The standard real estate pro forma sheet, also called a pro forma format or pro forma ledger is the basic worksheet for each new or existing real estate transaction. It’s the outline that helps to define the size and scope of a transaction and its related parties. Generally, it’s a balance sheet that summarizes the financial information of the transaction, including the loan, the notes, and the collateral.
For some transactions, it may be necessary to prepare a pro forma sheets for each part of the transaction. In other cases, the assets and liabilities are in one sheet and the net cash flows or the effect of the interest rate changes on the other. No matter which form you use, a real estate pro forma sheet will be used to determine the amount of cash flowing through the sale.
Real Estate Pro Forma Sheet
There are many factors that affect the preparation of the pro forma sheets. For example, what is the expected price for the property? How long are you expecting the closing to take, and when do you expect the seller to close on the property?
Some real estate pros will prepare the pro forma sheets themselves in Word or another word processing program. You will likely have to hire a pro to help you with this process if you’re having a real estate sale with a number of parties involved.
Before the real estate sale, a pro will do a preliminary review of the real estate pro forma sheets to ensure that all the parties have provided accurate data. This is so they can put together a fair value statement of the assets and liabilities of each party. A professional real estate pro will also review the pro forma sheets to make sure they are not missing any items and to get rid of errors that may be creeping into the documents.
Once the closing date is known, the pro forma sheets are opened up in an excel spreadsheet and entered into the spreadsheet program that was used for the transaction. The final step is to enter the information into the proper columns for the relevant parties. If there is a discrepancy in any one column, the pro can make changes accordingly.
The real estate pro forma sheet should include a note about the interest rate for the transaction. It should also include a detailed description of the differences between the note and the loan from the seller. The pro can make sure that the note does not exceed the interest rate that was negotiated, or that the notes are presented in the correct format for signing by both parties.
The note will typically provide a schedule of the notes that are being paid. That schedule will show the date that each note came due, the interest rate, and the balance owed. This will give the seller a quick reference guide, if needed, before he or she has signed the actual documents.
Generally, the seller is responsible for the credit data and should be able to provide it in the note, as well as a copy of their credit report. The pro should provide an accurate “Compare the Loan” sheet so that the buyer has the details of the current loan terms. The pro will also need to include in the note any costs that the seller will incur for additional closing costs and fees that are charged by the seller.
The real estate pro forma sheet will list the names of the seller and the buyer. The note will also include the address of the property, if different from the seller’s. The seller may request that the real estate to format the closing date in place of the date of the sale.
The closing date is probably the most important piece of information in the real estate pro forma sheet. It will provide the seller with the date by which the sale must be completed. The closing must be completed on or before this date.
The closing date can be included in the real estate pro forma sheet as a separate sheet, if it needs to be. In this way, the seller and buyer can have more flexibility in how they wish to close the transaction. YOU MUST LOOK : real estate investment analysis excel spreadsheet