By Richard Montgomery
Reader Question: I am a member of an aging church group on the east coast with a declining number of active families and participants. The absence of new young families in our faith moving into the area and the passing of fellow congregants have taken a toll. From about 400 active families in the sixties to about sixty families today, we realize we should downsize.
No one in our group currently has any experience in selling large, specialized buildings. We need advice on how to proceed. What are our next steps? Is there much paperwork involved? Do we need a real estate agent? Can anyone besides a real estate agent help? John P.
Monty’s Answer: Let us answer the last questions first, and then suggest the steps to a method that may be helpful in divesting of the asset. Your group has already made the most difficult decision in accepting the idea it is a likely time for a change. Here are your answers:
Can anyone besides a real estate agent help? Yes, at several points in the process you will want to consult legal counsel to review and comment on some documents. If the group has an accountant, it may be wise to give them a heads-up early to see if there may be any issues that chew up time and will have to be satisfied before the completion of the sale.
Do we need a real estate agent? When you mention, “ No one in our group currently has any experience in selling and buying large old buildings,” it suggests that a person(s) with contacts and expertise in real estate sales and marketing will be helpful. The key is finding the right person.
Is there much paperwork involved? Your real estate agent will prepare most of the paperwork. The steering committee should ask to review the documents in advance and ask questions of the agent after you have reviewed them. Take notes on the agent’s answers and then transmit the paperwork to the attorney for review and comment. The main documents are:
- Listing agreement
- Seller condition report (seller fills in the blanks)
- Offer to purchase
- Final closing statement (title company prepares statement)
The steps in order
As a caveat, the steps of any real estate transaction can change from the outline below. For example, one of the brokers you are interviewing may have a prospect right now, ask for a one-party listing, and sell the building now. While this example may be rare, unusual events do take place. If it makes sense to respond to an opportunity do not get stuck on protocol. Flexibility and aplomb help to ensure a satisfactory conclusion.
Step 4. Hire one. The key attributes are honesty, efficiency, and professional knowledge.
Step 5. Keep in touch about the agreed upon plan. Are they doing what they promised?
Step 6. Accept an offer.
Step 7. Complete your due diligence tasks. Do your part to meet contingency deadlines, which will be written in the offer to purchase. Ask your agent to create a transaction timeline
Step 8. The closing is when both parties waive all their contingencies.
Other owner tips
- Remember this is a double interview. Many real estate agents enjoy a robust practice, and they are working for themselves. Just as you are seeking the best agent, they are often seeking the best clients.
- Verify with your counsel that the committee handling the sale has the authority of the entire group to act. Who has the power to sign the deed and other documents? You may have bylaws or other materials that outline a procedure.
- Directionally, the seller should have a plan on where the group will convene when a sale materializes. This plan should be in place when the building goes on the market.
- A considerable period of time for due diligence is common. Due diligence time is extensive as plans, elevation drawings and municipal approval requirements cannot be completed simultaneously. The project often cannot proceed without time, and 180 days is not an unusual request.
- Put a showing protocol in place before any showings take place. Access for all prospects should be hassle free.
“Richard Montgomery gives no nonsense real estate advice to readers most pressing questions. He is a real estate industry veteran who has championed industry reform for over a quarter century. Send him questions at DearMonty.com.”