Sellers Agent is Pushing Residential Contract for 6-Plex?

[George White]

Hey Fellow BP'ers - I need some advice here... I have an off market 6 plex deal in which the owners and I have come to an agreement through LOI on purchase price. Initially, they didnt want to use agents but now they have pulled in an agent that is a friend of theirs and said this agent will do the paperwork. He sent over a residential contract agreement(Better Homes and Gardens Residential Contract) and asked for information such as lender preapproval, and other financing information. I got on the phone with the agent and he says the property is 6 units and less so it is a residential property(BIG RED FLAG!). He also asked me to provide lender information, financing information, and preapproval status. I have spoken to a local bank about this opportunity but not to hone in financing with actual numbers yet.

As I understand it, I didnt need to provide all of this financing information up front since there is no "preapproval" for commercial properties. I stated in the initial LOI with the sellers that there would be a 40 day due diligence period, and a 40 day Financing period to begin after the due diligence period.

Can anyone shed some light on what I should do here? I have some residential REI property but this is my first commercial property purchase.

He just emailed me again asking when he should hear from me again. I am a little confused about what to do here. Any guidance would be greatly appreciated.

[Charles Carillo]

@George White

Not sure exactly what the contract that was sent to you states but I have purchased small commercial multifamily before with a residential Realtor contract. The problem seems to be with residential financing vs. commercial financing. Speak to your bank and see how they normally proceed with commercial financing deals and relay this to the agent. Usually you send out a LOI, negotiate terms and then reach out to the lenders (who you have already spoken to) and review who can offer you the best product and then your attorney draws up PSA and you start due diligence etc.

If they want, you could provide a bank statement showing proof of down payment etc. The LOI will include the EMD amount you are proposing.