It Takes a VILLAGE to Close a Commercial Real Estate Deal

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Someone politically famous once opined, "it takes a village...". Never has this been truer than describing the team it takes to close a commercial real estate transaction.

Certainly you need a ready willing and able property owner and a ready willing, able and properly motivated prospective occupant, but rarely do those two "dance" without a proper orchestra of professionals.

So let's take a look at the village band, shall we?

Owner and occupant brokers. When a commercial lease or sale transaction reaches a certain square footage or dollar amount, there are generally brokers on the owner and occupant side of the transaction. Candidly, I prefer this. If there is competent representation on the other side of the table, I believe the transaction proceeds more smoothly. Certainly, exceptions exist, but typically if a deal exceeds 10,000 square feet or $500,000 in consideration, over 80% of transactions have an owner rep and an occupant rep.

Escrow officer. If the deal is a sale, all of the documents, proceeds, recordables, and disclosures flow through a clearing house known as an escrow. Your officer is key. At a point in the transaction, you must step aside and let the escrow officer do her work. Rookies need not apply as this function is critical.

Title officer. Equally important in a sale to the escrow officer is the title officer because the title of the property must be insured. In order for title to be insured, a complete review of the title to the property must be conducted and a document known as a commitment to insure title produced. I love title representatives to death, but they are not title officers. Make sure that you are comfortable with the person that will be reviewing the commitment to insure and issuing the policy.

Lender. Unless your buyer is stroking a check for the full amount of the purchase, a lender will be involved. Whenever possible, I involve a mortgage broker. I believe the buyer gets a better deal and I really enjoy having someone involved that can "speak lender" in case there are issues. Some lenders operate on their own time frames which can wreak havoc on a time sensitive deal. A loan broker can keep the lender focused, hit the dates, and close on time.

City Expeditor. With all of the requirements cities place upon occupants these days, a professional that can deal with the city, understand the requirements for move-in, and advise your occupant is invaluable. Frankly, I don't leave home, or move an occupant without one.

Environmental Engineer. A must in a sale deal and I see more and more tenants requiring a review of the environmental history of the property. Generally, the lender will engage the enviro folks unless your buyer is paying all cash. I would still advise performing an inspection. That way, the buyer is protected against anything unforeseen.

Building inspector. There is a big difference between an inspector that is trying to be realistic in his findings vs. one that is trumping up issues to get hired to do the repair job. I like to use an inspector that is simply that, an inspector with no construction arm. Additionally, I use an inspector that can budget immediate repairs and those that aren't as urgent but necessary in the next five years.

Attorney. Brokers and attorneys have a healthy respect for one another. We each realize that the other is a necessary evil. I have found great benefit in involving an attorney early in a deal so that the proper entities are created, the necessary language is inserted in all contracts, and that title commitments are reviewed and approved.

Miscellaneous. Architects, contractors, material handling specialists (racking, forklifts, dock levelers), ADA specialists, space planners all can find their way onto the dance floor at some point in a transaction.

The ability to choose your orchestra members, especially ones with whom you've done business, can add years to your life, shave days from your deals, and produce music to which ALL can dance!