5 GENERAL STEPS TO PURCHASING A BUILDING (USING SBA FINANCING)

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 when purchasing property.

1. Pre Escrow
   • Establish financing (cash, conventional, or SBA)
   • Negotiate Contract
2. Open Escrow
   • Executed Contract
   • Refundable Earnest Deposit
3. Contingency Period (Estimate 30-60 Days) – depends on tenant improvement needs
   • Schedule inspections: Roofer, Electrician, Plumber, General Contractor, etc.
   • 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.
   • Order appraisal – this is a 3 – 4 week process
   • Order environmental and possibly an Alta survey – this is a 2 week process
   • Title Insurance commitment from title company
   • Work with architects and contractors if tenant improvements are required
   • Renegotiating if issues arise from the inspections or appraisal or other unforeseen issues affecting the purchase
   • Final Bank Approval
4. Non-refundable Period (15 – 30 Days to Close) – could be longer depending on improvements or bank requirements
   • Earnest Deposit becomes NON-REFUNDABLE
   • Continue working with architects and contractors if tenant improvements are involved.
   • Continue Contact with Bank
   • Prepare to close
   • Receive Settlement Statement from Bank
5. Close of Escrow – Get keys and Move in!