Sale but.....

[Ville]

Hi Peeps,

I have been pretty busy lately with the sale of our place and so mostly read without posting.

Anyway, we signed the Promesse two months ago on our house and the acte is just a month away.

All has gone pretty well, we accepted an offer of 5% less than the asking price and selling privately. We have had to get an awful lot sorted out, as asked for by the sellers Notaire (We are using two, and never again !!) The fosse which was passed a few years ago, was required to have an up to date inspection (something we never even thought about when buying our new place, it had a pass and that was it !), the obvious diagnostic tests, building permits etc etc.

Nothing too much but believe it or not, this and some other dsmall matters, delayed the sale by a couple of months as the Notaires played their little one upmanship games !

To get to the point then. As the sale was dithering along, the time came to pay all the advertising for 2008, when their bid was accepted, it was agreed that the advertising costs we had now incurred would be included BUT nothing said at the time about the bookings taken for 2008.

Now, I have spent hours sorting out the 2008 books and the bookings (we are a very busy B&B with a cottage as well) have taken a fair time to sort out, some of you will know how B&B enquirers, especially some French, can send a few enquiries, which all of course need replying to, until they either book or not.

We have taken a fair amount in advance bookings but I am now told that the buyer thinks that all this work, for them, should be part of the sale. I know we spoke with them of this, a few months ago and I believe it was stated that we should let them know of how much this should entail.

When we have sold our other places in France, we have always agreed on a sum of between 4 -10% to be paid for advance bookings, some advertising to be paid for and some not, depending on the commission.

Now I know it is undoubtedly partly my fault for not tying this all down before now, unusual for me but I truly thought the people would see the moral; side in all this, if not the business side. I could quite easily turn the phone off, or even just say we are now closed for biz.

What do you all think ?

[la vache!]

Hi Ville,
when you say they want the 2008 bookings included, does that mean the deposits you have already taken as well as the balance payments? Or do they want everything? I would have thought it should be negotiable, not a done deal that the buyer automatically expect all the bookings to be included, especially in view of the work involved in taking them. Have the new owners never worked in B&B before?
I know when we bought, the advance bookings were included, but there were only 2 of them so it wasn't really an issue.

[Christine Kenyon]

Hello Ville. We've no experience of the French market, but when we've bought or sold holiday cottages in the UK, we or the seller have kept the deposits for the forward bookings (on the basis that that person has done the marketing and admin to secure the booking) and whoever is actually delivering the goods gets the balance.

In our case it was usually a £50.00 deposit and the balance was between £225.00 and £500.00, depending on the time of year.

Hope this helps. It seemed good practice to us! You've got one bargaining tool as you still have the info on the forward bookings .

[Ville]

Thanks Christine, that does certainly seem the moral and correct thing to de to me.

Hi Vache, how are you these days ?

It not only means deposits on the weeks sold in the cottage so far but umpteen B&B days to date in fact(and we are talking a fair number here as well) and with still over a month to go it will increase further and that is with not taking any March bookings (large loss there) as they want to "bed in" for a month or so.

They want all monies, deposits and final payments. I don't actually want any money from the final payments. Many of the B&B bookings are one nighters, out of season and all have paid in full (we always take full payments for one night bookings).

The new owners have not done anything like this before, nothing wrong with that, we all had to start somewhere but they are not listening to us but do want us to lead them by the hand for the first two weeks to show then how we take bookings, how we run the biz and so on.

I think another talk is imminent

[A-two]

Ville,
Allow me to help clarify the situation, then play devils advocate:-

1. When you advertised your property for sale, you did not stipulate a separate price for the business and property. In this part of the world, that means only the property was for sale, not the business. Unfortunately, the reverse may have been assumed, that the business was included in the price because you did not put a separate value on it.

2. Unless you agreed a non-compete clause as part of the sale, you can buy a B&B next door, take your customers with you and set up in competition. It doesn't sound like that's your plan, so they know the only value to you is to take your business out of the property and sell it on the open market to another B&B in the area. That would be a pretty evil thing to do, since you haven't already offered them first refusal at a reasonable price. (see item 1 above).

3. They will argue that the reason why they offered 95% asking price (congratulations by the way) is because they assumed it also included the business, otherwise they would only have offered say 94%, or 90%, or even 85%. (Now your deal is completely screwed.)

4. If you raise this as an issue now, you run the following risks:

(a) You will make them angry
(b) they will reduce their offer for the property by the same amount you are asking for the business
(c) they will walk away and buy somewhere else
(d) they will tell you to shove your customers and your advertising, they will get their own.
(e) you will be labeled a "nickel-and-dimer" (penny-pincher)
(f) they will accuse you of going back on your word (agreeing a price, then trying to squeeze it for more).

You have a few questions to answer:

Q1: What would you do with these B&B bookings if the buyer tells you they don't want to pay for them?

Q2: If you cancel your advertising, would you get a refund? If not, then again, it has no value to you. If you would, then they should pay you pro rata what you have paid from the date they take possession of the property.

Q3. Why are they buying your property? Are they going to convert it into a private family complex? Or are they are buying it because it's an ongoing and successful business? If buying as a business, why would you want to sabotage it for them? What if the sale doesn't go through, or is delayed?

I don't know your local customs, but if I was your prospective buyer, I would expect you to upkeep the business just as you have always been doing to the best of your ability until I had chance to take it over. I would also not appreciate being held to ransom for pocket money after the price had already agreed.

Sometimes, it's just too late to go back and start again. This is one of those examples. I regret that you had your chance and you missed it, too late, the deal is done. That's why people should use professional agents (sorry, I had to say that). You might want to hire one to help you smooth the path with these small details, to ensure a successful completion, for a greatly reduced commission of course, since you found the buyer yourself.

I am dealing with one property here this week which also has a price agreement on it, lawyers are passing contract and paperwork back and forth and it all sounds to be running smoothly - third time lucky we are saying - we thought it was sold twice already. Agreeing the price doesn't mean it's sold - the devil is in the details.

Sincerely,
Devil's Advocate.

p.s. Another trap is the furniture and other possessions. Are they personal or part of the business?

[la vache!]

A2,
If this is the case, and the buyers expect the business to date in 2008 to be included - then as well as the sales, should they then not expect Ville to include the expenses, the fixed and variable overheads (including salary for the current owners) for this year etc. to date? Surely the business doesn't just consist of sales (and if the B&B purchasers think it does, then they'll be in for a nasty shock!)

Hi Ville, not sold yet ourselves, your post has certainly given food for thought. There is no way I'd give up all my income for 2008 (which is shaping up very nicely) without claiming some money for the work involved in procurring the bookings and I'd be very loathe to give away the profit from people who have already stayed in view of the expenses incurred during their stay (heating, electricity, my hospitality/time! etc.)

[Jimbo]

it was agreed that the advertising costs we had now incurred would be included BUT nothing said at the time about the bookings taken for 2008

As always, when you bargain, you've got to be prepared to lose. If you demand - in effect - a very small sum of money and your buyers walk away because they think that you're being unreasonable, would this be an acceptable result for you? Shouldn't the cost of your sale falling through and having to re-advertise (in a stalling property market) be taken into account? Not to mention having to put your future plans on hold until you find another buyer (who might not be up for 95%).

As you didn't tie down the issue of the 2008 Bookings when the offer was made and accepted, your interpretation of what is 'fair and reasonable' may be light years from your buyer's. My experience of buying and selling property is that 'morals' usually take a back seat when money is involved.

Jim

[Jenroy]

Ville,

Perhaps you can charge an appropriate amount for their first two weeks of hand holding- which might equate to the value you put on the deposits taken

[Ville]

Jim,

We have bought and sold a few businesses in France, we have also sold an appartment we had and another house. We are well versed in the art of property selling and buying. In the early days many moons ago, we were actually involved with consultaions of this nature. It has always been the case in biz that it is expected to come to terms with the buyer about any future sales. I agree morals take a back seat but not with me. If I get nothing, then I walk away. I will not blackmail them nor do any harm to the existing biz.

Read my reply to A2 for the rest.

[Ville]

Ville,

Perhaps you can charge an appropriate amount for their first two weeks of hand holding- which might equate to the value you put on the deposits taken

That would be a good idea Jenroy but I did say, although only verbally, that I would assist them in the initial period. No time period set but I feel duty bound to carry that out, payment or no payment.

[Ville]

A2, allow me to reply from a French perspective, which appear to hold little resemblance by the look of it, to the USA style or buying and selling.

The house was sold and priced on the back of the chiffre d'affaire for the last few years and expected returns for 2007 plus a value put on the house as a private dwelling. We have 3 bedrooms, 2 private salons, a kitchen and two bathrooms, outside, a newly built cabin, 3 sheds and a large hangar which are not part of the B&B and thus did not equate to the biz.

In France, when a place like ours is sold, there is a clause in the acte, that states one cannot buy and run a similar venture within a certain distance (25 km's in our case, in previous sales of ours, it has been around the same distance stipulated) from the place one is selling. So we cannot take any existing clients, even if we wanted to, partly as 25 km's away from here, is probably not where a lot of our existing clients would wish to stay. It is location, in our instance, that is the forté of the place.

So evil would be the correct word if we did what you say but that is not going to happen, I can assure you.

They can assume what they wish but how easy would it be for me to simply tell future enquirers that sorry, the biz is now closed or new oweners will be along soon, please ring them (any B&B owner will tell you that they will simply ring another place).

So I am being moral and taking the bookings along with sorting out enquiries for various reasons, that take a little longer to sort out. My time and as you can see, all at a loss to me, when as stated, I could now walk away and just wait for the final acte to come along. Believe me, the sale would still go ahead, this is France, pulling out, for ether of us, is not an option now, trust me. So no, the answer to me being screwed certainly does not arise in this case. No clause says I must continue to raise revenue for the buyers....only a moral issue and it appears that I am possibly alone in that attitude.

a) If I make them angry, it will only be due to me asking the question again badly, so I will have to sort that part out.

b) Impossible, I don't think you are au fait with French law.

c) Likewise, impossible, they lose a lot of money

d) They sure can and a lot of my experience of being in the tourist trade goes flying out of the window for them, that would be akin to shooting oneslef in the foot for the initial period in charge!

e) That's a risk I will take but as I said, I am prepared to walk away with nothing and cause no harm to the property or the biz.

f) True but here we are talking of future sales which were not brought up, sadly in my case, even though many on here will tell you that it is only fair and correct to ask for a commission on all the sales taken purely for the buyer and I probably made the error of selling to someone who has never been in this type of biz and thinks it should simply be all in his favour.


Q1: What would you do with these B&B bookings if the buyer tells you they don't want to pay for them?

As I said, they will still be passed on. Many have been paid for and I will pass on payments and other reservations taken but for the next month or so, it is not going to be "all out for bookings"

Q2: If you cancel your advertising, would you get a refund? If not, then again, it has no value to you. If you would, then they should pay you pro rata what you have paid from the date they take possession of the property.

I told them in the beginning that I had paid a fair sum already in advance bokings (Many of us pay well in advance for the next season, often late August early September even) and so, it was part of the deal.

Q3. Why are they buying your property? Are they going to convert it into a private family complex? Or are they are buying it because it's an ongoing and successful business? If buying as a business, why would you want to sabotage it for them? What if the sale doesn't go through, or is delayed?

They are buying it as it is a wonderful property, it is to stay as it is, they also plan to put in a pool and other things for the guests. They most certainly are buying it on the strength of the books. They saw properties for well over a year and made 3 visits to us, before the offer.

We certainly have no intention of sabotaging the biz. We are only moving a short drive away, if we were immoral or just wanting to unload the place, I think sensible money would be on us departing the region, or indeed, France itself. I have already stated about sales in France and the possibility of it not going through

So in ending, you really would expect the sellers to graft for the buyers, when indeed, once the place was seen, price accepted, papers signed, we should tie ourselves to the biz and work for someone else for nothing ?

There is not a case of blackmail, this is a case of what is expected in this biz. If after talks, they still refuse, then I will not be in the same mood as I have been, to work so hard for them and will just amble away for the last month and that if you cannot see it, to me surely the best way. I don't harm the house, the biz, I just guard it carefully and hand it over on signing day.

As far a sprofessional agents, sorry but here one can find a lot who are les than that. Ask many and ask what many of their agenst actually diod for the huge amount of money that they took, or at least, hoped to take in commission. Due to circiumstances, we are using two Notaires, big mistake, they ahve fought like cats and dogs, each telling the other the laws, others asking for new guidances, gnoring emails and letters, the list goes on. The whole thing has been a charade at times, sp please, don't talk to me about professionals. I have been witness to horror stories from quite a few over the years. To those who are professionals on here, luckily I have also been privy to some excellent ones.

I think you have to realise, that hiring a pro of any kind now, is not a player. It is sense and sensibility time.

You see, the way you are talking about thing of having tow sales already, cannot happen in France. The deposit money is put down by tewh buyer, a weeks grace is given to back out, after that, anything not written in a clause suspensive, will mean loss of deposit, in this case, a substantial one.

p.s. Another trap is the furniture and other possessions. Are they personal or part of the business?

All signed for as far as the biz is concerned and separated from the fees, as no tax is applied to such items. So yes, this was delat with correctly.

Anyway, thanks for taking the time to reply. A few disagreements there but while I think some of it was valid on your part, the French way appears to be somewhat different from how it is with you, as many of our American friends tell us it is.

[A-two]

Ville,
Thanks for explaining the differences, very interesting. Actually, it all sounds very similar and straight forward to me now. Not all US States are the same, in fact some are very different. I just didn't understand the stage you were at, specifically that your buyer had already signed a contract and handed over deposit/downpayment (silly me). I thought you had just made a verbal agreement and that the buyer was not yet locked in.

Anyway, now you have explained that the value of the business was factored into the price, and that you do have a standard non-compete clause, (which would be normal here as well), then it would seem pretty obvious to me that even if you are not obligated legally, any buyer is trusting you to deliver a full on business as per your recent track record, not one that has been switched into idling mode.

The truth of the matter (at least the view from here), is that this isn't a money issue at all, it's a time issue. Having sold it, you now don't want to spend any time on it, period. The sooner you can hand over to the buyer, the happier you will both be when the time comes to part ways. So I think I would sit down with the buyer and try and work out a way in which he can start to take over some of the tasks now, one by one, rather than demanding payment for a job you don't want to do anyway. E.g. Could you work out a system with him, so that he handles all inquiries for the period after he takes ownership, so you don't have deal with any of those at all?

The alternative would be leaving a rather nasty taste in someone's mouth - someone is going to feel cheated - and that would be such a shame when it should be a cause of celebration for both of you. I do hope you can work it out.

Good Luck!

[Ville]

A2,

No I can't agree that they expect a full on biz. They do not want any bookings for the first month and intend to do some works before opening. So it will switch to idling mode, as you put it, on its own accord. Thus the trade will naturally be down on previous years.

I think it fair to say that I dont want to spend time on it, well not as much as normal anyway, we now have our own pressing issues in the move to the new house. The buyers also have little time to be able to handle all the enquiries, so that is not a player either. I wish they would take over the enquiries, it would make it a lot simpler all round !

I certainly do not want them to feel angry, just a sense of what is good and fair in all this. I barely see that they would feel cheated by simply paying a commission for works carried out for them, after all, would an estate agent, with a biz up for sale and then sold, continue to do all the work for the sale of any houses during the change over and then hand it all over, lock stock and barrel load of cash to the new owners, je pense pas !!

Thanks anyway for the good luck message and I too hope it all ends amicably.

[A-two]

after all, would an estate agent, with a biz up for sale and then sold, continue to do all the work for the sale of any houses during the change over and then hand it all over, lock stock and barrel load of cash to the new owners, je pense pas !!

If you are asking me that question, my answer is absolutely yes, I would continue to do the work until the transaction is completed, even though commission would be due and payable regardless. That's part of the job and I'm sure you are not handing over all the proceeds from 2008 bookings, only funds that relate to forward bookings after the date when he gets the keys. Everything before that date is yours to keep, no?

It's not his fault that he doesn't understand the "biz" to the same level you do, nobody explained it to him properly, so now you have to work with him and maybe go the extra half mile to meet half way. Be kind, he's learning, and maybe be thankful that he didn't know the "biz" inside out, or he may have realized how hard work it is and had second thoughts!

Also, I am not buying the argument that he is too busy to take over some of the jobs you are thinking about skimping. He's very excited about acquiring your property and he can't wait to get started. He will make time, especially if you explain that you're going to be heavily committed elsewhere making arrangements for a smooth and timely exit as agreed. You can express your concern that you may not have enough time to do everything properly and don't want to drop the ball on any of it. Can he help? If he says no, then you can suggest that you might have to pay someone to take over some of these tasks and it would be normal for the incoming buyer to pay for tasks related to the new ownership period, for example, a virtual assist to field inquiries, handle stock ordering etc. Then give him the rate suggested by LV above, or whatever is standard practice. By this point, he will understand that you can't carry on at the same level of input and take on additional responsibilities of your move as well. If he still doesn't offer any help, either in kind or financially, then at least he will understand why you need to go into idling mode for the last few weeks and not think it is just laziness or inconsiderate behavior. These are just my thoughts and suggestions, I'm sure you can handle it diplomatically.

The important thing is to get out of the mindset that this person is on the other side of a deal, and instead start to treat him as a friend, and be very helpful to him, so that later he will speak highly of you to future guests and others in your community, which is what you want. It's only for a very short time, so if you do end up having to go the extra half mile without any thanks, do it with good grace and and chalk it up to experience. Take satisfaction that at least you won't be leaving any residual bad feelings lying around, which is more important than a few extra hours here or there, especially when you are not leaving the community.

Let us know how it works out!

[Jimbo]

And we all make them don't we ?

Indeed. When we bought our property, we understood that all the linen for the gites would be include in the price. The previous owner insisted on charging us 600 Euros for it. When we examined the inventory for the gites, the linen wasn't included. How had that happened? It was a complicated transaction and I guess that we'd taken our eye off the ball and paid for the oversight. We were lucky - it could have been something far more serious. One man's oversight is another man's opportunity. Whilst one seller might be generous in such circumstances, another will cheerfully take full advantage. Buyer beware as always.

Jim