A Surge In Nonrefundable Offers on Apartment Deals Highlights Strong Competition

Multifamily has been the darling of commercial real estate for more than a decade, and the pandemic has only served to renew investor confidence in the asset class. As a result, there is record competition in the space. To win deals and provide a certainty of close, investors are more regularly using nonrefundable offers.

“The multifamily market across the US remains extremely competitive for institutional buyers in virtually all markets and all sectors due to limited supply, low interest rates and an abundance of available cash,” T. Gaillard Uhlhorn, member at Bass, Berry & Sims PLC, tells GlobeSt.com. “In such an environment, purchasers are looking for off-market deals or find themselves in competitive best-and-final rounds with multiple potential buyers. As a result, sellers can demand concessions that require purchasers to step outside their standard acquisition process comfort zone. One way for purchasers to make their offers more attractive to off-market sellers or to distinguish their offers from competitors is to propose a nonrefundable deposit at the time of contract execution.”