One of our apartment buildings is currently in escrow to be sold, and what an adventure it has been. We knew that the banks were being difficult, but the load on us as SELLERS to verify our numbers and positions has created an amazing workload of paper and correspondence.The frustrating part, among several, is that the bank keeps coming back to us as sellers for paperwork and documentation to the nith degree.
Some of this workload can be attributed we think to the buyers broker, who seems to be lost himself half the time with the process. We don''t know whether it is inexperience or lack of organizational skills, but if you are selling a commercial property these days have your ducks lined up in a row as far as your financials and property upgrade records go. Admittedly our internal financials were a bit confusing, but for the most part the ridiculous request we got for documentation wore thin.
Some of the paperwork was admittedly odd, and we thought overreaching. We had one environmental form we had to fill out that was several pages long, applicable mostly to a heavy industrial site and not a multifamily site that has been in operation since 1968. It even asked us if we had done environmental surveys on our neighbors properties. I guess with the threat of regulation around every corner this is necessary, but we are pretty sure none of the tenants are processing iron ore or plutonium on site.
As an example, I just got off the phone with one of the brokers and now the bank wants to see the management contract with our outside manager. We've owned the property for a number of years, and the buyer has multifamily experience but still, we need to pony up this paperwork. It just never seems to end in spite of all the documents we have signed under perjury,etc. The buildings have a good track record of cash flow and maintenance, yet we keep getting pounded with small, silly requests. It almost seems like the bank, who shall remain nameless, is looking for any excuse NOT do the loan.
Most of everyone out there that has commercial property for sale right now is just glad to get a buyer, but keep in mind if you are the seller be prepared to be deluged with paperwork request if a bank is involved. I guess Dodd Frank and the other oversight laws are forcing this micro management but we don't know for sure.
In spite of all the back and forth, it does look like we are going to be able to close. We have elected a 1031 exchange and we are in the search for a replacement building that is in line with our corporate plan. Hopefully on the buy side we'll encounter an easier time but we have go through the loan qualification process and that an interesting ride.