Bankers today seem to be the most unpredictable part of the real estate team. This is largely due to the FDIC regulators who have been looking over their shoulders for the last couple of years. It’s important to discuss your sale plans with your banker, as he may be less flexible on a prepayment penalty than he was three years ago when he made the loan.
He may also bring to light other issues that may have slipped your mind, such as the assumable nature of your loan or the bank’s willingness to allow a potential buyer to assume your loan, even if this is not stated in your loan documents. With the commercial-lending environment slowly starting to thaw, the terms of your existing loan may be attractive to a potential buyer, not to mention the possible cost savings on third-party reports in which a buyer may benefit.
The broker’s primary duty during the closing process is to make suggestions as to how to solve last-minute problems, such as handling delinquent tenants and dealing with prepaid rent. The broker will also help coordinate the flow of information. Certain documents will need to be signed by both parties and information will need to be passed back and forth. This is when an experienced self-storage broker can really help smooth the transaction. His experience will allow him to get the paperwork going early, and his ability to explain the need for each document will put both parties at ease.
Make sure your broker reviews the closing statements. He’s been involved in the negotiations of the transaction and will have a good understating of deal-specific issues, such as who pays certain closing costs, loan-assumption fees and if the buyer is to receive a credit at closing for any deferred maintenance negotiated during the due-diligence process.
A note on attorneys: Many are quite willing to help you, but they believe a small real estate transaction is simple and they can handle it even if real estate is not their specialty. I encourage you to use an experienced real estate attorney. During negotiations, he’ll understand the subtle motivations of all the parties, such as the buyers, lenders and public agencies, because they work with them every day.
A real estate attorney will also have creative solutions to problems, not only because he’s probably seen them before, but they have in-depth knowledge of the law and mechanics of transactions. This isn’t a place to be cheap or let your “friend” do it.
This escrow agent knows the closing business well. Most of the time, he really streamlines and organizes the actual process. However, though most escrow agents are the greatest people on earth, they are human and, therefore, make mistakes or have bad days. For these reasons, have your team review everything they do and be sure you understand all that’s happening at the closing. Remember, it’s your money they’re moving around.
Before you go to a closing, make sure all issues are resolved. Going to the table with open issues generally means the seller will have two choices—to forego closing or cave to buyer demands. Also, be sure you know what every piece of paper means to you. If all the planning and preparation has been done right, all that remains is to have a very good lunch and move on to your next deal!
Ben Vestal is president of the Argus Self Storage Sales Network, a national network of real estate brokers who specialize in self-storage. Argus provides brokerage, consulting and marketing services to self-storage buyers and sellers and operates SelfStorage.com, a marketing medium and information resource for facility owners. For more information, call 800.55.STORE; e-mail firstname.lastname@example.org.