Welcome to another installment of this-is-how-things-are-supposed-to-go because it is surprising the number of people who have done this for decades yet do not know how to handle the buying and selling process.
I wrote before about multiple offers and how to potentially handle them, but what happens once you accept? There are a few steps that need to be completed by different people, which is why it is so, so important that you get a competent team together to help you with your transaction. It’s another reason why you may be able to do a For Sale By Owner in other parts of the US, but it’s not a good idea in the city. First, agents are not going to bring people to your sale unless it is so drastically underpriced that it’s worth how much extra work we will need to do. Second, if someone else without an agent comes to buy it, you’re going to have to figure out how to make the transaction go smoothly all on your own. Hint: it won’t happen.
So first things first, you have an accepted offer. Congratulations! Now you need to make a deal sheet. The buyer’s info, the buyer’s agent’s info, and the buyer’s lawyer’s info are all going to be on it, plus the same for the sell side as well as contacts for the building’s management. This along with the details of the sale (cash versus financing, any inclusions like furniture or fixtures that are staying) will be in one place for reference for the lawyers to do their part.
Now, two things should happen at once.
The seller’s lawyer should begin drafting contracts (and this should only take 48 hours AT THE MOST) and send them to the buyer’s lawyer. They will go back and forth until a meeting of the minds is established. If everyone is acting honorably and doing their jobs correctly, the terms were already hammered out in the offer (this is in ‘as-is’ condition; these are the inclusions) this should be relatively painless. And the lawyers should do this BY THEMSELVES, not by cc-ing the owner and buyer on the emails. It’s surprising how many times a deal gets messed up because a lawyer starts including people who should not be part of this process. It’s a lawyer to lawyer thing, and then there are agent-to-agent communications on the side.
The buyer’s lawyer should begin the due diligence. He or she will need to look at the building’s financials, read the minutes, etc. If it’s a co-op he will need to see the offering plan to make sure the number of shares and other info is accurate. He will also work to see if the title is clear so his client isn’t buying something that’s tied up with liens. These documents and the board package info/application should be sent to the buy side by the seller’s agent, who received it from the building’s management. Everyone plays a little role in this!
Normally, after only a couple days the due diligence should be completed and the contracts should be ready. The buyer puts down 10% of the purchase price as “good faith” money and signs, then the seller countersigns, and congratulations again! You’re now in contract!
This is a very simple process if you’re dealing with solid, communicative attorneys, and an absolutely brutal one if you aren’t. As an agent or seller you shouldn’t even have to be involved other than approving the contract and signing. When you build your team you really need to work with someone familiar to your agent so there is a relationship and trust already there. My team has never had an issue with a deal when using trusted attorneys, but every single time someone else get involved we run into problems.
Until contracts are signed, the sell side must continue to show the apartment, because until that money is down there is no actual deal. Everything can fall apart with one misunderstanding or one disagreement. This is also why the more emotional parties (the buyer and seller) should be insulated from this process.
And then once contracts are signed it’s just a process of managing things, like making sure the buyer sends you the board package to approve before submitting to the board. And making sure nothing in the contract is going to expire before closing. And making sure the appraisal comes in right (if using financing).
So go forth and sell, guys! But use someone; don’t try to do it yourself. Because I guarantee it’s going to go Kanye and ALL FALL DOWN.
xo
Anna