It seemed like the deal was history…

July 18th, 2011

Success Story From:
Name: John P.
Title: Broker
Company: Diversified Residential & Commercial Services Inc

A few years back we were helping a client who owns a food manufacturing plant in Brooklyn NY, refinance. Everything was moving fine (appraisal Value was good etc.) until enviormental company revealed that in 1977 on one of the lots that the property currently sat on was a gas station. Unfortunately there was no information showing that the underground tanks were delt with when the station closed. The lender was thinking about steping up to a phase 2 for soil testing and investigation which was estimated to cost the borrower $50K-$75K, and then more $ (hundreds of thousands) if anything was found. It seemed like the deal was history, till after reviewing the survey and appraisal, I asked the lender if someone else had owned the gas station would it have been a problem, which they of course said no. I then asked if we could omit the lot that the gas station was on (client used this area as a loading area and parking lot for trucks) from the deal. The lender reviewed the deal and the Underwriter said as long as there is acces to property from other areas (which there was, they have 4 loading bays) and that the value was not dramatically impacted they would do the deal. I spoke to the appraiser and he reviewed the deal and only decreased the value by $75,000. He changed his appraisal, and a few weeks later we closed. If I had not looked at and delt with the issue in a creative/out of the box way we would have of lost the deal, and our client would have lost all money (appraisal fees, Env fee’s etc) that they spent in the deal already.

Knowing all aspects of your client’s property specifics and due diligence matters are essential.

March 11th, 2011

Success Story From:
Name: Bruce
Title: Senior Partner
Company: Lee and Associates

Knowing all aspects of your client’s property specifics and due diligence matters are essential. Several years ago, I obtained an agreement for the purchase and sale of a 90,000 square foot multi-tenant office building. The asset had lots of hair, but both buyer and seller came to terms and though the document execution took longer, because both attorneys were prima-donnas, everything finally eettled in. The due diligence contingency came and went, and $100k went at risk. I left town for the Christimas holidays feeling confident.

A couple of days later, at my out of state home, my client called and said the buyer called and wanted to put off closing until January 3, which was less than 10 days away, and he had agreed. After thinking about it, he called me and asked if that was OK? I said “Did you sign anything?” “NO,” he replied. “When the extension agreement comes out, send it to me.” “Why?”, he says, being curious.

“Because in the that four foot stack of due diligence information that you gave the buyer, there is a letter from the City requiring that there is a five year period beginning on that day, after which every elevator must be up to current code and specifications. The date of that letter is five years ago next week, three days after the Buyers extension request.” This requirement could have potentially cost my client three to four hundred thousand Dollars. I had him waive some specific warranties in the contract when the extension agreement was signed.

The contract proceeded to closing, and it was never mentioned again between the parties. My client, however, gave me a $25k bonus, more than a slap on the back and an “atta boy”, knowing that I had covered his back on this potentially hairy detail, no doubt averting a strategic last minute retrade gambit from the buyer on pricing using this hidden detail as leverage. More importantly, this client has used me for several other transactions since that deal closed.