Urgent advice please - offer accepted 10 weeks ago...

big_gus

Chaps, and ladies...I'd very much appreciate any advice here.

Situation is that we had an offer accepted on a (very small) hotel back in March. Almost three months ago now. Initial asking price was 'offers around £495k'......after two initial bids were rejected, we had a third accepted of £475k.

We have had problems with our Lender pulling their rate etc but now all seems back on track and we should be having a valuation/survey completed in the next fortnight.

Now - obviously - the price of the hotel would have fallen since we had the offer accepted in March.....but...this is the tough bit....I don't want to muck the current owners about as they are in their late 50's and looking to retire, nice people, plus we need them to teach us the business after we buy (goodwill etc).

Its not the 'normal' case of most property sales where you never see the sellers again so don't care about knocking them for as much money as you can to benefit yourself.

On the other hand, I am sure the true valuation of the property would have dropped since our bid was accepted in March.

The third part to this story is that the sellers currently own and live in an ajoining 'apartment/extension' built onto the side of the hotel and will continue to live there when we have the main property (blocking up the ajoining door etc).....AND, we plan to buy that part off them when they move out in the next 12 months or so.

So - in summary.....we will continue to see them a lot, and no doubt ask for their help in the running of the hotel for the first few weeks/months. So we would feel awful if we fell out over asking for a lower sale price in line with the drop in the market since the 475k was accepted. Plus we want to buy the 'extra' bit of the property in a few months time...funds allowing.

Help/advice on this one please?

Thanks for taking the time to read and apologies for length of post.

PasturesNew

If you're buying a hotel you're buying a business.

While the bricks/mortar might or might not be worth more/less, it's the business books you bought - and the potential.

No matter how far the bricks/mortar plummet, if you can still make and grow a good business then it would sell on well.

borntobefree

Ditto what PN said

prudryden

If a year had gone past, I would say drop your offer a bit. Three months (Nah) - you will only agravate them. But that is a choice you have to decide on.

big_gus

Appreciate you taking the time to reply guys, so thanks.

So none of you would ask for a reduction in line with the fall in the market since the offer was accepted?

Captain_Mainwaring_2

I'm not into hotel etc, but you seem to be making the cardinal mistake of mixing "friendship" (albeit one of five minutes) and business.

If they want to sell, they have 475K , I wouldn't have them anywhere near the place, they have enough money to buy something else.

Come 12 months are they contract bound to sell the annex, and at what price? You'll feel pretty sick if they don't want to sell, or it is valued at a current valuation and is worth 60% of that in 12 months, or you find you cannot sell the business later because you can't get the rest of the property.

I would run for the hills. Let someone else subsidize their retirement.

[Deleted User]

No, I wouldn't, especially if you need their help in the future.

andysstuff_2

No - valuation of an hotel will be on trading potemtial - may even be done on a 'price per bed unit' basis rather than a bricks and mortar valuation.

you may even find a school of thought that says values have increased slightly with the cost of fuel going up and the knock on this (may) have toflight costs and foreign holidays!

tbs624

I think you answered your own query in your post Big Gus. It looks as though the delay has been due to your finance arrangements (understandable in the current climate) rather than anything on their part unless I have misunderstood your post, so it would seem a bit dry to start trying to knock the price down.

This has to be especially the case when the support of the current owners is going to be key to the initial success of your new venture, and they could decide to not play the game with the annexe at the next stage of your plans. Good luck with it.

Doozergirl

I totally agree that the valuation should be based on the yield that the business will bring you. You shouldn't have a need to renegotiate.

Plus these people have the ability to mess things up a little for you. I'd avoid annoying them.

Kez100

Have you looked at the accounts, prepared cashflows for your own circumstances and undertaken due diligence or is this just 'a dream'?