When you’re selling your assisted living facility, there are many steps in the process. Once you have reached an agreement with a buyer, there is a long list of others who may need to visit your property.
Due diligence is the process a buyer undertakes to inspect a property and confirm their understanding of the property condition. For an assisted living facility sale, buyers also begin to plan the transition of management. This normally begins about as soon as the contract is signed.
Buyers, as well as their investors and lenders, rely on other professionals to advise them about the property. Some buyers will bring in more inspectors. Other buyers may have nobody inspect the property other than themselves.
The following is a list of those who may be need to visit the property as part of a buyer’s due diligence, financing, or management transition planning.
1. Appraiser. The appraiser will visit the property to verify information given to them by the buyer or lender, take pictures and some measurements, and get a general sense of the condition of the property.
2. Property condition assessment for the buyer. This is a third party inspector, similar to a home inspection when you’re buying a new house. They will look at the HVAC, foundation, roof, all mechanical systems, and more. If there is deferred maintenance at your property, they will probably uncover it – whether you’re aware of it or not.
3. Property condition assessment for the lender. Sometimes a lender will want a property condition assessment of their own, separate from the one that buyer orders.
4. The lender. A representative from the lender will probably to confirm the information they’ve been provided and address any concerns raised in the property assessment.
5. Surveyor. The buyer and their lender will probably need an updated survey of the property. While the cost of most inspections are paid by the buyer, the survey is sometimes the responsibility of the seller. Read your contract carefully to confirm who is paying for what.
6. Environmental assessment. An engineer or two may visit the property as part of an environmental review of the property. The assessment often consists of an onsite visit and a long checklist of questions to find if there are any environmental risks associated with the property, such as underground storage tanks.
And, of course…
7. The buyer. It may surprise some sellers to learn that buyers will make and offer and enter into a contract before ever visiting the property in person. At Senior Care Realty, we work hard to provide buyers with enough property information, along with pictures and video for a virtual tour, so that they know the property quite well without a visit. The buyer will also visit with their management team to gain a better understanding of how the assisted living facility is currently operating. Buyers need to understand a facility’s current policies and procedures so that they can identify risks and changes they may need to make after closing.
Concerns raised by an inspector may prompt follow up visits from specialists. For example, if the property condition assessment finds that a water heater may not be operating correctly, a plumber may need to visit for a final opinion.
This may seem like a lot of inspections. It is.
Sometimes there are more than others depending on the type of buyer and the complexity of the property. Most larger, institutional buyers and their lenders don’t take any chances – they confirm everything with reviews of the property by third party experts.
Some good news is that these inspectors do this work all the time, they’re normally quick and they know what to look for. But it does require a degree of patience for most sellers.
Due diligence and property inspections are just part of the process when selling your assisted living facility.