By the end of the day we had reached an agreement at a small discount (5%)
from asking price in return for an all cash deal, no contingencies other
than clear title and building inspection, with a thirty day close. The buyer
delivered a cashier’s check for ten percent of the sales price to our office
before the close of business that day.In the meantime, a client called on the apartment units and asked if it was still
available. (This was just two hours after the showing.) We said we’d been
pleased with the amount of interest, but so far no one had signed a
contract. The client wanted to give us an offer, and wanted to stop by
our office. When they arrived about thirty minutes later with a handwritten offer
about $5,000 below the asking price. The offer was written on business
stationery, and the second sheet of paper stated that this was there
“first offer” and was negotiable. This meant we would remind them about the interest at the
showing and stated that we expected the property to sell for the asking
price. We would discount for a cash deal with no finance
contingency. We agreed to discount the property $1,000 for a fast close, all
cash. We signed the contract the next day. This was a perfect turn of events for us, the buyers were each interested only
in what they made offers on, not the other properties or the whole group,
and both thought they were bidding against at least several others that had
been at the showing. The fact that we looked at only those two offers at our
asking price told me we had tested the market right to its limit. Both deals
closed within thirty days of the contract dates.It happened so fast that I was worried we had somehow left too much money on the
table. Maybe we had sold too soon. My rational side said we had gotten it
all and then some, but I couldn’t help but have a few thoughts of
second-guessing myself. Maybe the market was even crazier than we thought.
What if we sold too quickly by taking the first offers that came in the
door, even if it was our asking price? I couldn’t help wondering if we had
been smart, just lucky or actually blind to the real possibilities. The way
things played out over the next couple of days proved those doubts to be
unwarranted. The last twist in this deal is perhaps the best part of the story. The two
buyers that called that day were the ONLY calls we received! No other buyers
called back for several days, and then just to see if we had sold the
properties. That’s the way I would have played it as a buyer too… after
seeing all the interest at the showing I would have waited a few days and
then checked back with the seller, hoping he was getting frustrated with
getting a deal done. We did have several of those types of calls, and when
we told them we had sold at very close to full price, there were lots of
comments about aggressive we’d been and congratulating us on the deal. Now,
with a year of hindsight, I know we hit the market at its peak. Those
properties were what is known as “well sold”!Sorry to go on so long, but I’ve been meaning to write this deal down for
ages. Your question happened to hit when I had the time to finally get it
done! Maybe is will give you some ideas for your own deal.Require a 5-10% deposit. Obviously, refundable contingent upon inspections,
financing, etc.That will keep the broke folks away that think they can get 100% financing
and a savvy commercial buyer will have no problem as long as the
contingencies are in place.
Tags: apartment building, apartment financing, apartment income producing property, billionaires Investors, calculate the noi, capital investing, commercial financing, commercial hard money, Department of Housing, Trillion $ Deals™, Warren Buffett, Warren BuffettWealth, Wealth, What is a subject-To
October 16, 2007 at 11:32 am |
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