In these times businesses are shifting their practices in hopes of coming out the other side with a profile that meets what will be the new normal. Place of business and what that looks like plays a major part of those plans.
Buyers are more uncertain of what they want than they were before the pandemic. This creates challenges.
The more flexible your sellers can be with your prospective buyers the more likely you can bring in a sale that delivers top dollar for that property. Flexibility however should not mean a reduction in your seller’s profits.
One way to increase flexibility while maintaining profitability is through the new approaches to vendor financing support or “VFS”. A long way from the old high risk vendor takebacks of yester year, VFS is a concise analysis that determines what specific form of support an individual buyer needs and structures around it.
Some of the most common forms of VFS are:
- Short term debt servicing support (the most common)
- Direct payment performance during a move-in or rent up period
- Renovation financing
- Loan to value accommodations
VFS is typically short term in nature and should always add to the profitability of the overall sale transaction for the seller Often VFS sees the seller teaming up with 3rd party lending partners utilizing their fund and limiting the impact on the seller’s cash flows.
Structured and managed by established professionals, VFS transactions carry all the rigger and credit risk analysis applied by any major bank or institutional commercial real estate lender.
As a professional commercial realtor, it is your job to provide the best advise and to bring the best tools to your clients. VFS solutions should be one of those.