Download Where Does Underwriting Fit in the Acquisition Process

Where Does Underwriting Fit in the Acquisition Process
Step 1
Real estate owner decides to sell an asset
Step 2
Owner hires an investment sales broker to conduct an auction
Step 3
Broker prepares package, distributes to potential buyer and collects bids
Step 4
After 2-3 rounds of bidding a winner is selected
Step 5
An LOI is signed giving buyer exclusive right to purchase the asset for a period of
time and the buyer’s puts up a deposit (typically 10% of the purchase price).
Buyer & seller begin negotiating PSA
Step 6
Buyers typically get 30-45 days to before they have to “go hard” (deposit is nonrefundable) and then another 30-45 days to close (in a normal market)
Step 7
Simultaneously buyer will hire a mortgage broker to obtain financing with the best
rates and terms – assuming it’s not an all cash deal
Step 8
Once the buyer selects a lender and signs their term sheet, the underwriter is
engaged and begins his/her analysis.
Step 9
The buyer will also engage counsel to negotiate the loan documents
Step 10
In 30-60 days the underwriter will complete its diligence, obtain investment committee
approval and close (fund) the transaction assuming the buyer is also satisfied with their
diligence efforts.
Remember
It is the underwriter’s responsibility to raise issues and offer solutions as soon as
they arise. If not previously disclosed in the seller’s package, the seller will often
have to adjust the purchase price or make other concessions.