How to Close Out a Real Estate Deal: Tips and Strategies for Savvy Investors

As any experienced real estate investor knows, initiating and negotiating a real estate deal is only the beginning. Closing out the deal is the hard part, the one that sometimes seems more like getting a hesitant bride to the altar than anything else.

A stress-free exchange is the exception rather than the rule. The best plan is to expect-and prepare for-the unexpected. Closing on a commercial real estate deals is often much more complex than buying or selling residential housing. Discipline, focus, and creative problem solving abilities are all frequently needed to bring a deal to completion.

The first step towards getting a deal done is having a plan or vision for exactly what you wish to accomplish, and how that will be accomplished. "The devil is in the details", as the old saying goes, and there are plenty of details that can throw a deal. Perform your due diligence early on in the negotiations, and then plan ahead for the potential stumbling blocks you uncover.

Your "plan" for how the deal should unfold is similar to "business plan" concept that every company should operate by. It will be your guiding light throughout the negotiations, affecting many elements of the purchase agreement such as easements, zoning, environmental concerns and a number of other considerations. The plan should also include a suitable allowance for due diligence, plus an "action plan" for any items that may arise in that investigation.

As real estate investors and developers progress through a deal, obstacles and opportunities that were previously unknown are certain to present themselves. A proper understanding of the original plan and how the transaction can still proceed while addressing those obstacles, is critical if the parties involved are to avoid transaction failure at this point in the game. For example, title problems may be addressed with risk shifting tools such as title insurance. The solutions to challenges that arise may be as varied as the challenges themselves, but with creativity, solutions can often be found.

Third parties (such as vendors or governmental agencies) who have no stake in a deal may frequently hold things up. It is up to the parties involved to identify these bottlenecks, and push the transaction through.

Regardless of how much planning has gone into a real estate transaction, the final days before closing are still hectic more often than not. Third parties such as lenders, appraisers, zoning officials, tax authorities, public utilities, surveyors, or insurance companies (to name a few) may not be delivering necessary permits or certifications as quickly as needed.

While the optimal situation would always be to build adequate lead time into a transaction to allow for unforeseen delays, the reality is that transactions are often best done quickly. Deadlines can be met-if the parties involved apply themselves diligently to the transaction and tasks at hand. While proper planning and due diligence early on in the deal can certainly make the final transaction progress much more smoothly, investors should expect and be ready for that final "push" as the bride approaches the altar. If the deal is really worth doing, the results will be well worth the effort.