General Guideline of Buying Process of Commercial Buildings or Hotels is explained here below: Time frame varies depending on properties, locations, economic and financing conditions etc.
Estimated Time Frame to legally own the property after your offer is accepted:
when you get Financing: 60 ~ 180 days
All Cash deal: 30 ~ 60 days
1. Contact a lender to obtain pre-qualification letter. It states how much you can borrow. (1-5 days)
If you are an all cash buyer, you don’t need any of the financing procedures here.
Commercial real estate purchase typically requires over 30% down payment.
2. Determine price range/locations, view properties and decide on what building or hotel you would like to purchase. (2 days – several months)
Homework is necessary to come up with an initial price to put in an offer. It is important to check if the property has a growth potential in value: zoning, re-zoning, air right, buildable square footage, neighborhood developments, higher rental income potential, landmark, tax requirements and rental/sales comparables and history.
3. Present an offer and negotiate price (1-14 days)
4. Due diligence (1-4 weeks)
As soon as your price is accepted, your attorney will start thorough Due diligence. Click to review Due Diligence Check Points.
5. Execute contract (1-5 days)
Seller’s attorney sends the contract to buyer’s attorney. Buyer’s attorney reviews it to see if there are any revisions to be made prior to actual contract execution. Once it is agreed by both parties, the contract is signed by the buyer and the seller. 10% deposit is required when the buyer signs the contract and it is kept in the seller’s attorney’s escrow account.
Buyer’s deposit should be in a U.S bank or wire transfer is required. In order to have the deposits refundable, a ‘mortgage contingency’ clause must be in a contract. If a buyer can’t get the mortgage from his or her lender, deposit is allowed to be refunded to the buyer.
Sellers are allowed to show his/her property and accept other offers until the contract is signed.
6. Apply for Mortgage
Mortgage applications requires a signed sales contract, income, assets and debt verification, etc.
7. Commitment Letter Issuance and Legal/Title Clearance (8-26 weeks).
Commercial real estate usually takes longer to secure financing than residential properties. After obtaining a commitment letter from the lender, legal and title clearance is performed.
8. Schedule a Walk-through and Closing (about a week)
All parties should be available to be at the closing and scheduling can take about a week. A Walk-through in the property is typically done by buyers hours before closing time. Ownership of the property is transferred to the buyer on the day.
All information is from sources deemed reliable but is subject to errors, omissions, changes in price, prior sale or withdrawal without notice. No representation is made as to the accuracy of any description.