How long is average escrow period for CRE?

Is it longer than residential? Does it vary by property type?
In Buying Property - Asked by Justin H. - Jan 24, 2011
Report Abuse
Answer this Question

Answer(s)

Barry K.
Broker/Agent
Oakland, CA

Usually the average escrow period for CRE is longer than for residential. This is due to a number of factors, and yes, it can depend on property type. One factor contributing to the longer escrow period in CRE is the financing complexity. Another is that environmental issues enter the arena. Another contributing factor to the length of escrow period in many transactions is that CRE is often bought by groups, and this can entail gathering of capital, preparation of financial projections, and legal work associated with group formation. There is also the factor of complex negotiations between the purchasing entity and the selling entity; it is not uncommon to see a 90-day "due diligence period", in which the purchasing entity explores the target acquisition form any number of directions (financial, legal, environmental, etc). All of these phases take time.

Jan 24, 2011
Report Abuse
Davide P.
Broker/Agent
Pinole, CA

If you have a hard money loan or are paying all cash, it can be within two weeks. However, because there's so many more hoops to jump through and the appraisal usually takes an additional 1-3 weeks, I usually suggest 45-90 days depending on the type of property and size.

Jan 24, 2011
Report Abuse
Jack S.
Owner/Investor
Cheyenne, WY

Escrow can be much longer than residential and if they find a environmental problems or if the property is in need of repairs the process can be time consuming but there are some ways to get control of it while you wait for your conventional financing to come though such as a bridge loan which will allow you to buy it short term allowing you to make any needed repairs.

Jan 26, 2011
Report Abuse
Rob B.
Chandler, AZ

Justin.... Barry's answer was on target. In many of my transactions the LOI (Letter of Intent) calls for anywhere from 15 days to 30 days from mutual execution of contract and providing of all due diligence documents called for in what Barry has referred to as the due diligence period. It is during this time that the deposit is refundable. It is very difficult to get a Seller to stand still for a longer period of deposit money being without buyer risk. Frankly, for pure due diligence a maximum 30 days is usually adequate. At the end of due diligence it typically takes up to 60 days to complete the financing, which would make it a total of 90 days from contract execution, opening of escrow and closing of the transaction. During the 60 day period the buyer's deposit funds are then at risk. The amount of the risk deposit is always negotiable, usually the larger the project the greater the deposit. I most often will ask for an additional 15-30 days for any required financing documentation to be completed. With my request for this extension option the buyer must show good faith by increasing the deposit. At this point it is assumed that the transaction is indeed going to close but simply requires more time for all the documentation to be completed for the financing. I hope this sheds a bit more light on the commercial process. One caveat, small commercial properties can often be done more rapidly if there are no environmental or use issues. Good luck Justin.... Rob Baird, CA RE License #544165 (One of the oldest, active licenses in CA) 951 515-5855 Email: rob@capratecommercial.com

Jan 26, 2011
Report Abuse

Welcome to Answers

LoopNet Answers is where the commercial real estate community shares what they know to help each other out. And it's all for free.

Ask a question to get advice from brokers, investors, professionals and local experts.

Answer questions to raise your visibility as a trusted advisor and build new relationships.

Ask a Question

Post Question