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How can you negotiate due diligence when there is a time crunch?

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Due diligence is a crucial step in any commercial real estate transaction, as it allows you to verify the condition, value, and risks of the property you are buying or selling. However, due diligence can also be time-consuming and costly, especially if you encounter delays, disputes, or unexpected issues. How can you negotiate due diligence when there is a time crunch? Here are some tips to help you streamline the process and close the deal faster.

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1 Set realistic expectations

Before you start the due diligence, make sure you and the other party have a clear and mutual understanding of the scope, timeline, and costs of the process. You can use a letter of intent (LOI) or a purchase and sale agreement (PSA) to outline the key terms and conditions of the deal, such as the price, closing date, contingencies, and responsibilities. You should also communicate your goals, priorities, and concerns, and be prepared to compromise on some aspects if necessary.

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Neil Greenbaum

I draft your important documents | Business & Commercial Real Estate Lawyer | I help lawyers fuel practice growth | Law Practice Advisor |
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With due diligence, it's important to begin immediately once the contract is executed. It's always important to have your eyes on the calendar with multiple reminders when DD ends. To avoid a time crunch, I always try to add contractual language giving a Purchaser additional DD time beyond the customary DD Period (say 30 days or so). This is usually accomplished by making an additional contribution toward the deposit. In my experience, so long as a Seller sees that a Purchaser is realistic and not simply kicking tires, they are amenable to the time frame. If there's a true deadline say financing expiration or end of year), you need to know before you sign the contract how realistic it will be.

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Nick Gray

Executive Vice President - Brokerage Services - Creek CRE
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Understand how long transactions are taking in your local market, and what all due diligence items need to be done prior to closing. How long will a survey take? How long until financing is complete? As a commercial transaction manager you are like an air traffic controller landing planes safely one at a time.

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2 Hire qualified professionals

One of the best ways to save time and avoid mistakes during due diligence is to hire qualified and experienced professionals who can handle the various tasks and inspections involved. For example, you may need a lawyer, an accountant, a broker, an appraiser, an environmental consultant, a title company, and a lender. You should choose professionals who have relevant expertise and knowledge of the local market, and who can work efficiently and collaboratively with you and the other party.

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3 Organize and share information

Another way to speed up due diligence is to organize and share all the relevant information and documents about the property and the deal. You should create a checklist of what you need to obtain, review, and verify, such as financial statements, leases, contracts, permits, surveys, reports, and certificates. You should also use a secure and accessible platform, such as a virtual data room (VDR), to store and share the information and documents with the other party and your professionals.

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Nick Gray

Executive Vice President - Brokerage Services - Creek CRE
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Communication is KEY. As soon as I get something under contract I put together my critical deadlines list and communicate that to every party involved in the transaction. And when a vendor participating in the transaction needs something from you, then get it to them as soon as humanly possible.

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4 Anticipate and resolve issues

During due diligence, you may encounter some issues or problems that could affect the outcome of the deal, such as discrepancies, defects, liabilities, or disputes. You should anticipate and resolve these issues as soon as possible, rather than waiting until the last minute or ignoring them. You should also be flexible and creative in finding solutions, such as renegotiating the price, requesting repairs, extending the closing date, or waiving some contingencies.

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5 Monitor and follow up

Finally, you should monitor and follow up on the progress and status of the due diligence, and keep in touch with the other party and your professionals. You should track the deadlines, milestones, and deliverables of the process, and make sure everyone is on the same page and working towards the same goal. You should also address any questions, feedback, or concerns that arise along the way, and confirm that everything is in order before closing the deal.

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6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?

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How can you negotiate due diligence when there is a time crunch?

1

2

3

4

5

6

1 Set realistic expectations

2 Hire qualified professionals

3 Organize and share information

4 Anticipate and resolve issues

5 Monitor and follow up

6 Here’s what else to consider

Commercial Real Estate

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How can you negotiate due diligence when there is a time crunch?

1

2

3

4

5

6

1 Set realistic expectations

2 Hire qualified professionals

3 Organize and share information

4 Anticipate and resolve issues

5 Monitor and follow up

6 Here’s what else to consider

Commercial Real Estate

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