller needs a certain amount of information so that they make the most informed decision. Title and maintenance records will need to be collected, as well as financials and violations will be gathered will all need to be provided for the buyer within a certain number of days. You will have to do this before contract execution, and if the buyer isn’t the one preparing the information, then it will be important that they indicate that.
Commencing the Due Diligence Period
Once all of the records and proper documentation have been given to the buyer, the due diligence period should begin. Make sure that the timing of the commencement period is accurate and safe for the buyer by speaking with a professional real estate agent if you are not sure. You want to make sure that the period begins when the contract is signed rather than when the letter of intent is. This will protect the commercial property buyer and ensure you have plenty of time to review the information and make a smart decision for you.
Payment of the Due Diligence Study
In general, the buyer will be the one that pays for the due diligence study. There should be wording in the documentation and contract that says if seller defaults, that they will reimburse the costs. However, there may be limitation to this, and enlisting the professionals so that the paperwork is carefully inspected and the provisions are clear will give you peace of mind that everything is being taken into account.
Knowing Your Rights During the Process
While the person selling the home can hire the professionals they would prefer to keep the property in good condition, it’s important to note that the buyers should include in the provision that they can use the consultants that they deem appropriate to inspect the commercial property. The buyer will also want the seller to offer protection against loss or other financial obligations.
Deciding Whether to Terminate the Contract
If the buyer decided to terminate the contract, then during the due diligence period is when this will happen. The termination will be written with great care and the buyer needs to clearly state the reasons why they are terminating the sale. This letter will be sent to the seller must be sent before the end of the due diligence period, and there will be a specific time and date that will be determined ahead of time. Once that data has passed, you will need to speak to a lawyer or your real estate agent about what your options are to terminate the sale because they will be much more involved.
How to Stay Proactive as a Commercial Property Investor
Whether you are buying or selling a commercial property, you can stay proactive by understanding what to expect during the due diligence period. Take the time to educate yourself and hire an experienced real estate agent to ensure all aspects are prepared with the proper documentation and statements for when it is gathered. It will also be wise to choose a reputable maintenance companies because the interested buyers may want to look up the company that is providing the work on the property from the landscape to the HVAC units.
If you are selling commercial real estate, you may be interested in having a pre-inspection so that you are aware of any issues that the building may have. This way, you can correct these areas ahead of time and get the issues resolved so that you have current documentation. You can speak with a real estate agent about the steps to take to ensure your building is ready to be put on the market, and so you are ready for the due diligence process.
Pay Close Attention to This Step!
During the due diligence study, pay close attention to the provisions that are included, and make sure the dates and times are all accurate and give you plenty of days to look over the information and make sure the property is right for you.
While some people consider this a free pass to look at the commercial buildings in more detail to ensure an informed decision is made, buyers will often be the one paying for the information. Do not skip this step because you don’t want to pay the money to get the data. Trust that it can save you a lot of money in the future because you will be able to identify weaknesses and strength of the property, and this can make a big difference in expenses once you own the home.
If you want to learn more about doing the due diligence study and what you can expect during the process, get a real estate agent in Houston involved. They will guide you through each step of the process from the first phone call until you have found the best investment for you. As you find commercial property and the real estate documentation starts to present itself, you will want someone with a skilled eye by your side.