Discovery Period:
The Discovery Period is the foundation for a successful close where all three parties are happy with the outcome regardless of the path.
When you take the time to discover and analyze a building to a high level and with the intent of deciding on how to market the building, you will always come to the most logical way to market the property, and who will most likely purchase the building.
The more you and your representative know about your building is a true advantage that will yield a successful transaction in the quickest amount of time. A high level of understanding of the building and its relationship to the outcome is critical and will elevate you and drive the transaction.
When the timing is right you will inspect a building for its condition, environmental issues, amenities, life expectancy of capital items, necessary upgrades, NOI upside and just a general feel for how saleable the property is.
Internal Property Information Package:
A good Internal Property Information package will identify key client information, property information, building information, financing, suite mix, revenue sources, possible revenue sources, tenant profile, non-functional components, work orders, contracts affecting the sale, capital improvements, lawsuits, insurance issues, environmental matters, fire retrofit compliance, superintendent, how to handle offers and just a general understanding of the requirements for any well-drafted offer or sign back.
Even more importantly the gathering of this information during the discovery period makes the transition to an agreement of purchase and sale smooth and stress-free and is invaluable.
Actual Numbers:
You can explain cap rates, cash on cash returns and all the other pieces of the pie until you are blue in the face; but if the information used for the outcome of a value was incorrect or outdated it doesn’t matter, your value is incorrect. Even if you arrived at the correct value by accident!
A proforma is only good as of a date and this date must be known. If this is June in any calendar year and the owner of a building or a real estate representative tells you the NOI of a building for the Year Ending December 31 of the previous year the numbers are outdated and not valid.
To give an accurate and reliable opinion of value you must be working from verifiable and accurate numbers for the past 12 months. A snapshot of the past 12 months up to the date of the last billing cycle for the utility companies!
When you follow this advice, you will generate offers at true market values or at least know that you are not and when you can demonstrate to a buyer during due diligence that the reported numbers are accurate you have just hit the ball to third and rounding the corner to home.
Evaluation:
Condition:
Listing:
Compliance:
Full Disclosure: