Senior Housing Sales Negotiations

Negotiations are an integral part of the transaction process in the senior housing industry. It can be repetitive, complicated and challenging; having an experienced JCH investment specialist on your side makes it easier. More often than not, acquiring your senior housing investment depends on the negotiations themselves.

There are the three main phases of a typical transaction within the senior housing industry.

Phase 1: Negotiating the Letter of Intent

When a buyer makes an offer, the written document is called the letter of intent, or the LOI. It outlines details such as the due diligence period, purchase price, closing time frame and contingencies. Later in the process, the LOI develops into the purchase agreement.

There are two main approaches in -writing the LOI in the senior housing industry. Some investments specialists prefer a detailed LOI. They would rather get the majority of the negotiating out of the way and discuss sensitive details up front. This method, though aggressive, typically saves some legal fees for both the seller and buyer.

The simpler LOI, usually between one or two pages, saves the bulk of the legal negotiating for the purchase agreement and typically allows for quicker acceptance of the LOI.

Phase 2: Negotiating the Purchase and Sales Agreement

The next phase of negotiations includes the purchase and sales agreement, also referred to as the PSA, and the operations transfer agreement, OTA. Attorneys are involved in these negotiations; they will be responsible for drafting and negotiating the contracts.

The PSA and OTA negotiations determine the specific business terms and the legal framework of the senior housing investment deal. Typically, this is the most laborious negotiation process in acquiring assets in the senior housing industry. Because contracts are being drafted, the process can last for several weeks, although experienced brokers and attorneys can shorten this timeline.

Read: Investment Red Flags

Phase 3: Potential Negotiating After the PSA Has Been Signed

Once the due diligence period is complete, the buyer may argue for a potential re-trade or re-negotiation of price. This can be because the buyer discovered new information or simply had a change of heart. Sometimes, the buyer demands a lower price for the senior housing investment than what was agreed upon earlier.  Unfortunately, it tends to be an ugly negotiation. It can make or break the deal.

Another reason why buyers may attempt re-negotiations is to extend time frames. This is a rather common request. Depending on the circumstance, sellers will usually request an increase in the good faith deposit; the deposit may become non-refundable and be released to the seller, which is common for extensions on closing periods. This helps keep buyers invested in the closing of the deal.

The JCH Group is Your Key to Senior Housing Investments

In the senior housing industry, negotiations are what get you the housing investment you want. The investments specialists at the JCH Group know exactly what is marketable at any given time. We have experienced negotiators who have closed incredibly complicated transactions in the timeliest manner. They can do the same for you.

For your senior housing investment, speak to one of our investments specialists to effectively negotiate the deal you desire.

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