If you feel like you’re drowning in the tsunami wave of commercial real estate, you’re not alone. The commercial real estate market volume picked up in early 2021, leaving many companies scrambling to accommodate the skyrocketing number of owners and investors needing to quickly close their transactions. Here are a few ideas to help navigate your way through today’s transactions to facilitate a smoother closing instead of becoming a stressful ordeal.
1. Be Prepared for Delays
Plan ahead and be prepared to be patient. As much as I dislike conveying negative information and I also understand the urgency that comes with just being involved in a commercial deal, contractual timeframes have been tightening beyond the ability of some ancillary services related to the closing.
Currently the title and escrow component of commercial transactions have been taking longer than usual due to both the extremely high volume and the complexity. This is not limited to any one market; we are experiencing this nationwide.
Anecdotally, I have noticed as properties have been becoming harder to find, the frenzy of competition has made contractual timeframe requirements more difficult for supporting parties to the transaction.
A couple ways to help avoid delays in closing is to order the title report as soon as possible and allow more time than is customary within the sales agreement. Providing known requirements as soon as possible can sometimes be the difference in closing on time. Many times, this information requires collaboration and additional efforts that may take several days to complete.
Please keep in mind, almost everyone is dealing with delays and issues right now.
2. Communicate Clearly and Consistently with All Parties
Keep the lines of communication open, be clear about your expectations and be open to what the prevailing volume of deals is dictating. Between the raging market, and many people still working from home, regular correspondence can fall by the wayside if you’re not careful and proactive.
For example, many investors traditionally have a due diligence strategy and will contact vendors as soon as possible to schedule the necessary inspections and reports. However, over the past year, with the extreme level of competition, deals have been getting harder to get under contract and buyers have sometimes been waiving additional due diligence that has been showing to slow closing.
While the real estate market experienced high prices in 2007, the one big difference this time around is that buyers are making a leap on more expensive transactions as an inflation hedge. We’re seeing the escrow and closing process fast-tracked by companies eager to buy property and prepared to divest cash.
3. Prioritize Communication with The Escrow Officer and Provide What They Need for The Transaction
Don’t leave your escrow officer hanging. Please. Don’t do this.
Your escrow officer is the key liaison between all parties to the transaction. Many of these parties will have little to no communication with the buyers and sellers of the transaction. Open communication with escrow and giving them items and information, they need in a timely fashion, will help you complete your transaction smoothly. Your escrow officer needs to receive information from all parties, including, but not limited to, entity documentation, existing encumbrances, vesting, financing, exchange and logistics for signing documents.
4. Stay Confident in The Process
There are a lot of moving parts to coordinate in a commercial real estate transaction. Don’t be afraid to ask your escrow officer any questions, so nothing falls through the cracks that may impede the process. Remember that everyone is working hard to ensure a seamless transaction, and many offices may be experiencing the staffing struggle that is so common across many industries right now.
5. Get the Support You Need from An Experienced Escrow Officer
As an experienced national escrow officer, I’m here to help you close your transactions quickly and efficiently. One way to do this is through a remote online notary. This service is available in Nevada as well as many other states, streamlining the process with a virtual notary who has received a special license to operate online. With most of the world operating in an online format, this has also allowed procedures to become paperless, while maintaining a personalized and supportive experience — you’re never just talking to a screen.
Have questions about terms in your own transaction?
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