Elementary Steps to Buying
How does a buyer go from being a prospective buyer to being the owner? There is no perfect recipe, but the process looks something like this.
- See an appealing listing.
- Sign our Confidential Agreement and request more information on the listing.
- Review the Confidential Listing Details for the property.
- Visit with the broker to further discuss and evaluate your thoughts.
- Determine whether you want to do an onsite-drive-through or if you are ready to have an onsite guided tour and a visit with the owner.
- If things are appealing, this is the time to submit a Proposal to Purchase (aka, the offer). This proposal equates to a legal document which outlines such things as your offered sales price providing the property meets all of your criteria (and then you outline the criteria).
- Fortune Real Estate then delivers this to the seller. The seller either accepts or rejects it.
- For a success purchase to take place, the buyer and seller cycle through Steps 6 and 7 until an agreement is reached.
- Upon reaching an agreement, the due diligence begins on a very strict timeline:
- The buyer’s calendar fills in with inspections, analysis, meetings, banking decisions, and so forth (this is when the buyer begins being extremely intimate with the business, usually while also remaining anonymous to the current staff and customers).
- The seller’s calendar fills in with due dates by which things need to be presented to the buyer (occupancy reports, database information, etc.). The seller continues operations as though nothing was being sold.
- During the due diligence process, both parties adhere to the outlined details. When an issue is discovered, both parties must reach mutual agreement on how to proceed (such as a something being found to be out of compliance. Will the seller bring it into code? Or will the price be reduced? Or the time extended? Or will the agreement be deemed null and void?).
- When all items have been successfully reviewed and agreed upon, and the financing has been lined up, a ‘closing’ occurs which then legally, financially and physically turns the business over to the buyer.
- The day of closing typically is the buyers. As of midnight on that day the new owners take control:
- The new business owner then implements their business plan, using their business accounts (bank accounts, credit accounts, merchant account, utility accounts, insurance policies, etc.).
- The seller then begins closing the former credit accounts, merchant account, utility accounts, insurance policies, employee tax accounts, etc., ensuring all debts are paid in full.
For more information on buying or listing an income-producing investment property, please contact Fortune Real Estate.