Due Diligence and Creative Financing Equals Success
Property Review - Property Type: Land
"Great to do business with Cassie to achieve my goal. Very helpful." - J.Singh
Challenge
A lender contacted Realtor® Cassie Wells regarding a client who was interested in purchasing two parcels of land - a one-acre parcel and a 15-acre parcel - situated at the opposite corners of an intersection on Hwy. 107 in Cabot, Arkansas.
After evaluating the properties, the buyer sought representation other than the listing agent to avoid the potential conflict of interest inherent in dual agency- a situation in which a real estate agent represents both the buyer and the seller- and retained Cassie.
Action
Cassie reached out to the property's listing agent to communicate the buyer's need for separate representation and submitted offers for both parcels, which were accepted.
Cassie then initiated a thorough due-diligence process, which revealed that both properties required septic systems. Further consultations with a septic installation company revealed that the one-acre parcel's require septic system and field lines would substantially reduce the usable space for any structure built on the land, due to it corner location and associated setback requirements.
Additionally, the buyer, an entrepreneur with modest funds ,faced qualification issues for the loan due to the land's non-income-producing nature. Although processing sufficient cash for the purchase, he preferred not to deplete his liquid assets.
To address this problem, a strategy was devised in which the buyer would invest his cash in a certificate of deposit (CD), which then served as collateral for the loan.
Result
The buyer opted to terminate the one-acre parcel's contract within the due-diligence period. However, the CD Strategy allowed him to retain the asset on his balance sheet while providing the bank with collateral, thus successfully securing the financing needed for the 15-acre parcel, without exhausting his cash reserves.
Cassie Wells - CCIM Executive Broker Keller Williams Realty
501.993.1973 | cassiewells.com | cassie@cassiewells.com
12814 Cantrell Rd. Little Rock, AR 72223
What Does a Commercial Realtor Do?
