1. Letter of intent
A short, usually non-binding outline of price, timing and key terms.
Deal process
From handshake to closing table.
What actually happens between agreeing on a price and getting the keys: the stages of a real estate acquisition, explained.
Every deal follows a path
Buying an investment property is a sequence of steps, each with its own documents, deadlines and decisions. Knowing the path helps buyers, sellers and brokers keep a deal moving.
Here is how a typical acquisition unfolds.
The stages
2. Purchase agreement
The binding contract, drafted and negotiated by attorneys.
3. Deposit
Earnest money held in escrow to show commitment.
4. Due diligence
Inspections, financial review, title, zoning and legal checks.
5. Financing
Appraisal, lender underwriting, loan approval and documents.
6. Closing
Final documents signed, funds transferred and ownership changes hands.
Be clear in the LOI
The clearer the letter of intent, the smoother the contract. Price, deposit, diligence period, closing timeline and major conditions should all be spelled out.
Start diligence on day one
Order reports, request documents and schedule inspections immediately. Most delays come from information arriving late.
Communicate constantly
Buyers, sellers, brokers, attorneys and lenders all depend on each other. A short weekly update on open items prevents surprises.
Frequently asked questions
Is a letter of intent binding?
Usually not, except for specific provisions such as confidentiality or exclusivity. The binding terms come in the purchase and sale agreement. Have an attorney review both.
What happens during due diligence?
The buyer reviews leases, financials, physical condition, title, zoning, environmental reports and legal matters to confirm the property is as represented.
How long does it take to close on a commercial property?
It varies with financing, diligence and complexity; many transactions take from several weeks to a few months.
What is an earnest money deposit?
Money the buyer places in escrow after signing the contract, applied to the price at closing. Whether it is refundable depends on the contract terms.
Selling or representing a property?
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Brooklyn, New York