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When sellers evaluate purchase offers for their commercial real estate, one thing they consider carefully is the buyer’s financing. An offer from a financially strong buyer might get preference over a higher offer from a marginal buyer. A great sale price is meaningless if the buyer can’t close. And the value of any offer diminishes as time ticks buy while the buyer gets the loan underwritten.A conventional loan from a bank or other institutional lender will take 90 days or more to underwrite and close. Sellers of commercial real estate like apartment buildings, offices and retail outlets know this and they don’t’ like it. Once they decide to sell, and accept an offer they resent every mortgage, utility and maintenance payment they have to make and they constantly worry that something will go wrong and derail the deal. Sellers want to close quickly. Anything you can do to speed up the process will strengthen your position at the negotiations table.Private Lenders can Close Fast – This Gives Borrowers LeverageOne strategy that savvy real estate investors use when bargaining with sellers over price and terms is offering a 3 week close in exchange for some concessions. Sophisticated real estate pros know that the competition is probably offering a 45 day due diligence period plus 60 days to find a loan and close the deal. That’s more than 3 months, and the seller has no real assurance the sale will actually close. If you have a good relationship with a private commercial mortgage lender (or have a good mortgage broker with such a relationship) and you know the kind of deal they can close on in an instant, you have a significant advantage.You Might get a Lower PriceMost private lenders will only lend up to 65% of the purchase. If you present a scenario where a lower purchase would allow you to make a larger (percentage wise) down-payment, qualifying the deal for a private (sometimes called “hard money”) loan that can close in weeks instead of months, the seller might just be interested. Especially if the seller needs the cash in-order-to get involved in a new project or building.You Might get Better TermsSellers willing to carry back a 2nd mortgage on a substantial portion of the price could add real equity to a deal and guarantee interest from hard money commercial specialists. If they were confident that the 2nd was only temporary but they could get the deal done quickly, it is very possible they’d be interested.Don’t try This at HomeSophisticated real estate strategies are for sophisticated real estate investors only. Don’t go making promises to anxious sellers unless you know the property, the market and your lender extremely well. Misjudge a deal or your lenders ability and desire to close it and you will lose your earnest money and your credibility. Know what you are looking at and know what a lender will lend and give yourself an out in the purchase and sales contract.Here’s What Private Lenders Need to Close a Deal in 21 DaysEquity. In order to facilitate a expedited close a hard money lender will demand at least 50% protective equity in a land deal (50% LTV), 40% (60% LTV) in a vacant building and 35% (65% LTV) in a building that has cash flow sufficient to cover it’s own mortgage payment. Don’t ask them to be flexible with these standards and expect them to move at light speed also, it won’t happen.Cash. Private lenders won’t deal with any borrower that can’t or won’t bring at least 10% hard cash to a deal. If you want to get them interested in closing in 2 or 3 weeks, I’d recommend bringing more than that. Even if the seller is willing to carry back a massive 2nd the lender will be cold to the deal unless the borrower has real skin-in-the-game.Documentation. Be sure the seller can, and will, provide all the necessary documentation on the building. To achieve a fast close you will need to work with property owners who have kept meticulous records and can produce them, in digital format, instantly. Hours matter when trying to pull off a quick close; you will not have time to allow the seller to gather or create the paperwork. You will need the seller to provide digital photos of the property, inside and out, profit / loss statements going back 2-3 years, a certified rent roll with copies of rental agreements or leases attached maintenance records and copies of relevant bank statements. You will need to have, on hand, a resume that includes a summary of completed deals, a personal financial statement with the documentation to back it up, and a detailed “source and use of funds” statement that proves you have the down-payment readily available and details what you intend to use the loan proceeds for.Clear title. There is no time to be clearing up title disputes. If a title search reveals problems the close will be delayed.Environmentally friendly. Environmental liability is unlimited; lenders can not take chances and cut corners on potentially contaminated sites. Don’t try to push through a quickie loan on a gas station, dry cleaner, chemical plant, brown field or a nuclear waste dump. There is too much at stake for a hard money lender, if there is a hint of environmental problems they will require full due-diligence.Access. If a deal is-to-be closed in just a few days there may not be time for a certified appraisal. The lender will want to thoroughly inspect the site more than once. Make sure they have access to the building when they need it. They may need to bring engineers, brokers or other commercial real estate professionals, scheduling these inspections is usually a one-shot deal. Facilitate the lender on their time table, or the deal could be blown.Income. Nothing helps a deal fly through like income. It is exceedingly difficult to close any commercial loan in less than 3 weeks if the collateral property does not “cash flow”. Ideally, a private lender would like to see positive cash flow 1.2 (or more) what the mortgage payment will be. This cash flow should be backed up by fairly long term, documentable leases.Super-Fast Closes are the ExceptionMany privately funded commercial mortgage loans can and do close at light speed, and, any hard money loan is fast compared to conventional financing. But, from the lenders perspective, short-fuse deals are risky. If you’re going to use the promise of a 21 day close as a bargaining chip, know your lender and choose your deal wisely. Look for cooperative, well organized sellers offering income producing buildings at exceptional prices. Bring plenty of cash to the table and make yourself and the building available on a moments notice.