Why does Buyer Financing Matter?

Your big commercial real estate deal is coming together – but have you thoroughly vetted your buyer’s lender? Join Hayden Hulsey, CCIM from Results Commercial for a discussion on why it’s so important to be in the loop on the financial terms of your potential buyers.

Hey everyone thanks for joining us today my name is hayden halsey a broker here at results commercial so the topic today is going to be about financing the real question is why does buyer financing matter so there’s kind of two reasons why one of course is time the second is money the time is we want to make sure before we’re running out for a tour is this person

Qualified and can they actually get this deal done and of course the money part is you know closing the deal and actually getting paid so one of the first questions that we always ask when we get an inquiry is how are they paying for this is it cash is it financed if it’s finance is it sba or is it conventional now some people get frustrated and it’s usually a

Red flag for us right away if people get you know ticked off that why are you asking me these personal questions and we say well in order to you know service the product and work on behalf of our client we want to make sure that this is going to be a fit so cash this is one of the you know most common ones you hear all the time yeah it’s a cash deal it always

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Gets me and it’s funny because you know most of the time it’s not a true cash deal people are pulling money from somewhere else it is in the form of cash at closing or it’s a future line of credit you know is it truly cash sitting in the bank account ready to go right now or are there five steps that it’s going to take to get there with a lot of time most of the

Purchases if it’s not you know a cash deal or a 1031 deal is going to be sba financed or conventionally financed now sba is small business administration the concern there with sba is it usually takes more time there’s more hoops to jump through because you have government involved compared to a conventional deal which is usually a little bit more streamlined

You know you can get from start to finish a little bit faster say you know 30 days versus 60 or 90. that completely depends on the product the buyer a lot of different variables that’s not a you know hard due diligence lender timeline with sba a lot of buyers right now are liking that because you can come in with less money down so you don’t need to come with

You know say 20 or 25 percent to closing and there’s different fees and incentives that can be written off and you know for given during that time period so in addition to asking about cash or conventional or sba financing we also want to know who is that lender so it really matters because is it a u.s bank is it a wells fargo or is it a smaller group like you

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Know bank cherokee or 21st century bank it depends who it is because we want to make sure that that buyer with this product is going to be a good fit because we know that if it’s uh you know if it’s an owner user and they want to go the sba route but they’re using a residential based lender or mortgage company we’re going to have a lot of hurdles in front of

Us and we’re probably not going to get there that’s almost that’s more important than price or how fast can they wrap up their inspection or all of that is it a lender that can actually perform one of the questions we get as well is about a prequal letter or a pre-approval letter and we’ll get residential agents that ask us this a lot so we don’t typically in

Commercial deal with a lot of pre-approval letters per se we do want to know who that lender is of course but we don’t usually get a formal letter from them that says you know susie has been pre-qualified for up to x amount usually that lender will be on a you know not usually but sometimes that lender will be on a thread to where when that purchase agreement

Or loi is delivered you know here’s the lender uh jim over at 21st century is going to finance this thing so we at least are in the loop with who is there but they’re not necessarily providing a formal pre-qualification or pre-approval letter now one of the very biggest issues that we have right now is environmental work we’re running into phase ones that are

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Consistently coming back saying that a phase two is going to be required and a phase two is expensive takes a long time pushes everything out so this is where the buyer’s lender really matters because we need to make sure that lender has really good experience in the environmental space otherwise that’s it’s a deal killer that’s where we run into huge issues so

Kind of to summarize we are that listing broker and we’re always asking that buyer that buyer’s broker what are the terms of the financing are they going to be able to get this thing done do they have experience and who’s behind this buyer because it’s really really important thanks again for watching guys we really appreciate it check us out resultscommercial.com

And don’t forget to subscribe if you have any questions i’m happy to help too hayden at resultscommercial.com thank you you

Transcribed from video
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