For this 8plex investment property I just sold in Marysville for $860,000, I was the agent for the buyers who were doing a 1031 exchange. This deal was quite the roller coaster ride from beginning to the end. Initially, there were multiple offers, and my clients needed to sell a property in order to buy this property, and it was contingent on that happening. So, I wasn’t so sure we would have a great shot at locking in this property, with having to sell a property that was not even on the market yet. So, we offered a little higher in price to try to make up for the risk. And, the buyers agreed to very short contingency periods to show the seller that we were serious. And then just basically begged and pleaded, that we were the offer to pick, that my clients were super serious and committed to THIS property, that they weren’t locking in multiple properties with the 1031 exchange, that THIS was THE ONE…we promise!
Praise God, we convinced the seller to go with our offer, and then I just got to it. We put the other home on MLS ASAP and was able to sell that home with an all cash buyer who closed in 7 days.
In an investment sale, it’s pretty normal not to be able to see all the units before going into contract, although, it is a contingency of the sale to see them during the transaction period. Well, the pictures online were basically of the nicest unit they had of all 8 units. And, frankly, some units were not as up to par as expected. Also, there were some things that came out of the home inspection, also not anticipated. So, off to the negotiation table again. We were able to shave off $15,000 of the inital agreed upon price once we went back to the table with the inspection reports and also the notes of the units that were not up to par. So, the buyers were very happy with the end sales price. There were some other hiccups along the way, but everything ended up getting resolved one way or another. I think that’s just the norm for commercial transactions when you are dealing with many tenants, property managers, sellers, agents, banks, etc…just a lot of cooks in the kitchen.
Also, this transaction started before COVID really hit the news, and then ended up being right smack in the middle of it all, when people were really freaked out. In fact, there was some concern about the commerical loan, in that I was hearing the commerical brokers were cancelling loans and closing up shop. And, commercial transactons were falling apart left and right. So, although, this transaction was super solid with a huge down payment, there was still some concern that the bank would do something crazy, so our goal was to wrap it up and close the sale ASAP before the commercial bank changed their mind about giving the loan at all.
During the midst of the madness, the commercial bank for the first time in their history, added a guideline at the 11th hour due to COVID, which was to take 6 months of mortgage payments upfront. That was pretty shocking to have come up at the final moment, but the buyers just rolled with the punches, since overall, this property was a sweet deal and has a great cash flow. And, with the COVID environment, they just wanted to get ‘er done…so we did!
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