7 Essential Steps for a Smooth Commercial Real Estate Closing

Closing on a commercial real estate deal involves much more than a single day of signing papers. It requires a thorough understanding of the closing documents, including purchase agreements and escrow instructions. One mistake or delay could stall the entire process. Fortunately, several ways exist to prepare for a smooth commercial real estate closing.

Prepare Your Financials

It is essential to have your financials in order before the closing date. It will ensure that the transaction goes through without any delays. It will assist you in avoiding costly errors like failing to sign the appropriate paperwork or missing deadlines. Any commercial real estate transaction must include due diligence. It should thoroughly review the seller’s financial statements, tax returns, loan documents, and other records that may provide insight into their business practices and reputation. This step is also essential for ensuring the chain of ownership is apparent.

Do Your Homework

The closing or settlement process is when money and documents change hands. It can be stressful, especially for new commercial real estate agents. A seller must have a clear title and conduct a pre-planning stage to resolve any legal questions about the property. It is also essential to be intentional about the asking price for the property, avoiding over or undervaluing it. The next step is to sign the PSA and deposit earnest money. Be sure to communicate with your real estate agent and escrow agent, ensuring they have all the information they need to close the deal.

Communicate With Your Lender

It takes careful planning, close attention to detail, and knowledge of the legal ramifications to close a real estate loan. An organized plan for commercial real estate closing Orlando FL can make the process more efficient for investors and professionals. Having an open line of communication with your lender can speed the process up. If you and your financial professional are already in a good working relationship, resolving issues that might slow the transaction is more straightforward. This process differs from residential real estate in that there is less federal regulation of commercial purchases, which requires greater due diligence on the part of both parties. It also typically takes longer to close than residential purchases.

Prepare Your Closing Documents

Commercial real estate transactions are frenetic. It’s often controlled chaos leading up to closing as issues arise from due diligence, title work, or inspections.

For example, ensuring the legal entity has proof of signing authority. It is typically a quick check and can save time at closing. Also, be sure to transfer or cancel utilities before your final walk-through. It’s easy to forget things and not do this, which could delay closing or cause problems later. Keep all documents in a safe place. You never know when you’ll need them – like a copy of your purchase contract or homeowners insurance policy.

Meet With Your Real Estate Agent

It’s essential to meet with your real estate agent regularly. An open communication line will help you stay on top of all your transactions. When meeting with your agent, be honest about your wants and needs in a new home. Your agent should prioritize your needs, but remember, they have other clients and projects. Please inquire about the anticipated timeframe for their response so that you can take the necessary action. Keeping all your closing documents organized takes time. When vital information falls through the cracks, it can feed into a client’s distrust of their realtor.

Be Available

Ensure you are available to sign the necessary paperwork during the closing process. You must respond promptly to all communications from your real estate agent, lender, and escrow officer during this time. If you are unavailable, it could delay the sale of your commercial property. The most important commercial real estate transaction should be completed with the assistance of a reliable real estate agent. Such agents offer numerous advantages during sales, including preparing your paperwork, identifying what potential buyers seek, overseeing pricing, etc. You should also update your environmental report if it is six months old. It will remove barriers to a quick closing.

Meet With Your Escrow Agent

The intricacy and volume of information involved in commercial real estate transactions surpasses that of residential ones. Regularly meeting with your escrow agent is essential to ensure all necessary steps are taken. This person is an impartial third party who will hold all of the funds until all of the conditions of your contract are met or one party backs out. They will verify that you’ve completed due diligence and received all required inspections. They will also organize your closing documents. If you ever need a copy of any of the documentation, these companies typically keep it on file and can provide new copies for you.