WHAT TO EXPECT IF YOU ARE SELLING YOUR RCFE
THE SALES PROCESS
Realtor showing a home to a senior couple[/caption]Making the final decision to sell your RCFE may not be easy. After all, you may have invested years of hard work, dedication and capital into your home, and letting go is complicated. At RCFE Resource, we understand and appreciate these all-too-human emotions. Our financial and market expertise enable our clients to obtain the maximum value for their assets. Our team brings considerable real estate, financial, accounting and marketing expertise to every transaction. This team approach greatly benefits our clients. While every transaction is different, the steps below are an outline of what to expect when you work with our team.
PREPARATION AND ANALYSIS
When selling an RCFE, we take into consideration both the real estate and the financial position of the business. This means that we analyze both the value of the property and the profitability of the business. We will request information from the client in order to gain a thorough understanding and appreciation of the asset and the income generated by the business. To that end, we request a list of items needed from the seller, such as profit and loss statements, rent rolls, payroll information, and floor plans/facility sketches. We will provide an engagement letter outlining our role in the sales process.
Occasionally, sellers engage us in advance of the sale so that we can offer suggestions on increasing the value of the asset prior to sale. It is always up to the client whether or not they wish to implement our suggestions.
We will develop a comprehensive marketing plan based on each particular client’s needs. We consider the client’s time frame, price objectives and need for discretion and privacy of sale. At this point, property and business listing agreements are signed. We never lock our clients into long-term contracts, and always emphasize the KW Commercial mission of having a win-win situation for all parties.
Depending on the client, our marketing plans may be laser-targeted and specific, or more broad-range. We always take into account the client’s unique objectives when developing our marketing plan. Sellers will have access to our large database of qualified “buyers in waiting” to purchase senior living facilities.
Offers are usually in the form of purchase agreements for the property and business, or submitted to us as a Letter of Intent (LOI) prepared by the buyer or their agent. We will qualify each potential buyer and review the pros and cons of every offer. Once the contracts are signed by all parties, the Due Diligence Period begins.
DUE DILIGENCE PERIOD
After signing the purchase contracts, the buyer deposits into escrow a pre-negotiated cash deposit. This due diligence phase usually extends for 30-60 days. Essentially, due diligence is when the buyer has the opportunity to perform investigations, inspections of the real estate, and review of the financial statements of the RCFE. Third-party investigations will also ensue, such as conducting an appraisal of the real estate by the buyer’s lender, also occur during this time. The buyer may cancel the contract during the due diligence period without penalty and receive a full refund of their cash deposit tendered upon contract acceptance. This may occur if the buyer discovers something that contradicts the information in their initial analysis, such as revenues which are significantly lower than initially communicated, or if an appraisal of the real estate indicates that the value is overstated. Transaction prices can then be renegotiated. At the conclusion of the due diligence period, the buyer’s deposit becomes non-refundable and the transaction goes into the closing stage.
CLOSING THE TRANSACTION
During this final stage of the transaction, all open points and “to do’s” are handled, and any outstanding issues or information requests are addressed. Upon completion, the buyer wires the remaining funds to escrow. Documents are signed in front of a notary, and escrow proceeds are distributed to the seller. The deed is recorded with the county, designating the new owners as titleholders. Escrow is then closed.
If you are considering selling your RCFE, contact us for your complimentary consultation.
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