Valuation, seller financing & escrow

Build income-backed pricing from audited NOI — not speculative pad expansions. Start from the Step 01 T-12, normalize obvious one-time items, recognize the 50–55% expense floor buyers will use if your books are thin, and apply a cap-rate band appropriate to your region and condition (your advisors / market comps — we do not invent a fake “official” rate here). Separate “in-place” from “upside.” Price the machine you have

Example: An owner priced as if 15 vacant sites were already rented at full 50A rates. Buyers zeroed the speculative pads and anchored to occupied NOI — a high-six-figure gap vs the ask.

Stress-test the story at the expense floor before you fall in love with an ask. Recalculate: if expenses were 50–55% of effective gross, what NOI remains? What price does that support at your target cap band? If that number scares you, fix books and operations (Steps 01–02) before marketing a fantasy

Example: Books showed ~25% expenses and a heroic NOI. At a 55% floor, NOI dropped enough to erase roughly the same equity a full rewire would have cost — better learned in a spreadsheet than in a buyer’s LOI redline.

Discuss seller carryback / installment framing with your CPA before preferring all cash. At a high level (not advice): commercial sellers sometimes take a down payment and a promissory note (often targeting first-position security when the capital stack allows), collecting monthly principal and interest over time. People discuss installment reporting because gain recognition may follow payment timing under federal installment-sale concepts — while interest is generally ordinary income, and depreciation recapture and other items can still hit hard in the year of sale. Adequate interest, documentation, and security matter. Mori / installment conversations stay at framing only here — your CPA runs the real modeling.

Example: An owner chased a slightly higher all-cash headline, then learned from their CPA that the single-year tax hit crushed net cash in year one versus a carry structure the CPA modeled. The “win” was not the win.

If you offer carry, define commercial terms on paper (with counsel) — not on vibes. Typical discussion points (illustrative, not a term sheet): down-payment %, note term, interest rate, amortization vs interest-heavy periods, due-on-sale, default remedies, whether the note is in first position, reserves, and personal guaranties if any. Credit risk is real: you may be the bank

Example: A handshake “20% down and we’ll figure interest later” collapsed when the buyer’s lender and the seller’s attorney disagreed on priority. Written term sheet first.

Insist on strict 30–45 day diligence with earnest money discipline. After POF + NDA + access, diligence should be bounded. Define what is contingency vs what goes hard, inspection periods, and when deposits become non-refundable. Endless “we need another two weeks” without deposit consequences is how deals die of boredom while rumors grow

Example: A buyer burned 90 days on a soft $5k deposit, then asked for a six-figure electrical credit. Tighter 45-day clock and harder money would have forced an earlier decision — or an earlier exit for someone unserious.

Use commercial escrow — prorated rents, utilities, deposit holdbacks. Choose an escrow / title team that has closed income property, not only houses. Instruct them early on: rent proration method, prepaid rents, security deposits transferred or credited, utility final reads, personal-property list (golf carts, mowers, office gear), holdbacks for unfinished repairs, and wire fraud protocols

Example: Residential-style escrow forgot deposit liability. Post-close, tenants demanded deposits the buyer did not receive — and the seller got the angry calls.

Align PSA / LOI language with the Glitch reality you already disclosed. If Step 02 found a weak branch or biomat stripes, disclose and attach evidence. Hiding known glitches invites renegotiation or litigation risk; disclosing them early supports cleaner escrow holdbacks instead of nuclear price cuts

Example: Pre-disclosed pedestal photos plus a licensed bid became a defined holdback. Undisclosed melt marks found by the buyer’s inspector became an open-ended discount demand.

Call your CPA and real-estate attorney before you accept a structure. Bring: basis estimates, depreciation history, entity type, existing debt and prepayment penalties, and the LOI. Ask explicitly about installment-sale eligibility, recapture, state taxes, and whether all-cash vs carry changes your net. We will not answer those as your advisors.

Example: Two owners with similar gross asks had opposite CPA answers because one had heavy prior depreciation and the other did not. Same “structure fashion,” different correct choice.