This is a follow up to offers written to purchase multi-unit residential buildings. Some of the clauses and conditions in the Agreements of Purchase and Sale were presented to me from other Realtors and others were my own offers in which I wrote the offer for the buyer(s).
Find a knowledgable and experienced Realtor and listen to their advice. Read this article to learn more about me and what I do.
It is important to understand that in this process Realtors are legally required to follow the instructions of a client and owe that client Fiduciary responsibility. We must follow any legal instruction of a client. In other words, don’t always blame the Realtor if the offer sucks.
One of the conditions was that we produce for the buyer, the building permits for the property. Think about this….are you in possession of the building permit for your house? Likely not.
The building had been there for about 40 years. What does happen in the process is that the buyer’s lawyer orders a Compliance Report from the city. If there is anything out of order, if the property does not comply with code or zoning, etc. it will be revealed with the report.
A good Realtor and/or lawyer will also want a fire retro-fit certificate from the Fire Marshall’s office to ensure that the building meets fire code. Of course the buyer’s lawyer can also inquire with the city about building permits, but to ask the seller to produce them is not relevant and annoying.
If there is a spider in a hallway, does that nullify the transaction? I think I understand the intent, but it sure was poorly presented. The only pest in this case was the buyer.
Ridiculous amounts of time to complete conditions are also huge red flags in a transaction. I have had two occasions recently where a buyer wants 45 business days (a full two months) to review the leases. This can be done in 45 minutes.
He also wanted the same two months to have a building inspection done. I can find an experienced and qualified inspector in 48 hours. These to me are delaying tactics. A buyer is trying to tie up the property and does not know if he can afford to buy it. The buyers agent is weak and has not properly financially qualified the buyer. The buyer won’t pay the cost of a building inspection until they know whether or not they can obtain financing.
In the meantime, two months can go by in which no one else can purchase the property because it is conditionally sold to this shaky buyer. The stupid conditions are not met, the building goes back on the market, and the seller would have lost two months of marketing time.
I had a buyer who wanted me to make the offer to purchase a building conditional upon him obtaining the income tax records of the seller, so he could ascertain if the seller was being honest about his claims of income and expenses. This is not the first time that I have been asked for this request, and as I told this buyer in more than two decades it has never happened and it won’t happen with his offer and he will just aggravate the seller. Guess what?
That’s exactly what happened. I’ve sold more multi-unit buildings than I can remember, so what do I know? Not the first time I’ve been ignored.
This same buyer also ignored my advice in another matter. He wanted access to the seller’s bank records so he could see all the monthly rental cheques being deposited into the sellers account. “Ain’t gonna happen fella”, I said. Guess what again? It did not happen.
Rental payments are frequently not so neat. In this case, one tenant pays in cash, another had pre-paid a few months in advance, some paid by cheque, and still others send the funds via email.
I understand a buyer wanting verification of payment, other than signed leases and I recommended a technique for that to happen. Guess what? Got turned down again!
The truly frustrating part of dealing with some of these people is that they have never bought income producing properties before. They generally own their own home, which they feel makes them an expert in real estate.
In my cranky old age I refuse to work with some people. Other times I let my guard down or they slip in under the radar. The moral of the story is that maybe, just maybe the Realtor could know a little bit about real estate.
As always, reply with any questions you have.
contact Patrick Walchuk