395 unit Multifamily issue with seller

15 Replies

So Me and my partner got these properties as a package deal in Atlanta,GA has 2 multifamily apartment complexes total of 395 units for $17.6M with a 9.2% CAP 91-93% occupancy and has a grant more almost $6M for anything the complexes need. But only way for a buyer to get anything important like rent rolls or other financials the buyer must provide a POF. It's been off the market for maybe a month and a half. Me and my partner found an all cash buyer who spent all week to get the POF for $15M from there bank and the seller didn't accept the POF. All the buyer wants to see is the rent rolls and financials. Plus the buyer is very interested in the property. I just don't understand why the buyer wouldn't even budge or accept the offer to just show the POF. The buyer can get someone else to lend him the extra cash but the seller won't allow or want to deal with that. So now the buyer has to figure out a way to get $17.6M. This seller is frustrating us. Any advice on what we should do or advice I could give my buyer? Seller pretty much lost a buyer when the buyer could've gotten the extra cash if everything works out.

Hi Paul. Let me start by saying this is waaaayyyy out of my league to even attempt to respond to, but I wanted to offer my two cents in the event it would lead to a solution. I'm here in (near) Atlanta, and it's very common for sellers to request POF's for buyers to weed out those that may not be serious about purchasing. It sounds like your buyer is one of the serious ones and the seller may be frustrating the progress. Have you tried getting someone to partner up with the buyer? Perhaps they can provide a joint POF submission to satisfy the seller? I'm not sure, but will a transactional funding institution be able to supply a statement for the remaining balance? Perhaps shopping the deal for syndication is an option? Just my thoughts. Hope some of it helps.

@Paul Fagot : Did you ask the buyer why the POFs were rejected? Was it an issue with the format or that all the cash wasn't there? That seems the easiest fix. 

I'm being noisy, but why put up that much cash with interest rates this low? 

@Paul Fagot Is the owner an individual, a hedge fund, a REIT?

@Paul Fagot Sometimes sellers can won't budge. Clearly he's in no rush to sell and will only sell on his terms, and that is his right. If it were me, I would figure out my offer price based on what I assumed was contained in the financials. I would then send a letter of intent, containing my price and a POF that matched exactly. I would include in the LOI the request for due diligence items you've listed and offer to sign any non-disclosure agreements they require. Then if the seller likes your price, he'll send the stuff and you can go from there

Sellers of this type of property are really only going to deal with commercial brokers

@Jay Dewberry hey there thanks for the response and anything helps! The whole reason my buyer went the bank route to get accepted for $15M is because he first brought the $17.6 and that was a joint POF that's why he didn't accept. I mean is having a partner(s) with joint POF risky or too much to deal with?

@Russell Brazil I can see that but why is that? I mean if We already have a buyer wanting to buy it don't you think the buyer would be a little lenient to at least show the financials and rent rolls.

Originally posted by @Paul Fagot :

Russell Brazil I can see that but why is that? I mean if We already have a buyer wanting to buy it don't you think the buyer would be a little lenient to at least show the financials and rent rolls.

 Same reason I won't show a residential listing to someone who doesn't have their own broker/agent...if they don't have representation then they are not a serious buyer.

That's Understandable. Thanks for the comment back we're gonna just have to figure something out.

Ask the seller to accept a signed non-disclosure and confidentiality agreement related to any information the seller provides to buyer.

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My guess is that the seller senses that you aren't the actual buyer or that you're trying to wholesale the deal and is just trying to brush you off. It's not common to ask for a POF to obtain financials on deals like this.

Here's how it works: Buyer signs a Confidentiality Agreement, seller delivers financials, buyer underwrites and tours, buyer submits an LOI, seller accepts or counters, once LOI is accepted the purchase agreement is drafted and executed.

In the single-family and small multifamily space sellers establish certainty of closing by asking for a POF. In the large multifamily space it's resume and track record. Even active buyers rarely have the liquidity to produce a POF on transactions of this size.

@Paul Fagot Most likely reason, I can think of, is the the seller or buyer is not a credible source. Is a broker selling the deal or private owner? 

If you get a confidentiality agreement signed by the buyer it could help. 

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