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Kit Cassingham
Joined: 18 Nov 2004
Posts: 302
Location: Colorado
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 Posted: Sun Dec 05, 2004 6:11 pm Post subject: A Steal of a Deal |
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I regularly hear about B&B buyers who are so pleased with their B&B purchase they are almost gloating. I’m all for a buyer getting their B&B for a good price, as long as they don’t make the seller feel as if they are being robbed. A seller who feels robbed will make life and the transaction unpleasant fo the buyer. When that happens the good deal quits being a good deal.
When I was a B&B Broker I believed in a win:win situation for the buyer and seller. I felt if it wasn’t a good deal for both parties, it wasn’t a good deal for either party. After watching numerous transaction go from seemingly good to awful, I feel even more strongly that way.
Usually the "steal" comes in when the seller is desperate to get out of innkeeping and finally takes an offer that’s considerably below what they wanted to get for the property. They try to salvage some value for themselves but often just give up, on the face of it.
How can things go bad? The seller refuses to train the buyer. The seller quits taking reservations. The buyer finds furnishings that were part of the sale disappear. I even heard of one case where the seller sold gift certificates without recording them, much to the buyer's surprise when the guests arrived. There are lots of examples, but I think you get the drift of how bad things con get.
There are times the seller has to get out of innkeeping and will sell for almost any price they can get, but I believe that doesn't happen often.
I want to raise your awareness about "getting a steal of a price"; that if a deal is too good to be true. it may be. Buy what you can afford to buy and let the seller feel as if they are willing participants in a mutually beneficial transaction. Have reasonable expectations of the seller's responsibilities, and of your responsibilities as the buyer. Buy well and enter your innkeeping career in a good note.
_________________
Sage Blossom B&B Consulting
Kit Cassingham, "The B&B Lady"
PO Box 668
Ridgway, CO 81432
U.S.A.
970-626-2277 |
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Inn at Elizabethville
Joined: 06 Nov 2005
Posts: 168
Location: Elizabethville, PA
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| Posted: Sun Nov 20, 2005 9:54 am Post subject: Re: A Steal of a Deal |
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| Kit Cassingham wrote: |
How can things go bad? The seller refuses to train the buyer. |
Yep, that happened to me.
| Kit Cassingham wrote: | | The seller quits taking reservations. |
I can't prove it, but yes, I suspect that this happened as well.
| Kit Cassingham wrote: | | The buyer finds furnishings that were part of the sale disappear. |
All furnishings on the ground floor disappeared. Everything in the kitchen except for the stove and refrigerator disappeared. Beds, linens, towels, comforters, alarm clocks, lamps, bedstands, and dressers disappeared.
| Kit Cassingham wrote: | | I even heard of one case where the seller sold gift certificates without recording them, much to the buyer's surprise when the guests arrived. |
Yes, yes, yes ... I also had a wedding party arrive and when I billed them for their rooms, the father of the bride complained that I had overbilled them insofar as they had paid a 30% deposit to the former owner.
On the flipside, I will say this.
This property was listed as a turnkey for just over $200,000. I knew that the former owner had purchased this for nearly 1/3rd more. I didn't twist her arm to sell me this property for a loss. I even met her asking price even though I knew full well that I could have gotten this facility for less.
As the prospective buyer, it wasn't my fault that the owner had gotten herself into dire straits. At one time this business had a 60% + occupancy. At the time of sale, she only had an 11% occupancy - though she cooked her books and dummied up her records to make it seem as though she had a 40% occupancy.
This woman also flipped on her realtor. On the day the realtor was supposed to show me the inn, I was told by the owner that the realtor hadn't come because she didn't consider me to be a serious buyer. I subsequently found out that this woman had told the realtor not to come because she could show me the inn.
When it came time for me to make my earnest money deposit, the realtor wanted me to make out a check to the realty company. The owner wanted me to make out a check to her attorney. When I called the realtor for clarification, the realty company slapped a lien against the property. The owner retaliated by prohibiting the realtor from being present at closing.
After the sale was completed, the former owner filed a complain with the real estate commission. She claimed that the realtor had been incompetent and unprofessional. As "proof" of this, she cited the fact that the realtor had never shown me the inn and the realtor had not even been present at closing.
An investigating officer interviewed me and eventually cleared the realtor. The owner's attempt to recover the realtor's paid commission was thwarted and the woman kept her realty license.
The former owner was a real piece of work. I didn't have to meet her asking price but I did and the result? I was scammed. It cost me $40,000 to replace everything she took. I also bought this business thinking that she had sold a successful business when in fact it was teetering on the edge of bankruptcy.
As if that wasn't bad enough, she also lied about switching over utility accounts to my name. My electricity was turned off. I lost my phone service. I came very close to losing water, sewage, trash, and cable.
When I called the former owner she LAUGHED and then claimed that she had applied for a transfer of accounts and it wasn't her fault if these people were idiots and they "made mistakes."
I didn't deserve what happened and the only reason I didn't go bankrupt is because I at least had enough sense to have a couple of year's worth of operating expenses stashed away just in case of a rainy day.
Did I have a rainy day? 
I had a frigging flood of biblical proportions! If I hadn't had cash reserves, I would have lost my shirt!
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Inn at Elizabethville B&B in Lyken's Valley PA |
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