In this video Shafiq Hirani, MBA, CCIM explains to apartment building sellers how the due‑diligence phase of a sale works and how to protect the price they agreed to in the Letter of Intent. He walks through the transaction timeline (LOI, binding PSA, 30‑45‑day due‑diligence period, hard‑money date, financing contingency, closing) and stresses that the hard‑money date is the moment most negotiating power shifts back to the seller. Hirani outlines the four concurrent due‑diligence tracks – physical, financial, legal/title, and environmental – and advises sellers to be present for inspections, to build a comprehensive pre‑listing disclosure list, and to avoid shortening the due‑diligence window to appear accommodating. He explains that buyers don’t retrade on known problems but on surprises, illustrating with a $120,000 retrade example versus a $35,000 disclosed repair cost. A case study (the “Marcus” scenario) shows how a rent‑roll mismatch discovered late can trigger a cascade of price reductions. The video ends with calls to action: watch a related closing‑sale video, download a Due Diligence Survival Checklist, and book a 30‑minute exit‑strategy session.
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The price on your letter of intent is not your price. Your price is whatever survives the next 45 days. And the average retrade, which is when a buyer comes back mid-deal asking for a reduction, takes back more money than most owners will save negotiating commission all year. I am Shafiq Hirani, MBA, CCIM. Today, how due diligence actually works. And how to make sure the number you agreed to is the number you close on. Quick ask before we get into it. If these breakdowns help you think about your building more clearly, subscribe and leave a comment, because the questions in the comments are what I build the next videos from. All right, let us get to work. Here's the mismatch at the center of due diligence. You think It is an inspection, something to get through. He shows up, he looks around, he confirms what you told him. He thinks it is a second negotiation, and this time he has better information than he did the first time. Only one of you is preparing for what is actually happening, and it is worth saying plainly: this is not bad faith on his part. It is his job. His lender requires it. His investors expect it, and every buyer does it. The problem is that most sellers don't know the game has restarted. So here is the sequence: Letter of Intent, non-binding, sets price and basic terms. Purchase and Sale Agreement, binding, deposit goes into escrow. Due Diligence Period, usually 30 to 45 days. During this window, his deposit is refundable, which means he can walk for any reason at all. Then the deposit goes hard. That is the single most important date in your deal. After that, his money is at risk if he walks. Then the financing contingency. Then closing. Know your hard money date. Write it on a wall. Because before that date, almost all the negotiating power is his. After it, a meaningful amount of it comes back to you. One practical piece of advice about that window: do not negotiate the length of due diligence down just to look accommodating. A buyer who needs 45 days and gets 30 will simply ask for an extension on day 28, and he will ask for it at the point where you have already turned other interest away. During that window, 4 things are happening at the same time. Physical: roof, mechanicals, structure, and a walk of the units. Expect him to want access to every unit or close to it. Financial: leases compared against your rent roll. Bank deposits compared against your reported income. This is where a sloppy rent roll turns into a real problem. Legal and title: survey, zoning, Open permits, code violations, and estoppel certificates from your tenants confirming their lease terms. Environmental, usually a Phase 1, underground tanks, a dry cleaner next door, historical uses of the site. 4 tracks, 4 sets of people, all running at once, all reporting back to the same buyer. And be present for the physical inspection or have somebody there who knows the building. Inspectors write down what they see. If nobody explains that the stained ceiling is from a leak repaired 2 years ago with an invoice to prove it, it goes into the report as an active problem. Now the retrade. Here's the thing to understand about it, and it is the line that makes some owners uncomfortable. Buyers do not retrade on problems. They retrade on surprises. What's the difference? Every surprise in your deal is one you chose not to disclose. A $30,000 roof that you disclose up front is a price negotiation. You handle it once in daylight and you move on. That same roof discovered by his inspector in week 4 is no longer a roof problem. It is a credibility problem. And now he is wondering what else you did not mention. And he starts pricing that uncertainty into everything. So build a disclosure list before you list. Every open item, every deferred repair, every quirk in the building. Hand it over early. It costs you a little in the price negotiation, and it saves you a great deal in week 4. Here is what that costs: a 3% retrade on a $4 million building. is $120,000. Now compare that to disclosing the same issues at the start. Say the real repair number is $35,000. You disclose it, you credit it, or you fix it, and it costs you $35,000. Same set of facts, an $85,000 difference decided entirely by when the information came out and who found it. Back to Marcus. 12 units. That rent roll mismatch I mentioned in video 3 surfaced again during the lease audit, which is exactly where it was always going to surface. By itself, it was worth almost nothing. Some renewal dates were wrong. But it arrived in week 3 from the buyer's side, not from Marcus. And after that? Every number in the file got a second look. That is the cost of being the one who did not find it first. Here is what to do next. First, watch video 11, Closing the Sale and Planning Your Next Move. Second, download the Due Diligence Survival Checklist, 4 tracks, the key dates, and a disclosure list to build before you list. Third, Book a 30-minute exit strategy session if you want to walk your building the way a buyer's inspector will. And in the comments, tell me this: if a buyer walked your building tomorrow, what is the one thing you would rather he not find? You can be honest. This is useful. Shafiq Hirani, MBA, CCIM. Keep navigating.
