Tuesday, April 17th, 2012
By: Steve Goldman, CCIM
Mini Case Study on Ashlandwood Apartments
On June 16, 2011, we closed on the sale of the Ashlandwood Apartments. This is a 79-unit complex very close to West Town Mall in west Knoxville. The buyer was the owner of the adjacent Briarcliff At West Hills Apartments. The sale included a short sale with a local bank and we acted as “facilitator agents” in the transaction.
This was a really tough deal to get done. And frankly, we are proud of getting through it successfully in 115 days from start to close. Here is a short case study on the transaction.
We learned Feb. 22 that the apartments were in foreclosure with an auction in three weeks. A commission agreement was worked out which included permission to contact the lender regarding a possible short sale. We delivered a written offer on Feb. 25. It was a complicated deal due to the short sale negotiation, dealing with other secured property etc., but it ultimately led to a fully executed contact at $1,850,000 on 4/1/2011, including the necessary agreements with the lender.
We were near closing when the hailstorms hit, causing over $50,000 in damage. This caused delays until the insurance settlement could be reached and the funds paid.
A couple days before closing, we were informed that the title company refused to close because the ALTA survey showed nearly all the buildings encroached in the setbacks. The out-of-town buyer and his attorneys weren’t able to secure the required “legal but non-conforming” letters from the city and county fast enough, so John literally jumped in the car and worked this out in person at the courthouse, coming back to the office with the signed letters in hand in less than 24 hours after being asked for help.
Lots more drama ensued up to and even past the closing deadlines as final paperwork and payments were worked out. Both parties and the title company worked into the evening before closing, making last minute changes to the settlement statement. Then, a “cloud on title” was discovered at the very last minute, requiring getting notarized signatures from an out-of-state relative. So, even on the day of closing, I was in constant contact with everyone including the bank’s attorney. We worked out a postponement of the foreclosure auction from 10:30am to 1:30pm as the final paperwork and funding was in process. They finally cancelled the auction when the loan payoff funds were confirmed as received by the bank about an hour before the auction – the transaction was finally closed. Yikes, what pressure!
- 494 emails that I was sent or received.
- Countless phone calls and numerous face to face meetings with the parties involved.
- 3 days to get an offer from the ultimate buyer.
- 35 days to negotiate the price and written agreements between the buyer and seller and the short sale agreement with the lender.
- 77 days from binding agreement date to closing, including a delay due to the hail storm and insurance settlement.
- A grand total of 115 days from the first day I heard about the property becoming available to Closing.
Frankly, this is pretty fast, all factors considered!
In this case, the marketing and pitching would appear to be the easy part. What only our associates (and wives and kids) know is the years we’ve invested in research, analysis, driving and relationship-building that resulted in our getting the call about the property’s critical situation, knowing who to pitch it to, having existing business relationships with the lender’s special asset manager and his attorney, and on and on.
And most people have no idea about all the other work it takes by the broker and each of the other parties, to get a deal “with hair on it” successfully closed. I appreciate the bank’s special assets manager calling and congratulating me after closing, saying that, “This never would have gotten done without you.” The buyer, David Willner with TEG Acquisitions LLC also gave me a testimonial: “One of the most difficult closings I have ever been involved in and without Steve, his expertise, and going way beyond the call of duty there is no way this would have ever closed.” I am very grateful that we were working with a sophisticated, reasonable buyer and special assets manager, because it required all of us pulling together to get this deal done.
We are sharing these case studies to give you some insight into why working with or referring investors to experienced, local multifamily specialists like ourselves is really in everyone’s best interest. Please call us and see how we can help all the parties.
Even if an investor has a favorite broker they want to work with, we are happy to work out strategic and professional co-listings with that agent so that the owner gets the advantages of our expertise without damaging his current relationship.
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This is the best time in years for an investor to sell 50+ unit apartment complexes, conventional or subsidized. The prices are strong, the demand is high, and we know the buyers and exactly what they want now. We work all of East Tennessee, from Bristol to Newport, Chattanooga, to Cookeville. And as part of the CCIM network, we can connect investors with the best commercial real estate experts across the country.Back to Blog