Purchasing a new office or industrial building for your business is an exciting step in the journey of one’s company. One important consideration in purchasing a building is the process one goes through from financing to opening and closing escrow and all the steps in between. Below is a general timeline of items to be addressed during each specific time period. This is subject to change according to the specific transaction. It is very important to work with a knowledgeable Real Estate broker and/or attorney when purchasing property.
- Pre Escrow
A. Establish financing (cash, conventional, or SBA)
B. Negotiate Contract
- Open Escrow
A. Executed Contract
B. Refundable Earnest Deposit
- Contingency Period (Estimate 30-60 Days) – depends on tenant improvement needs
A. Schedule inspections : Roofer, Electrician, Plumber, General Contractor, etc.
B. Collect Feasibility Material: (CCR’s, Budgets, Existing Alta Survey, Phase 1, Tax Bills, Confirm Zoning, building plans, leases and any other information material to the purchase.
C. Order appraisal – this is a 3 – 4 week process
D. Order environmental and possibly an Alta survey – this is a 2 week process
E. Title Insurance commitment from title company
F. Work with architects and contractors if tenant improvements are required
G. Renegotiating if issues arise from the inspections or appraisal or other unforeseen issues affecting the purchase
H. Final Bank Approval
- Hard Money Period (15 – 30 Days to Close) – could be longer depending on improvements or bank requirements
A. Earnest Deposit becomes NON-REFUNDABLE
B. Continue working with architects and contractors if tenant improvements are involved.
C. Continue Contact with Bank
D. Prepare to close
E. Receive Settlement Statement from Bank
- Close of Escrow – Get keys and Move in!