We’ve all procrastinated at some point in our life. Whether we waited to study for a test until the night before an exam or we drove longer than anticipated with the check engine light on, we’ve all put something off longer than originally intended. Sometimes we’re no worse for the wear because of these delays, but other times they can be incredibly costly. In the world of commercial real estate, the wrong delay can cost you everything you’ve worked for, so it’s best to avoid putting off certain obligations during the course of a commercial purchase. In today’s blog, we spotlight three delays you’ll want to avoid during your commercial acquisition.
How Procrastinating Can Cause Problems For Your Commercial Purchase
Let’s look at some of the obligations you’ll have during the course of your commercial purchase and explain why you shouldn’t delay when it comes to taking care of business.
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Doing Your Due Diligence - You may be excited that you have received an accepted offer, but that doesn’t mean your work is done. In fact, it’s just beginning. The time between offer acceptance and closing is known as the due diligence period, and it is a crucial period for researching a property and ensuring there are no issues that could cause problems for you once you close. You’ll want to connect with a title services team to research the title, conduct surveys and inspections, determine boundaries, unearth easements or other encumbrances and understand zoning and law use regulations. Anything that isn’t fixed during this period can become your obligation once you’ve closed, meaning you could inherit an environmental concern that needs to be addressed or an unpaid tax bill that now falls on you to settle. Make sure you are busy during the due diligence stage investigating a title and clearing any potential issues with a property.
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Securing Financing - It may be a little more challenging to secure funding for a commercial loan because the amount financed is likely higher and because the financier is taking on additional risk compared to providing a residential loan. This can lead to more requirements on your end or the need to secure additional capital from investors, and if funding falls through, so too can your deal, along with any earnest money you’ve committed to the deal. Be aware that financing can be a little more difficult to secure in the world of commercial real estate, so stay on top of it.
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Title Insurance - We’ve talked about the benefits of title insurance at great lengths on this blog, and it really isn’t something to put off until later. Like most forms of insurance, it’s something you’ll really want in the event an issue arises. Although the title has already been inspected, it’s impossible to know with full certainty that no potential title issues remain. If you don’t secure title insurance and an issue comes to light, it can cost you a fortune or even result in the loss of your property if someone else has a legitimate claim to the title. Best of all, title insurance can be secured for a one-time payment, so you can secure peace of mind for as long as you own the property with one simple payment. Once you’ve closed, don’t wait to secure title insurance, because the cost and the period it covers will be the same, so the sooner you grab it, the better.
The team at Commercial Partners can help with all of these processes, so put our team to work for you. For more information, give our team a call today at (612) 337-2470.