Offers, LOIs, Escrows & Leases
If you’ve marketed your client’s needs successfully, the offers should start rolling in. The focus now shifts to managing those offers by qualifying buyers, buildings and tenants on behalf of your client.
Getting an offer is cause for celebration, but don’t get carried away. Not all offers are the right offers. The last thing you want to do is take your property off the market or commit too much of your time for an offer that may never see the light of the day.
A lot goes into working out an offer (especially a lease). You’re not trying to disprove a buyer, you’re simply acting out of the shared interest of your client to prove the buyer. Don’t hesitate— legitimate buyers will have no qualms about providing the the proof you need.
Here are a few things you should do to when you receive an offer:
- Verify the offerer.
Is the buyer really who they say they are? Develop a process to quickly vet a buyer to see if they can make good on their offer. Include things like requesting a resume of past deals, proof of funds and references. For lease offers, verify that the tenant is up to date on their business taxes with a simple search of the local tax authority. Look up their past lease comps to see if they have a solid history of fulfilling lease obligations.
- Qualify the offer.
Seek to understand how the buyer values the property. This will tell you if you’re working from the same set of criteria, which can eliminate questions down the road and make for easier negotiations.
Check to see what else the buyer owns, or what past leases they’ve held. Does your property match their portfolio profile or past deal mold? If not, then you can start asking some critical questions that will help you evaluate the viability of the offer.
- Look at the timelines of the deal.
Are they asking for an extended due diligence period? What about the proposed closing date? Is it alarmingly short? There can be very reasonable answers for either, but what you’ll be able to fish out are scenarios where there are apparent contradictions between two or more offer attributes.
Take an all-cash offer seeking an extended feasibility period. Or a syndicator asking for a shortened feasibility period. Both of these should raise a red flag and send you into analysis mode to figure out what’s going on.
Building a habit and a process around verifying your buyers and qualifying your offers will save you from humbling scenarios with your client. If you are using Apto effectively, then a lot of these things will all but take care of themselves. You’ll have built-in knowledge about contacts and companies and the properties they hold interest in, making it easy to get some insight about a potential offer or buyer.
Using Apto to get more background
Apto allows you to track offers directly on your listing or assignment, enabling you to trace offers back to buyers and tenants that you already have intel on. This makes it extremely easy to identify potential issues from the outset.
To track offers in Apto, open the subject Listing, scroll down to the Offers list and click "New Offer".
Additionally, having your offers in Apto allows you to quickly and easily communicate those offers back to your client. Apto’s reporting tool allows you to build tabular reports that highlight all the key offer fields that can be presented live, emailed or exported to Excel for presentation.
To run an offer report, click on the Reports tab (or click on the '+' icon and locate "Reports"). Click "New Report" at the top of the page, search for "Offer" and select "Listing/Assignment Offers". Modify your report to include the fields you want to display and click "Run Report". From here you can export your report to Excel for external presentation, or better still, just use Apto as a sales tool and present it live. To learn more about creating reports visit our knowledge base article Create New Reports with Report Builder.
Remember: Don’t take your listing off the market until you are sure you have the desired number of vetted buyers and qualified offers. This will save you a lot of grief at some point in your career.
Escrows and Lease Proposals
Provided you qualified both offerer and offer, you can move forward with a lease proposal or escrow. And wouldn’t you know it, Apto has a dedicated place for these—In Contract.
Projects are for managing the tasks and processes surrounding final negotiations of an accepted offer. Upon acceptance, simply convert your listing or assignment into a Project to begin preparations for closing. To convert, simply click "Advance to next stage" on the very top of the Listing / Assignment.
In the new In Contract record, fill out the fields to track the important details such as the space, the prospective tenant or buyer, the landlord or seller, deposit and the expected close date.
You can also track major milestones such as when earnest money is do, when inspections are to take place, when tenant improvements start and any other event worth tracking. To add a milestone, click "New Milestone" on the Milestons section of the Project page. Upon saving your milestone the Project Milestones Gantt View will automatically update giving you a visual chart of when things are due.
You can also manage and add all important stakeholders to the transaction, such as loan officers, attorneys, title reps and other agents. To add a new party to the transaction, locate the Deal Party list and click "New".
Once everything is done and money is secured, you are ready for your final conversion, and that is to a comp. Once the listing/assignment becomes a comp, you can leverage your closed deal for future valuations, newsletters and credibility. To learn more, see our article on comps.