How do I save myself from getting goofball "buyer wants everything for nothing" offers?

I understand the market is less than was 5 years ago, but asking prices already reflect this. I'm not kidding, for a STNL A+ Corp 20 year lease buildind I'm getting zero money down+seller financing+15cap offers. Furthermore, many of these buyers aren't even financially qualified to purchase a car let alone CRE. Sellers would go bankrupt if they accepted the ridiculous offers that have been coming in lately on all properties. Are there no Real buyers left? How do we guard against such nonsense and get real offers?
In Selling Property - Asked by Anand B. - Jun 12, 2010
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Valerie B.
Conyers, GA

Welcome to Real Estate... There are Real Buyers out here, however if an Investor see a chance to take advantage of an opportunity, they will. It's up to the Listing Broker to put it out there in the beginning. knowing what's required in submitting an offer, As I convey to the Buyer or Buyer's Representative up front, don't waste my ink.
Valerie Brown
Real Estate Broker
One Nation Entity LLC

Jun 12, 2010
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Tom W.
Port Richey, FL

The short answer is as follows Just read and think.
1) you will need to hold 3-5 yrs if you are looking for cash period.
2) if the property is so great then hold in the world will sellers go bankrupt this is just a question.
3) when I started this 20 yrs I form a corp and did my first deal on a hand shake in new york I now live in Florida and only do multi-family deals companies can fold up tomorrow people will always need a place to live.
But if the property is as good as you say it is do the no money down and sell the note for cash at any time. There are PE firms that will take the note.
I know what you are talking about I have owners of properties trying to sell on 2008 appls. with asking price's of negative NOI. that is a big problem down here.

Jun 12, 2010
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D D.
Irvine, CA

First off you need to define ridiculous!
You can easily protect yourself from unqualified buyers by just requiring a simple evidence of ability to close which must be submitted with ALL offers. Many buyers will ignore this that are still qualifiable but you can help weed out the real buyers from from shoppers.
In regards to your statement that sellers will go bankrupt if they accept the offers being generated. Actually that is quite true and many in fact should as the assets are often time worth much less than the debt they secure and the seller has no equty. It is a fact of life and happens every downturn.
As far as a buyer offering what may be considered a ridiculous CAP RATE that is always a risk when selling any asset that generates income. BUT consider these questions and the answers they generate.
Is commercial debt readily available for the asset class in question? BE TRUTHFUL with yourself in this answer! If the answer is YES then at what rate and terms? You can generally use as a rule of thumb that if debt is available the equity required to buy the asset as required by the lender (generally 20-40% of the purchase price) should genrate a similar yield as the debt costs. Those numbers combined should give you a reasonable ball park value for selling price. It's not exact but its gnerally damned close.
If the asset generates no income currently then the analysis gets a bunch more complex but is still driven by the availablity of available debt to a large degree.
You can say you only want cash buyers! DONT WE ALL! But the reality is that cash buyers still need to determne their exit strategy and therir yield on investment dollars and it is always driven in actuality by available debt capital.

Jun 22, 2010
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Tyler J.
Portland, OR

1. Make sure you are working with a commercial real estate agent.
2. Require all offers to be submitted on a standard purchase agreement or LOI that your broker can provide to the interested party.
3. Require the offer to include proof of funds.
4. Consider having non-negotiable terms to be included in the standard purchase agreement or LOI, for example: Earnest money deposit in the form of cash not to be less than $25,000.
5. Make sure your broker is interviewing the buyer or broker or both before allowing an offer to be submitted. Has the buyer seen the marketing package? Has he seen the property? Has your broker confirmed the proof of funds.
6. Most of these BS offers can be prevented by your broker setting expectations with the market/buyers up front.

Jul 8, 2010
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Dorene S.
Torrance, CA

Dear Anand B.
Have your listing agent qualify the buyers in advance. Let them know you will not entertain offers without proof of funds, or under a set amount..that should weed out the unsuitable offers.

Aug 6, 2010
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