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Due diligence
I suppose you can say that my insistence on getting
value for residential clients is an example of carrying out due diligence.
In other words, I make it my business to determine what a house is truly
worth before a buyer makes an offer on it.
Admittedly, the principle is more commonly thought of in relation to commercial,
industrial, and investment properties, and this raises the question of just
how you can put a value on something that’s more than simply bricks and mortar.
There is, of course, a whole industry of specialists
engaged in finding these answers. Appraisers,
accountants, business brokers, and investment bankers are only some of them;
and they often call on sophisticated modelling techniques to calculate value
for both sellers and buyers. Their purpose is
to decide the worth of items over and above the building(s) themselves.
Needless to say, the job can sometimes prove challenging.
On the one hand, inventory is easy enough and machinery isn’t too
difficult to deal with. On the other hand, however,
the actual and potential derivation of income (and, it’s to be hoped, profit!)
is a much more nebulous issue. Forecasts
are dependent on goodwill, management strength, and market shifts, all of
which can change after a new owner takes over. There
are also the pressures of demand and supply, not only in relation to the
same kind of property, but also with respect to the need for capital.
Even so, what amounts to a comparative market analysis will still show what
else can be bought for the same price, how much similar undertakings sold
for, and what asking prices didn’t find buyers.
Moreover, somehow and somewhere reliable measures can always
be found – and quite often by simply looking at the competition.
Thus, despite the complexities, I don’t see why
the business people and investors I’m dealing with shouldn’t take the same
approach as my residential clients. What I want
to know is why a seller thinks a non-residential property is worth its asking
price, and, by one means or another, I’m going to make sure my buyer has
a thoroughly developed rationale for whatever offer he/she is willing to make.
If you'd care to call and discuss any of these
points with me, I'll be only too pleased to hear from you.
Thank you for your time.
Duncan Pollock, Real Estate Broker,
427 Gate Street, Niagara-on-the-Lake, Ontario, Canada L0S 1J0
Tel: 905-468-3154 Fax: 905-468-3812 Cellular: 905-704-9037
e-mail: duncanpollock@sympatico.ca
Note: E-mail
addressed changed as above on Nov 3 2007
website: http://www.duncanpollock.com
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