Page 146 - Trump University Commercial Real Estate 101

TRUMP UNIVERSITY COMMERCIAL REAL ESTATE 101

• Are there any visible water problems near windows or on ceilings
or fl oors?

Have a checklist with you and only mark the issues or items that
must be addressed. This will save you a lot of time, compared with
checking everything off, good and bad.

What If You Find a Problem?

By now you know what I ’ m going to say: You ’ ve completed the physical
due diligence and have the inspection report, plus your own notes about
the property. No property is perfect, so we ’ re expecting some level of
small problems. If that ’ s all you are aware of, say a silent thank-you.
On the other hand, you may very well have discovered that the
roof is in pretty bad shape, or that the boiler needs a $ 30,000 repair.
Share your findings with the seller: “ Mr. Seller, you did not inform

me that a problem with the boiler existed prior to my inspection. Had

I known that it did, I would have reflected that in my price. My offer
assumed a property in total working order. Do you feel that it would be
fair to compensate me for the repairs I will have to make at closing? ”
What you ’ re asking for is a repair allowance; in other words, funds
the seller gives you at the closing to cover the cost of repairs. If the
seller says he won ’ t pay a dime and will not cooperate, then you must
decide just how good this deal is. You can either absorb that cost, or
walk away from the deal.
Again, do not nickel - and - dime the seller about minor repairs.
Reserve your negotiations for the major stuff, where you can clearly
show a material difference from what you were originally told, and
what you now know.

Legal Due Diligence

You ’ ve managed to get through the financial and physical due diligence,
so there ’ s one phase left: Now you can engage the attorney to start the
legal due diligence.
126

10/14/08 10:54:45 AM
c06.indd 126 10/14/08 10:54:45 AM
c06.indd 126