Digisign Invoice Template for Translation Made Easy

Digisign invoice template for translation

all right so welcome everyone thank you for joining me this afternoon we are going to start a new podcast and we're actually changing the name it's no longer going to be cahoots we are changing it to stoic sessions a commercial real estate conversation before we get started I want to jump into the word stoic I think one of the things that sets me apart as a commercial realtor versus other Realtors and residential Realtors is that word that's my theme word stoic if you look at the definition is you know things happen and you don't show emotions either way and that's essentially what we do is commercial Realtors is we analyze deals by the numbers we make deals make sense and if they don't we're not looking at things like layout paint little things like that because that can all be changed we're looking at the financial scene if these deals can work and for investments we're looking at leases and if the deals make sense we're going to go through with it and that's one of the biggest differences between a commercial realtor and a residential realtor if you can set yourself up to be stoic in a sense you'll set yourself up to be successful so that's how I approach my business that's how you should probably look at approaching yours and so yeah we're gonna go and jump into this so the first deal we're gonna look at is a lease for a nail salon I have a ton of nail salon clients this one happens to be in Kyle so if you take a look at the area you've got a ton of anchors you have Kohl's you have target you have Walmart you have Lowe's you have h-e-b you have all of the square footage of retail that are there are anchor tenants that create foot traffic in the area and one thing they don't really have is the nail salon which is great so you look at this little site right here that's being developed you have orange theory you have enamel which is a dentist and a smoothie King if you look at all these places this is foot traffic coming into this specific little building on a consistent basis you have 325 apartment buildings coming over here again Walmart Walgreens all this stuff so this was a slam dunk when I looked at it that I needed to pitch this to my client as soon as possible and we needed to get a letter of intent in their heads so you look at this is done by one of the local powerhouse brokerages they do really good work they have strong demographics we take a look at it in the mediate area we have a $65,000 median income household income three miles 78,000 and then we have a forty thousand population within three miles so the demographics looks pretty good and then you also have a 35 you know you're right off by 35 it's one of the major thorough ways to get into in and out of one of the major parts of Kyle and again here's more about the development stuff so I sent this over to my client we put up an LOI the same day and started working on it and that is what we're going to jump into next all right so I put a letter of intent together on behalf of my client if you'd like a sample you can always email me at James at CMO CRE comm what we like to do in our letter intent is outline a lot of the basic terms that you would like to see inside of the lease so if you see you know we make it out to the broker we identify where we're trying to lease you know I put my my clients info and we're stating that we're putting a letter together on their behalf with the intent to lease this space so we also identified our use as a nail salon with waxing services it's very important when you've got a client that offers multiple services that you outline what they are there could be exclusives in another leases lease that limit what you're able to do so you want to outline all your services possible so that you can make sure that you are in the clear to do your services because nothing sucks worse then you go into lease in a space for a nail salon your offering whack services but there's another tenant that says you're not allowed to do whack services at all and you have to cut that out of your business if that's a major part of your business plan you're hurting whatever that allotment is taken out so be upfront make sure that you identify all services as they are related to your clients this is a new development so I didn't know exactly when it's going to be delivered they didn't have a concrete answers so we I just put four to one or two thousand 19 commencement I put the suit of a hundred and eighty days or tenants grand opening of business and so when we execute the lease the tenant will have a hundred and eighty days to complete construction build-out or the Tina tenants grand opening for business we asked for one hundred and twenty four months so we're asking six months of construction time and we're asking for mine if I ask you real quick the the delivery date being q1 2019 does the commencement run during this timeframe right now it does not so the delivery date is when this 180 days starts the delivery of business after delivery is possession okay and once you get possession then you're asking for build-out time and so we're asking for 180 days from the delivery date to build out the space so delivery is this is when I can expect my keys now on top of this we get a little slick with and we also ask for early access so we may have the delivery date far in the future with a new development but we may ask for an early access so we can start working with our architect to come in and and start doing their planning along with the general contractors to come in and so they can start planning so we're really asking for probably eight months of free rent here as early access give you an ability to to physically go in and change the building at all or it's only for planning and measuring you can yeah you can go ahead and start working on it what the landlord really cares about here is that you have your entrance so that if something happens they're not liable for it so you before they grant you early access they're gonna want to see proof of insurance beforehand but it's pretty known as soon as you sign the lease they've already got you on the hook for whatever time they have allotted so more times not they're just going to give you the early access but I build it into my letter of intent and ask for the early access I'm not sure if I put it in here but that's something I typically do so if you take a look at it you know we have 180 days and then we also asked for four months of free rent why this is appropriate because we have a ten-year commitment here we also are doing a pretty aggressive bumps where we're doing one dollar annually and you know that's pretty market you they were asking I think thirty three a foot what's triple net and everyone's going to expect escalations so what we did is a dollar is still under the 3% margin so you know we're still getting a discount by asking for a dollar per foot and you'll increase and I'm sorry I did this by anything so really this is 50 cents annually that you're being increased again that's something I do on the longer-term deals they're usually willing to work with you because you know their bottom line still looks pretty good with a 10-year commitment this lease will use a triple net structure today will be responsible for its share of expenses which includes taxes insurance and common area maintenance I'm not sure if when breaking this down that we've really gotten into it but the way trouble nets work is you work for you are allotted the amount of square footage you pay the expenses based on how much square footage of the building you're taking so say you take 25 percent of the building you are paying 25 percent of the total cost of taxes insurance and common area maintenance so if taxes are a hundred thousand dollars for an using example you're paying twenty five thousand over the course of 12 months that's really high that's not what people are paying but you know just for reference that that's how that works we also built in two five year options we haven't we also identified at then prevailing market rents you can some time to ask for a set amount that we would like to continue doing the the biannual 50 cent increases in this case we already know that we're asking for a sweetheart deal so we're not going to get too aggressive we're gonna go ahead and put it then prevailing market rate ritz identification is just talking about signage if the landlord has specific signage criteria that they would like to identify that's their opportunity to come back and say all right we don't like your language we would rather see this and some of the higher projects like if you look at the top two developments and awesome right now they will actually give you an allowance towards your signage so they'll cover a certain amount of the cost because they want it done a certain way and so they'll give you a little bit of incentive to make sure that it's done tastefully it doesn't happen very often but on the on the top developments you can sometimes get that security deposit I'm not sure if we've gone in depth on that security deposit is minimum almost always equal to last month's rent and in triple net if triple nets are a part of it they sometimes may ask for higher than that and that subject to financials they may also ask for a guarantee again that subject to financials and you can kind of get a good feel of it you when you've done enough these deals you can take a look at the financials and kind of start managing expectations with your client okay based on these financials or based on the amount of locations or base that you're a start-up you can tell them all right you're probably gonna have to do a guarantee with this or we may have to offer some additional security deposit now one thing you can do is if you don't want to do a personal guarantee but you don't want to lose the deal you may offer double security deposit security deposit is if the lease if the tenant defaults the landlord gets to keep that cost so you look at is if you do if you're doing double security deposit here this is probably $15,000 on the line it shows that the tenant is not wanting to default on the lease and has skin in the game so you can get creative with these solutions you know your goal is just to find something that works with every 110 or improvement allowance we know that market for nail salons is 40 40 dollars a foot roughly so we're gonna go high on that we asked for 45 a foot and we also ask that the space be delivered in a cold dark shell and when we get into the lease we're gonna ask them to specifically define what a cold dark shell looks like because every landlords definition is a little bit different but it's very important that you understand and that your client understands what the Speight what condition the space is going to be in before they take possession and their clock starts ticking access we also ask that they have 24/7 access so they can come and go as they like you may see this in office buildings that it's locked after hours or they limit to certain mounts or maybe city ordinances that affect that we put 24/7 and if it needs modification the landlord will let us know landlord responsibility we this is kind of an aggressive ask but we put it on every letter of intent to you know see if we can get landlords to agree to it we ask them to take care of all roof structure and HVAC components now roof and structure they're gonna take care of that anyways that's typically landlord responsibility unless you're in an absolute net lease where everywhere the tenant pays all expenses example like the Walgreens they typically have that but if you're in a typical triple net lease or modified gross the the landlord's can be responsible for the structure in the roof where our aggressive component of this is the HVAC a lot of landlords this is one of the big talking points that you that you get stuck on Annalise is who pays for the HVAC and you have to look at it from both sides from the landlord's perspective you have it you don't know if the tenant is taking care of the unit so why would you want to be responsible for a 20 thousand dollar replacement if the tenant is in there dogging it out you know putting it on 60 degrees in the summertime and just you know killing the unit where the tenants perspective is okay this unit may be 10 to 15 years old and on its last leg and I'm only expecting to be here in 3 years I could be gone because I may be expanding or relocating why would I want to be on the hook for a $20,000 improvement on something that I'm not even sold I'm going to be here forever on it so you have to look at it from both sides it's it's your responsibility as an agent to do your due diligence and ask the questions like if you're representing tenets of how old's the unit how often is it been serviced can we maybe get an inspection done and you can pick an HVAC contractor to come out and give your their opinion on the AC as a whole before making a decision and tying yourself up in a lease so if the unit's 10 years older I would recommend getting an HVAC specialist out there to give it an evaluation we are in Texas it gets well over a hundred degrees in the summertime so it's very important that you you research on your client and set them up so they don't get themselves in a bad situation brokerage Commission we're asking for 4% of the base here in Austin that standard other markets that may change like in Dallas if you're the 10 or a broker you're getting four and a half percent compared to four percent so you know just understand your market know it's acceptable to ask for another example here in Austin if you're representing a Class A office space tenant they typically pay four percent on the gross so that's triple net and bass combined you can't get that on just about anything else Muslim they're going to be paying on the base so just understanding what's appropriate to ask for and in what instances you may be entitled to a little bit more know your market and if you don't know reach out to someone that has experience in commercial again you can reach me at James at CMO CRE comm I'm happy to answer questions and yeah and then we just have some language on conditions to offer we out we outline a date that they need to respond by we typically give about a week you know three days three business days three to five business days to respond is pretty normal and then we just have a little note that letter of intent SAR not a legally binding document so you know while we're agreeing to terms we can also always go back on the lease and if it doesn't make sense we can dispute certain items you want to negotiate in good faith you don't want to do pull a bait-and-switch and say that you're green to this and not really falling through with it but if there's an item that pops up that's pretty big you can always go back and contest this this is not a legally binding document so with that this is the offer we sent let me show you the response we got and how I evaluated it all right so the first change that we see is they upped our square footage from 1700 to 2200 now look at that for a minute that's a 500 square foot difference that you're now paying rent on so it's important that you take a look at that and you you go over that with your client and make sure they're okay with that additional 500 square feet of space it's interesting because the the marketing said 17 yeah the marketing says 1700 it looks like they Wis bagsy and renegotiated space with someone else and cut some of that down so there's opportunity to have 2200 square foot now this is a new construction so if that's not locked down yet that was just their site plan of what they're expecting but it seems like it's changed a little bit my owners were ok with it so we were gonna move forward the other thing that changes they now anticipate that their delivery date is going to be June 15th so we went from quarter 1 of 2019 to June 15th of this of this summer now that was actually a problem for because the the owners of this is a husband-and-wife team the husband does all the general contracting he's a general contractor he does all their build outs he can't start before September 1 so this is an item that we're still going back and forth on we agree to all terms not these terms but we've agreed to all terms of set for delivery date and that's one of the items that's holding it up so again delivery date pokes its head up again it's one of those painless items that you look at they can hold up a deal because we're a month and a half discrepancy one and a half months to two months discrepancy on date on a 10-year deal that is holding it up right now from both sides of green and I'm sitting here with the mindset we're guaranteeing 10 months of rent I mean 10 years of rent and you're giving us trouble about a month and a half or two and a half months what I mean what's your opportunity lost there it's not very significant on giving us letting our dates start a little bit later the only thing that is super interesting and I had this conversation with my client I always like to ask the question first when we get on a conference call about these I want to hear my motivation before I start giving them my analysis I always start off with the question what were your thoughts on the letter of intent and with that he said I didn't like it and I said why what what stood out to you that you didn't like he said I didn't like their price point of 30 to a foot and 35 20 on the second split now if you look at this this is years one through five at a flat rate of 30 to a foot and you take a look at years 6 through 10 they increased by 10% and so I went back and I told my client you realize that we were given ourselves 3% annual increases so if you look at the end of 5 years we've already increased 20% so this is a flat rate and we've reduced our actual increase by 10% by this rate so we are automatically getting savings they offered us a better deal than we offered them and he said I didn't think about that so again that's why I like to start with the question what do you not like so I can go and I know my motivation of what I'm trying to address and it goes back to the financial breakdown that we looked at a couple weeks ago I saw that and I started kind of salivating I was sitting there I was like we just got better terms and we even asked for it so though when you get this when you get a counter response go take an Excel spreadsheet put out what you offered put what they originally offered put what you put in the the LOI and put what they countered at and compare the three numbers and show that to your clients because my client was mad about something that he was saving a significant amount of money on and then they also went back and said on the renewals we have two five year our noodles at a 10% increase per option what if what if the increase then is they're looking at $40 a foot and we just increase and we're at 38 we've seen money again so and I also told my client too and if the market goes south for whatever reason yeah there may be a 10% increase but we can tell the landlord at that point that doesn't work for us anymore that's not market rate anymore we can't afford to be in here like that anymore we need to renegotiate the terms you can always go back to them and if they like you as a tenant they should be willing to work with you but having this locked in they can't go above that and that's what one of the things that we look for yes it's great they put it in the letter of intent this is not legally binding we need to make sure that it's put into the lease so these items that you win you need to make sure that these translate our job is once we get have this document to compare it to the lease and make sure that we have implemented it successfully so with that I'm gonna stop real quick at any questions or anything we've gone over so far good no it's good cool so we also updated the triple Nets I also like to identify that in the letter intent just so we can kind of see what what what we're working with so that I can show my client what we're looking at monthly base rent along with the triple Nets so they can combine them and know what they are truly paying for a month because a lot of people forget about the triple nets they see that we're paying 4,500 a month what is this nineteen hundred dollar charge on the back end that's your trouble Nets you've known about them we talked about them but they don't think about that so outline them make it make it known to them over and over again these are your expenses so that they are aware no right so triple Nets so the question is do we do we plan for triple net increases do we talk that over with our clients and the simple answer is we just we tell our clients to be aware that there could be an increase in triple Nets but it's impossible to predict its factors that are out of our hand exactly like triple net like property taxes increase and that can be helped or hurt by the landlord if they decide to protest their taxes pretty diligently and make sure that it's a fair market value year over year you shouldn't see a huge increase but things like development in an area like a changing of an area kind of a gentrification process or people not prospective testing their taxes when they should landlords not protesting their taxes when they should you'll see a significant increase and taxes will will drive your triple Nets that is the main the main most expensive point in a in a triple net when you're looking taxes insurance common area maintenance insurance is typically the least expensive it's pretty flat rate you can account for that they're not expensive policies cam it depends on what the landlord wants to charge back to the tenant us here at their discretion there but the great thing about triple Nets is you can always ask to audit their triple net expenses the landlord cannot profit off these these are truly expenses that are being passed through to the tenant so it's not like the landlord's getting rich off these it's just passed through expenses which is normal now you can fight to put a cap on triple nets as a whole a lot of them aren't going to accept that or a cap on cam expenses so if you think they're cam expenses are high and maybe going higher maybe it's a redevelopment play where it's gonna be more expensive to upkeep say we don't want more than a four percent and no increase on cam expenses and cap that again they're more likely to accept that I would start with asking for all of triple has to be a two capped when they say no to that then I would the next step you asked for a camp tap where I talked about security deposit again they countered at $40 foot so we are already at market value for a tenant improvement allowance cold dark shell delivery so they've kind of identified that they are going to be delivering the space and in cold dark shell they took out all of our language about the roof structure and HVAC components I'm not worried about this the HVAC units going to be brand-new and it's going to be a part of the the t-i allowance build-out that goes into it so I'm not gonna fight on that because it's a brand new unit and there's a brand new space the landlord is not paying for it so why would they insure it I'm not surprised by that in the lease I'm gonna make sure that roof and structure are taken care of that should be a landlord responsibility so when getting the lease we will go through that and make sure that that that has taken place and so that was a pretty strong counter I talked it over with my client he was kind of blown away because he wasn't looking at it the way us as commercial Realtors and professionals look at it again when you're starting off and you haven't done a lot of these deals do the financial breakdown that will help you so much and seeing the bigger picture and how you can help your client and also ask questions to see what what their issues are with so you can address those you know how you evaluate it's great but the challenges that they are facing and that they're having in their mind is most important because they're the decision maker not yourself so we countered again and this was actually a second counter we let them know that you know we are not good with the June 15th date we can't start till September so we're still holed up on this June 15th today item so again that I'm gonna have to go back to the listing broker and say we're a month and a half apart on this two months whatever it is let's not hold up a 10-year deal on this month and a half you like us we're we have existing locations or a quality tenant we're paying market rent we're okay with all of our targets we're okay with the 150 days for after delivery day for the construction time five months and Kyle we feel confident that we can get it done we are okay with the no free months rent because we really after further or not analyzing we're okay with the 32 a foot in the 10 percent increase we also went back and we countered again at 43 a foot and tonight improvement allowance so we knew that our bottom line was forty that we would accept we got them up to 43 if you look at it that's the next row of $7000 that we got in tenant improvement allowance after negotiating so again this is an item that we're so going back and forth on but after taking a look at where we started and where we are now we are super close to terms and I think we're gonna get this done so again we're kind of done with this one do you guys have any questions about about tenant rep as a whole or this transaction specifically pretty straightforward yeah what we do is simple it's not easy so you're putting in a lot of work and you know if you're creative you can find creative solutions and and work to help your client find you know the best win-win situation for both sides were not rocket scientists [Music] because this is not the same kind of development where they were coming from remember we talked about the reasons why a landlord would want percentage rent is because they've lined up your foot traffic for you now this has foot traffic but it isn't owned by the landlord it's not all one big development it's shopping centers spread out owned by different owners it's not a part yeah it's not a part of the anchor this is a separate owner from all that all right so the next thing that I want to look at is we have we have this commercial contract for improved property in a in a Austin subdivision that are an Austin area that is changing you know this is one of the few kind of low income areas that still exist but even that is starting to change and property values are starting to go up we went from an assessed value of I think six hundred thousand to 850 thousand in one year we're sitting here with about an acre and a half of property it has two structures on it it has a church building it has a thousand square foot house and we've had our challenges with this we've had it under contract twice and it has fallen out twice for different reasons there's definitely some things I could have done better to to alleviate some of those problems and we'll get into that I have the listing this is my listing it is falling out twice the first time it's closer to the 183 side so like I said it's a changing area it's got a really strong development called Mueller that's two miles away and with that as kind of changed the area and it's spreading out and our areas being there you hit now you're seeing a lot of flips a lot of redevelopment a lot of you know buys and leases duplex conversions all sorts of stuff over there so we take a look at this contract this is the second contract yep this is the second contract that we had we got it under contract for four hundred fifty thousand a little bit of a backstory is this when I got this listing there say month-to-month tenant in the place of a church that had been there for over 20 years they were friends with the owner the owner was not the church owner they owned the building but not the church the the church was a tenant the tenant stop paying rent from the last two years so with that there's a property tax bill due every year and my my clients are a little bit older they're of retirement age so this is strictly money out of pocket every year that this thing is just sitting without a tenant this paying rent yes we're selling at 450 because last year last year it was at assessed at 600 and again we had this on the market and the market was dictating the price that it's not worth six hundred and twenty five thousand when we originally went out yeah no tea and commercial commercial will be wrong can be wrong it can be on the high side or the low side yes so the question was is this as the taxes been protests on this yes they did put in a protest for that I don't know how that's gone yet but we had under contract so they debated not doing it at all just because they didn't want to put the time and effort in but they went ahead and put in a protest at the last second and I advised that I said that jumped from 600 to 8 and we can't even get a seller for for 600 and something's wrong here and so it's an acre and a half and we have our challenges and and our price is actually probably market value and I'll jump into why a little bit later and so there's a huge discrepancy and there's one item that dictates the price in this it will jump into it so we had it listed at 500,000 we came down there there in a tax burden that they have about 12 to 13 thousand and tax debt on this that they just want to retire it's owned outright you know this is just a headache for them they would rather just get out and so we went under contract the first time the buyer never even deposited the earnest money he had a lender we you know we talked to the lender the lender said go ahead and make an offer so they made an offer we came to terms and the best guess is that the buyer really didn't have the funds or really couldn't do it and it they never did they never deposit earnest money for days in they said we need a we need a terminate it was it was really strange and it was really frustrating to my client it was it was it was one of the weirdest things and uh so that kind of got myself and my client off to a rocky relationship because she's like what what just happened who did you bring to me who do we go in her contract did you properly vet them did you and I said we went through all the proper protocols this is just I'm freakin freak occurence I've never seen this happen before in my five years the earnest money up was one percent and that's typical that yep one percent you don't there's no option in commercial so option equivalent is feasibility you don't have any you typically don't have any independent consideration for that no no this is a commercial this is a commercial property this is a car it's a commercial contract approved property gotcha so yeah this the buyer was a tender the buyer for the second contract was a 1031 buyer and so I told my client this one should be a slam-dunk because their identification phase was already expiring that week when they made the offer they then they had an additional like what was it 90 or 180 days to close so they're in a pickle where they've already had to submit all their identified properties now granted they could switch to another one but I'm saying they've decided to move forward with us this is a 1031 buyer this is equivalent to cash and they're getting to a price we're comfortable with so we said okay we're good to go here it's not contingent on financing there's no assumption or seller financing we got to pick our title company I my client is an attorney so she was really upset with the first title company that earnest money was never delivered or communicated to her that it was never delivered so we ended up switching title companies I don't blame the title company I don't think it was their fault it was just a really weird circumstance all all along so we switch title companies someone that I've used before and they are great you know if you ever have the opportunity to work with them I highly recommend it Christy and her staff are just amazing they take wonderful care of you so title policy you know we instructed for five days after the effective date seller Wolfer furnished buyer a commitment for title insurance survey we gave ourselves now this is one of the tricky parts so when we got the title commitment we're reviewing it and we learned that there's deed restrictions pretty quick so we get this within five days the the buyer is not comfortable with the deed restrictions the deed restrictions state that the dwelling is you to be used for a single-family residential or a church only there's two Lots on this property the church building is along with the deed restriction the other side is the is the property with no deed restrictions so risks in here the the buyers like well I don't know if I can get these lifted I don't know what what this looks like I'm not comfortable with this purchase I need to terminate and so we're like okay well that kind of stinks but we understand so we cancel the survey and we're at like day ten we go ahead and put a hold on the survey because they hadn't done it yet and so we go ahead and cancel and then they come back the day after they cancelled and said you know what we're gonna go ahead and go through with this anyway so they had already cancelled but no one had time they they had signed and sent it in but they hadn't officially recognized and we hadn't officially terminated so we say okay we're going to order the survey again but we need to extend closing because we're not you know we just don't have it we cancelled it when you said you guys were going to cancel because we're not gonna pay three grand for something that's not ready to go when we could have had it set up to come out of the proceeds that that's one thing that you can sometimes do is get the survey to hold off on payment until closing and they'll just take it out of the cost if it's in a reasonable time line not all survey come I mean survey companies will do this because they get burned a contractor will fall out and then they're stuck there they've already done the work they've already handed over the documents and they haven't been paid so they're stuck in a weird limbo situation and it's depending on the property getting sold again for them to get paid some survey companies aren't willing to take on that risk some may ask for a fifty percent upfront you know you just got to work with the surveyors and figure out you know the win-win for everybody so with this deed restriction they said they're gonna cancel so we had a reorder we get the amendment and they extend the closing they never asked to extend feasibility so we're sitting there like alright well it's not my job to do the other agents job to setup feasibility and all these items we simply extend closing two days before we're supposed to close we also renegotiate a price we came down fifteen thousand on the price and LU of the deed restrictions because we understand that it's going to take time and money for the for the deed restrictions to work out title gave three different solutions to get them uplifted we have a question good so the question was did I counsel to give a concession for for the for the D directions I counseled that because what what they did is they got with their attorney and they said it's going to it's going to take me $20,000 to get this removed with my attorney and it's going to take me six months to a year to get these removed and said you know what we'll compromise with you we'll give you 15,000 off for your time and effort because we understand this as a burden but we could also close this property in eight days as I told my client okay fifteen thousand dollars but we can close this in eight days and it's that worth the risk from you otherwise we have to start over no guaranteed on a contract no guarantee on a timeline to close no guarantee on any of those items so fifteen thousand to hit but is it something you can live with it's less than ten percent you know it's it's a livable number I think that would be I mean it would be like a three to four percent decrease in price so that's definitely something we can live with actually know it was a little bit more than it was it wasn't a significant amount that we were given up so we give that two days before closing she gets a new attorney and the new attorney says that she needs to ask for an extension for 45 days and to do further research on this and we tell her no we're not going to do that you were in default we don't need to do that and that's why we gave you a concession of $15,000 that was for your money and your time and so if you would like the time we will give it to you but we need to go back to original contract price we need to be at 15 450,000 and earnest money needs to be non-refundable at this point which already was because they're already in default because we had already exceeded feasibility so they came back and said that we were being unreasonable and so I countered you are being unreasonable to ask for an extension with when we've already given you concession you can't have both so we can either ran it if you want to put up some non-refundable money we can go back to original contract price you know we will work with you but we're not just going to give you something with nothing or turn that's not operating in good faith there's no 50/50 here so we're not willing to do that so she decides to terminate all together and they've defaulted but the crazy thing is even though they've defaulted she will not resign the release of their earnest money so that is a debate we're having right now there's $4,500 side up and my client is pissed first off she thought it was the title company she's like well why do we have a contract if they're not going to enforce it and I had to tell her they are not they are not there to make a legal decision they are the placeholders they hold your money and when a decision has been made then they can act on it legally they cannot just release the earnest money otherwise they're liable to be sued because they've done something improper now and whatever illegal [Music] I don't where you can still do that with title for me being a licensed realtor I wouldn't do that because that compromises what is legal in my scope you not being a licensed realtor I think you may have power you you have different parameters to operate but being licensed realtor and and operating with our fiduciary responsibilities it makes sense for us for our protection to go through a title company and use them and the way to bill if you have an attorneys involved then let the attorneys dictate that not use the realtor because you're operating outside of the Thar contract which is not our scope for work we can't do that and so like I said when you weren't license you weren't bound to these tire forms and what you can do inside or out of that and if you have an attorney dictating it they can make that decision we're not taking that liability on as individuals but yes but what you can do is you can that non-refundable that you're talking about you can put that in the special provisions there's no reason you can't do non-refundable earnest money just like you're saying but you're setting it up to go through the title company so how do we set this up to be non-refundable in the special provisions they wouldn't have had to claim to earn title would had no problem yes and it actually that will lead into this new contract that we're accepting and I'll show you what I did here because you know as we learn from this and I know my clients upset we're gonna do things to you know make sure she's protected and feels good that we're making progress and protecting her so we go through you know we had all that happen it was just kind of a big mess there's probably not anything else that we really need to look at with this one so we'll get out and we'll take a look at the new offer well one thing I'm going to take a look once you guys to take a look at to is a critical dates list I always ask this of title companies some will provide it some won't you can also provide your own and I would recommend doing that if you can't get it sending it to the other side and confirming that both parties recognize these as the dates so that there's no confusion everyone's on the same page note that if the date falls on a weekend it's supposed to roll over to Monday make sure that you identify that and confirm it with the other side so that they're not trying to hold you to Friday or is that there's any confusion there take care of your client bye-bye confirming with everyone making sure everyone's on the same page so you look at it this title company is outlined things like the effective date earnest money when this do seller property info title commitment existing survey all these items what I like to make my own anyway so I go and I have my own sheet that I use it's a lot of these same items and I just make sure my dates compared to what title recognizes and then I have title sent it to both sides and then if the other side has any objections they should let us know what those states look like but if we both receive this notice and nothing is said then these are the dates that will more than likely be using so I'm not sure if you guys have seen I know you guys some of you more experienced guys have seen this but for some of you newer ask your title company if they can't provide it email me at James at CMO CRE comm and I will give you my own personal that I use so this next contract I actually leveraged the previous contract to get this contract so with this property you know you guys saw that the assessed value skyrocketed to eight hundred thousand we've had people blowing up the phone saying you know we're interested in this property when I said that we were limited to that price of four hundred fifty thousand 500 and that were below market on that assessed is simply because the deed restriction because right now it's limited to a church so if we're selling that is current use with no guarantees that the the restrictions can be lifted you're limited to Church buyers Church buyers can't afford eight hundred thousand dollar properties that are only twenty five hundred square feet and only 0.65 acres sorry it wasn't an acre and a half so point six five acres but eight hundred thousand dollars they're not gonna pay that for this kind of property so we look at it okay we're not doing any of the deed restriction work so with that we're limited to church buyers and so this price point of five hundred thousand ball park is kind of the play house that we're playing in now one thing I did with this contract like I said I use it as leverage is I took the other contract that we had and I called this group because they are the ones that were consistently calling me more than anyone else saying they need it and I knew their church and I told this group hey we're really unhappy with this buyer we're supposed to close in two days we haven't terminated yet but they're asking for a 45-day extension with no additional money so if you can come to me with non-refundable money and essentially replace the contract and I didn't tell a contract price but essentially what I did is I went back and I worked oh this is an amendment I'm sorry this is an amendment where they didn't they just extended closing and not the feasibility so when they did that and we passed the feasibility they were in default at that point when they didn't close that's not the where is this contract let me pull that up real quick so essentially I got my clients fifteen thousand dollars that we have guaranteed back because I didn't tell them a contract price but I told them they're like well we'd like to offer for twenty five and I said well that's already well below our our current price we would just stick with them there's no reason we're gonna give any concessions here but we can if we can replace and you have some non-refundable money that you're willing to give then we're already mad at this group we'll just replace them so I got them up to 450 I got our price back and let me show you some of the other things that we built in here and so again I used that previous contract I wasn't lying I just used it as leverage to get ourselves into another deal give me just a second as I pull this up any any questions all right so again we we upped our price back to the 450 we got them to sign off on it this is not contingent on buyer obtaining third-party financing we got them to put up $8,000 as earnest money no we didn't really care about that it it is it's nice if they default we end up getting this but also our goal is to close we got to use our entire company we push for that I you know I was just they wanted to use theirs but I told them look we've had this title company for two rounds now they've done its kind of work for us I need to get them rewarded we're paying for title policy anyways we're Christie is one of the best in the business you know we we feel comfortable using her it seems rather flexible in that like at least residential I've always known the listing agent to be the one to make the decision the the seller to be the one to make the decision on title since they are paying for policy yeah and typically you do have that leverage it's usually the seller that gets to dictate there are certain instances where the buyer you know says I'm not going to close unless we use ours then the seller has to decide is it worth it that much to do it but I was going to go to bat for our title company just based on the amount of work they've done for us that was gonna be an item that we really didn't want to bend on so we go through all this it's a it's a pretty standard contract like to get down to the special provisions all right so sale is continued on buyer confirming of receiving answer on zoning and use that is an item we may potentially dispute that's kind of what your feasibilities for and that's what your time periods for so that contingency is kind of irrelevant it's kind of a double whammy there's no need for it if it doesn't work for you then ask for an extension and we can either yay or nay it if we fill your clothes or if you find out it doesn't work just get out within your feasibility now one thing here is they've also put that three thousand of their earnest money will be non-refundable and will upon closing be applied to the price of the building that is one of the adjustments we made going forward and especially after seeing this whole earnest money situation is we needed some non-refundable money and that's what I went to my client said she's like is there anything we can do to kind of protect ourselves and clean this up so that we're not stuck in the same limbo because otherwise why would any buyer give up earnest money if they default why wouldn't it all of them do that I said well we did that because we got 3,000 of non-refundable money built into the contract we didn't have that previously we didn't have it say that the earnest money is non-refundable if defaulted and so title can't act on on this title can act on they can say okay it's built in your contract at that 3,000 we can release that the day they decided to back out the other is pretty standard the seller is to turn on electricity for inspection they just they realized that the utilities are off they just want that on so they can properly inspect they also asked for we kind of scared them when we told them that we weren't granting the extension they said okay well we we wants access to one-time 20-day extension for closing for an $1,000 non-refundable fee it asked me originally you know can we have a 20 20 day extension if needed because you know we don't want to get stuck in this other position where we need that additional time you don't grant it we want to make sure you guys aren't being unreasonable I said we would look at that if you put up something in return something non-refundable that was our issue with other people they were putting zero in for us and trying to take all the reward where this if you give us $1,000 or non-refundable you know that's still considerate you're paying to play and we can respect that and honor that so we put that into the contract so one of the other challenges we had is that the buyer on this previous contract hadn't officially terminated the contract yet we had terminated and they hadn't terminated yet but we couldn't accept this offer until that other one was terminated so we had title do some research when they initially tried to terminate back in April the first time title said they can recognize that as the termination because it was signed by them so assigning a separate document although it's not the same one which showed that both sides have terminated and we can move forward with the new off so that's sort of a loophole because one of my issues with assigning this other document is it's dated and it's a date that I didn't like not gonna disclose why but just didn't like it so I didn't want to assign that document I'd prefer if we had a different document and that's what we did so we are going to be able to accept this offer because both sides are now going to be officially recognized as terminated at what point in time and maybe you guys know this but at what point in time does the fight over earnest money and the limbo that that contract puts the the property in when does that die off until and until they come to agreements and the young so the seller signs off says we're terminating and the buyer could just sit forever one the the buyer the buyer argues here that that the survey since we didn't deliver the survey on time that they have recourse to it and what I told them is well when you filed your your amendment you should have asked for an extension of feasibility it's not my job to set you up you guys knew that feasibility was expiring and you didn't set yourself up properly that's not my job either way you guys have defaulted and so again it's a he said/she said pointing fingers you know it's it's ultimately they defaulted and they're not willing to take because who wants to just give up $4,500 I get it you know I wouldn't want I wouldn't be too keen of that 22 split in two and that's kind of next up I'm not sure yeah I'm learning more about this because this is the first time that I've had this pop up and be such an issue you know it's kind of one of the fortunate parts of these contracts is you can set it up and you're reliant on both sides playing nice even if one side is messed up and that's one of the things that it's kind of unfortunate but that's just kind of the nature of the business is that something you could write in two special provisions well to ask what we that's what we did we have one out of order hard money there but I'm saying you know in the professional special provisions just writing in something short that says you know in the event of a default and a non agreement the seller can continue to move forward selling the property or something like that that at least gets them out of that limbo and you know what we can argue on the back end about your earnest money but right now we're gonna go sell this house you okay that was my original question but since days they're not tied up in they they're just tied up with the money not selling the house right okay that's what I thought I kind of tuned out yeah I thought we were saying earnest money tied up the property so that you couldn't sell it to anybody no so it is lies at the end we were we were kind of hung up on two things determination and the earnest money and so I went to my client said whatever we do we need to get out of this contract as soon as possible so we can do this and we can dispute the earnest money on the side but as long as this property's tied up they think they have leverage in their mind that they can hold us up from selling so what I actually did is I went to the buyer's agent and told them hey we're actually pulling the property because we saw that we had a huge increase to our assessed value so we're gonna pull it for six months and try again and you know see if we can double our price tag and so with that I'm telling them that we are comfortable to sit and wait you know we're we're not looking at any other offers it's not that so that kind of tells them that okay they're just gonna wait us out we wore okay just terminate terminating is most important to me because there's four hundred fifty thousand on the line not forty five hundred I don't care about forty five hundred I care about getting the four hundred fifty thousand closed and so kind of next up with earnest money is I'm just gonna suggest that we split it down the middle do half in half both parties to say I mean because they owed us for the survey anyway so it's in the contract they owe this for the survey and that was like five hundred thousand bucks and I'm gonna outline a you notice this for this this for this why don't we just split it down the middle like and if my clients can live with that you know let's just do that and call it a day but I'm going to go to bat for my client as well and let them know that we're doing everything we can to potentially get that money but again it's forty five hundred it's not a ton of money to where you want to tie yourself up going to court and arguing over forty five hundred dollars because again we have a lot more at stake here all right so any further questions on these items listings next time yeah so thanks everyone to tuning in to the first newly named stoic sessions a commercial real estate conversation appreciate you tuning in and I will see you guys next month