speakwithlarryj

Refers to the conditions attached to an offer to purchase property and included in real estate contract which must be met in order to make the purchase offer binding on the buyer.

1. Inspection – Contingent upon ME physically inspecting the property for the next 30 days and for any reason within those 30 days I can cancel the contract.
2. Financing – Me finding and getting approved for a satisfactory loan to purchase the property within 45 days or I can cancel the contract.
3. Title – Me approving the chain of title that it must be delivered to me clear and free within 15 days or I can cancel the contract.
4. Appraisal – The banks appraisal of the property to be equal to or greater than the contract purchase price or I can cancel the contract.

1. Parties – Seller and Buyer
2. Location – Street address, legal description of property.
3. Sales Price – The amount you’re offering.
4. Earnest Deposit – The amount of money you will deposit in escrow and who holds it.
5. Finance Contingency – Offer subject to certain terms and days.
6. Inspection – Contingency for physical inspection and approval.
7. Closing – When and Where the closing will take place.
   There will be several more but you get the idea!

A binding legal agreement that is enforceable in a court of law or by binding arbitration.

An exchange of promises with a specific remedy for breach.

Once the contract is signed by both seller and buyer, it becomes legally binding with action items both the seller and buyer promise to carry out.

A good contract should protect both buyer and seller as equally as possible.

1. First way is called Sales Contract.
2. Second is called a Letter Of Intent or LOI.

The sales contract is the most commonly used to make offers.

Do NOT use purchase and sales contracts found in supply stores.

However, you MUST only use sales contracts for the state where the property is located.

1. Are you the owner of the property?
2. What is the occupancy of the property?
3. Does the property have any loans on it?
4. What condition is the property in?
5. Are the loans current?
6. How much is owed on the loans?
7. Are there any liens in the property?

1. Recovery – Occupancy rates have bottomed and the market is or has just experienced a state of over-supply from previous new construction or negative growth demand.
2. Expansion – Rents rise quickly, which signal new construction to happen. A short supply will also cause a increase in rents.
3. Hyper-supply – This is where new completions begin to compete for tenants in the marketplace.
4. Recession – The difference between demand growth and growth in the market supply. In other words the “Market Access”

There are basically two types of buyers!

1. Trend Buyer – They tend to buy when the market tanks or has hit the bottom. The downside to this type of buyer is everyone else sees the market and are buying too.
2. Contrarian Buyer – They tend to buy when everyone else is selling, however they still prefer to buy as close to the bottom as possible.

Tip #1 – Ask Yourself – Would you be willing to collect the rents in that neighborhood?

Tip #2 – Are there valid transportation lines available?

Tip #3 – Does the trash collectors keep garbage and debris off the streets?

Tip #4 – Is the neighborhood out of the city limits existing by itself?

In the commercial real estate world the slogan should be “Use” meaning how the property will be used.

Zoning and building codes are set by the local city government and is in constant change.

The way a parcel of land or property is used is a major element to understand when determining it’s value.

The highest and best use for a commercial property maximizes its value.

1. Income and expense statements versus property tax returns – make sure the income amounts match.
2. Proformas – Never buy according to brokers proformas!
3. Operating expenses are always underestimated double check and verify them with a third party.
4. Be wary of reassessing property tax bills, know when it happens and at what rate.
5. And YES, location is always important, because no matter how good the deal you can’t fix the location.