After sending the LOI what is the important next step in buying a property?

At what point an accountant a lawyer and an appraiser should be contacted?
In Buying Property - Asked by karan s. - Jan 21, 2009
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Jay M.
Studio City, CA

If the letter of intent is accepted by both parties then the next logical step is to enter into a purchase and sales agreement.
An accountant should be involved prior to the sales/purchase of a commercial real estate asset to discuss the potential tax implications of such a transaction. The same could be said with the attorney. As far as an appraiser, under "normal" conditions they get involved only after a purchase and sales agreement has been executed by both parties.

Jan 21, 2009
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William C.
Yonkers, NY

Dear Karan,
My motto has always been make sure the ink is dry on the agreement and any good faith deposits are cleared. After that the seller has a hard time backing out without ramifications. If you are the seller, make sure the buyer has his financing readily in place or if cash ask to get some verification. We sell Bulk REO's and most people do not have the Liquid money they say; and with the credit markets so tight right now you do not want to get stuck. It is good to get referrals of possible accountants and attorneys beforehand, because you will find that these things move very quickly once begun, Especially with REO deals. The information from Jay is good and prudent. I hope this helps .. best of luck..

Jan 22, 2009
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Neil B.
Louisville, KY

You started with a wrong assumption - that the starting point in a commercial transaction is the LOI. As a recovering attorney and now practicing commercial broker I (almost) never use an LOI - I like to cut to the chase and submit my purchasde contract immediately. This has a few advantages: (1) It tends to eliminate the "tire-kikkers" from my practice (2) While other brokers are submitting non-binding LOI's, I am ironing out the nuts and bolts of the actual agreement. This gives my client a competative advantage and saves time. It does take a little more up front time, but I find it well worth it.
But assuming that you did submit an LOI, and assuming you are serious about the purchase, you need to immediately submit a binding offer and then obtain a binding acceptance.
As it appears you are a new investor, it behooves you to assemble a team of advisors before you even start your property search. This team usually consists of attorney, broker, accountant and maybe appraiser, depending on the complexity of the transaction and cross competance of the others in your team.
Often the broker will feel competant to advise you on the relative value of the property you are considering buying, and may have a cookie cutter contract he adapts when submitting offers. Some brokers will submit all the offers to attornies to check before submitting on behalf of the buyer. Some transactions are so complex that the attorneys handle the contracts almost exclusively. The contracts are as varied as the attornies and brokers - each having his preferences. Accountants should be consulted on an as needed basis. Even if you don't use an appraiser your lender will and that will occur after contract acceptance and before and as a condition of closing.
Good luck.

Jan 26, 2009
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