I own a 12-unit building. I have an interested buyer wanting to purchase the property for $100,000 with a $10,000 down payment and payments of $593 per month for 6 months. He wants to pay the entire remaining balance after 6 months when he is able to populate six of the units and get a commercial loan. What are the first steps in making this process happen? How does the deed in this type of transaction get transferred? Does a mortgage company need to get involved? What are the things to watch our for is this type of deal?
You should definitely consider a lawyer to help you run point on this transaction. It would be good to get a recommendation here on BP or elsewhere instead of just looking one up. Make sure that you get a lawyer that is experienced in commercial RE and not just a RE lawyer that specializes in residential, which is the majority of them.
Assuming you own the property free and clear, Get a real estate attorney to draft a mortgage and let them handle it. You will be holding the note on the property becoming the Lender.
@Luis Fernandez you come to basic agreement on terms. Then have a good commercial real estate attorney draw up a contract for your deal using the terms you have agreed to. Then that contract goes to a title company that handles commercial deals. It could be the attorney that drew up the contract.
The attorney who draws up the contract should be an attorney YOU hire, so the contract is written for YOUR benefit. There are LOT of things that can be slipped into a contract that would cost you money or hassles so you want the contract atty. on your side. The title company is supposed to be neutral.
@Luis Fernandez The seller of one of the buildings that we're buying right now is represented by a real estate lawyer without much commercial or MF experience. It has been a pain in the ***, costing us more time, money and headaches. We have two other deals that were under contract later this deal and will close sooner, largely because of this lawyer.
Don't go on the cheap, it is worth paying a higher hourly rate for someone who knows their stuff and has a lot of experience. You will actually pay less $ because they are more efficient and they will probably win you more money through contract structure and negotiation.
+1 to @Ned Carey 's comments and I would add, the sooner you engage a lawyer the better...even before you negotiate too many terms. It is hard to change terms or back out of something after you have come to an agreement.
@Scott Skinger Since I'd be the one getting a lawyer to write out the contract, do I pay the full amount for the legal service?
Start with finding a good commercial RE lawyer, have a free consultation and if you like them engage (sign an agreement) with them. Before you even get to the drafting of the contract you will probably spend some time discussing the offer, strategies, etc. This is your chance to learn, ask questions and come up with a good plan forward. Yeah, it sucks to feel like your "on the clock" at some crazy high $ rate but if you have a good lawyer, they are very efficient and it is worth every penny.
Specific to your last question "who pays?", those are the types of question that you would ask your lawyer and they can help you negotiate with the buyer issues just like this. Everything is a negotiation and having a competent RE lawyer on your team tips the scales in your favor.
I can't believe it's worth selling for that price?