Discovery Period:
The Discovery Period is crucial for a successful outcome, ensuring satisfaction for all parties regardless of the chosen path. When you thoroughly analyze a building to decide how to market it, you will always find the most logical way to promote the property and identify the most likely buyers.
Understanding your building and its impact on the transaction is a major advantage that can lead to a successful deal in a shorter time. This knowledge is crucial and will empower you to drive the transaction.
When the time is right, you will evaluate a building to assess its condition, environmental impact, amenities, lifespan of capital items, necessary upgrades, potential increase in net operating income, and overall marketability.
Internal Property Information Package:
A complete internal property information package should encompass essential client, property, and building details, financing information, suite mix, revenue streams, potential revenue opportunities, tenant profile, non-operational components, work orders, contracts impacting the sale, capital improvements, legal disputes, insurance matters, environmental concerns, fire retrofit compliance, superintendent information, and guidelines for managing offers and negotiations. This will ensure a comprehensive understanding of the requirements for a well-prepared offer or counteroffer.
During the discovery period, gathering this information is crucial for ensuring a smooth, stress-free, and invaluable transition to an agreement of purchase and sale.
Actual Numbers:
You can explain cap rates, cash-on-cash returns, and all the other components of the equation until you’re blue in the face. However, if the information used to determine the value is incorrect or outdated, it doesn’t matter – the value will be wrong, even if you accidentally arrive at the correct figure.
A proforma is only valid as of a specific date, which must be known. For example, if it is currently June in any calendar year and someone provides you with the Net Operating Income (NOI) of a building for the year ending December 31 of the previous year, those numbers are outdated and not valid.
In order to provide an accurate and reliable valuation, it is essential to have access to verifiable and precise data from the past current 12 months, including information up to the date of the last billing cycle for utility companies.
When you follow this advice, you will generate offers at true market values, or at least know that you are not. 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 are rounding the corner to home.
Evaluation:
Condition:
Listing:
Compliance:
Full Disclosure: