For sale inspections
The simplistic side of this part of the sale process is that a potential buyer wants to look at the good, the bad and the ugly.
The seller wants the buyer to have a quick look around, say they will buy it and then leave to avoid an employee or customer finding out that they are selling.
Many potential buyers are concerned only with having a thorough look through a motel property and do not consider at the time that the motel operator is running a business. It can be an awkward situation when the seller, broker and buyer are talking about sensitive, business-specific information and a staff member, customer or supplier walks through the door. The busiest times of the motelier’s day are therefore simply not suitable for conducting an inspection, and all parties need to be acutely aware of the sensitive and confidential situation that they are in.
Preparing for the inspection
The motel broker’s role is to set up a mutually suitable time for all parties for an inspection of the property, taking into account the busy and quiet times of the particular motel business. These busy and quiet times will vary from motel-to-motel depending on the type of clientele and income departments the business has. Buyers will inspect a motel at whatever time suits them; however, from the seller’s point of view, for much of the day it is inappropriate to carry out a thorough inspection. These times may include when the operator and the employees are busy, or when customers are checking in and out.
In most cases, the motel is always on show and therefore should present well for an inspection on any given day. If the day or night before was a busy one, then the property should be prepared to present as best as possible and as clean and tidy as it can be. Any repair items should be attended to or raised during the inspection with the intention that they will be rectified as soon as possible.
Inspection expectations
The percentages show that by far and away, most buyers do the right thing when it comes to an inspection. There are, however, some buyers who will not. Some will arrive on the doorstep unannounced and want to look through the property. This will no doubt be at a completely inappropriate time of the day; such as when guests are checking in or out, when the owners are away, or when the broker has not been advised that they were going to attend the property and the buyer then talks directly to the employees.
Other buyers will stay at the motel as a guest, having a look around without disturbing anyone. Some will unfortunately ask employees questions directly and alert employees to sensitive business details. I once witnessed a buyer, while inspecting a motel, stop and start to ask an employee direct questions about the property and business. This is, of course, completely inappropriate and lacking in common courtesy. Thankfully, I have only seen this happen once in the last 13 years. Once was enough.
Sometimes, when a motel is operated under management, a seller will not want the manager to find out the business is for sale. It has been found many times over that the best policy from a sale point of view and from an employer-to-employee point of view, that everyone is honest and upfront with one another. The manager will find out one way or another so it is best it comes from their employer first. Plans can then be put in place between both parties to ensure that when the motel does sell, each party walks away on good terms. In many cases, the manager is often re-employed by the new owner.
Seller’s role
The seller of the motel business can be involved in the physical inspection or can leave it to the broker to show the buyer through the property. This is up to the individual seller, as some prefer the broker to handle this and others prefer to be there to assist in showing the property. At all times, the broker should attend inspections and should control the inspection so that there are no unexpected problems that arise. There are many important reasons for this, which can be covered under the broad headings of financial, legal and communicative reasons.
The seller should be as transparent as possible and allow the buyer to look as in-depth as they wish throughout the entire property. Obviously due to stay-over customers, it is not possible to inspect every room within a motel. Most buyers accept this and are mainly interested to look at the different styles of unit that make up the complex.
When a buyer inspects a motel, they are looking for any faults or flaws they can find whether it be with the building or the books. It is the seller’s responsibility to present the property in its best light, free of repair and maintenance or financial issues.
Andrew Morgan is a Specialist Resort & Motel Broker & Partner at Queensland Tourism & Hospitality Brokers & he writes the monthly Motel Market column for Resort News
