Visitations and Dealings with Prospective Buyers
“Negotiations should always take place on a level playing field; courtesy, politeness and
mutual respect are essential. You only have one chance to make a first impression!”
The time has come – the sale of your palace or castle is approaching!
Prospective buyers have sifted through lots of marketing material for palaces, castle, palace hotels, historic buildings and luxury properties, looked carefully at the available details and data, and have decided to visit and look into your palace or luxury villa. Without intending to be patronising, the following tips on how to treat and communicate with prospective buyers and lessees are designed to familiarise you with the most frequent problems, conflict situations, questions, mistakes and misunderstandings which may arise and provide you with some helpful tips and guidance.
What information will a prospective buyer already have about me and my palace /luxury property?
After completing identity and solvency checks, your ASP broker will provide prospective buyers and lessees with documents about your property as agreed so as enable them to prepare for visitations or sales negotiations. Please be aware that most prospective buyers and lessees will also conduct their own detailed research about your property online, using available historical sources, looking at booking platforms (in the case of hotels) and perusing your website.
In the case of palace /castle hotels some prospective buyers or lessees with a real interest in a property may also book into the hotel anonymously for one or two nights, so as to see how the hotel or business operates on a daily basis. If you offer palace tours, they may anonymously take part in one. You would do exactly the same in their position!
Serious prospective buyers or lessees will always be well-prepared when coming to visit your property or to discuss matters with you and will probably already be aware of your property’s particular strengths or weaknesses. This means being prepared for honest, matter-of-fact discussions with prospective buyers or lessees of your palace, castle or luxury property.
What information will I have about prospective buyers or lessees of my palace / historical property?
Your broker for historic and luxury properties at ASP Global Luxury Properties will normally have carried out checks on any prospective buyers/lessees in line with the provisions of the Money Laundering Act, including verifying their identity. The prospective buyer or lessee will also have signed a confidentiality agreement and will have completed a binding agreement confirming that they either have the necessary equity to buy the property outright or to find funding of other means. In accordance with data protection regulations, if a prospective buyer has provided us bank statements/confirmations these will not be passed on to you directly without the prospective buyer’s explicit consent. Failing this you will receive confirmation from your expert broker that the prospective buyer either has enough equity to buy your business outright or to take out a bank loan.
This ensures that the prospective investor, buyer or lessee is not at a disadvantage and negotiations can take place on a level playing field.
No palace, castle or luxury property is ever perfect – not even yours
ASP sells palaces, castles, historical properties, memorials and landmarks, and luxury properties in any condition; be it a derelict castle ruin in South Tyrol, a comfortable residential palace in the Rhineland, a delightfully beautiful and successful palace hotel in Bavaria, a water palace in the Ruhr, a palace hotel in Tyrol, a palace with vineyards in France, or a dream villa in Cap Ferrat or Monte Carlo. The palace, castle or luxury property is what it is and its condition will be reflected in the asking price. As castle, palace, or luxury property owner you will have put a lot of money and effort into the building, facilities, expansion and constant development of your property. Now it is time for your ASP expert broker to bring the prospective buyer or lessee to visit your property.
The ASPI AG hotel broker will already have informed serious prospective buyers and lessees about any flaws or shortcomings in your palace, castle or luxury villa. This is advisable as it means there can then be no disagreements about these aspects as they will already have been factored into the asking price. Ideally, you should accompany your broker and prospective buyer/lessee for most of their visit, so as to answer any questions as they arise and because after all, nobody knows your property as well as you do. If so wished your ASP broker can also carry out the visitation themselves making note of any questions, comments, etc. that may arise. They will then go through these with you and answer the prospective buyer’s questions either in person or in writing.
It is only natural that potential buyers/lessees notice aspects during their visit that they may not like or would perhaps do differently themselves. The green carpet, yellow tiles, red curtains, the whitewashed wooden ceiling in the dining room, a broken lamp and many other aspects. This is solely a question of different tastes. There might be a crack in the wall here or there, some dodgy painting, a worn or stained part of the carpet. If a prospective buyer/lessee mentions this during a visitation do not react emotionally or indignantly, comment on it briefly and objectively, do not feel offended by it. Never forget: you would ask exactly the same questions in their position! Leave it to your hotel broker to discuss these aspects and win prospective buyers/lessees round to them after the visitation.
What is a prospective buyer/lessee allowed to ask during a visitation?
The simple answer is: ANYTHING and EVERYTHING. There should be no issue that a serious prospective buyer cannot debate and discuss with you and/or your expert broker, no areas of your palace, castle or luxury property that they should not be able to visit and see for themselves. That being said, in the interest of a positive atmosphere and constructive meetings and negotiations we remind prospective buyers/lessees to pose questions in a polite and respectful manner and to address any particularly sensitive aspects with our ASP brokers. We kindly request that you would do the same.
What documents and information do verified serious prospective investors, buyers, lessees usually have access to from the negotiation phase through to the ultimate handover?
- Fully disclosed hotel marketing material with all hard facts and descriptions
- Historic documents with references
- Recent financial statements, business assessments and occupancy rates
- Staff levels, staff planning and contracts
- Operating costs and cost structure (in the case of enterprises / palace hotels)
- List of deficiencies
- Land Register entries and building layout plans
- Energy performance certificate (if applicable)
- Expansion plans and possibilities (if applicable)
- All required technical data for equipment, etc. for due diligence tests
- Estimated valuations and valuation reports if available
- Drafts of rental/lease contracts in the case of properties for rent or lease
- Underlying rental or lease contracts with all attachments for investors
- During the final negotiations an inventory and copies of all active contracts and liabilities
This list is not exhaustive!
Honesty is the best policy! Always lay your cards on the table!
You have a good a palace, a castle, or a sophisticated luxury property. Now do not be shy to show it off, with all its strengths, and possible shortcomings and weaknesses. When showing prospective buyers around be confident without being overbearing. Remain friendly and professional even if there are aspects of your property that the prospective buyer/lessee dislikes or if they confront you with uncomfortable questions about damages, decreases in revenue, etc. Answer these in an objective and honest manner. Do not exaggerate or present your property in an unjustifiably positive light, yet at the same time there is no need to point out every flaw which the prospective buyer might have overlooked!
Always bear in mind: you would think exactly the same things and ask exactly the same questions if you were looking to buy a property!
The prospective buyer or lessee has to get a feel for your property, they have to be able to identify with it and in the case of business enterprises they have to be certain that they can make a living from it, earn enough money to run the business, meet debt repayments and provide for their family. If we can impart this sense of certainty then their stands a good chance that they will choose your property.
Being honest and forthright with any prospective buyer or lessee will increase their sense that they can trust you. In this branch there is no tale that has not been told before; discreet modest understatement is always preferable to unrealistic exaggerations and imposture. A respectable and well-groomed appearance will help to win people’s confidence. You may be faced with a professional hotel buyer or lessee who has probably experienced similar personal and financial difficulties with at least one property as you have done with this one. They will understand your worries, problems, questions and concerns. The more honest and forthcoming you are as hotel/gastronomy business owner, the more helpful, honest, forthright and forthcoming the prospective buyer or lessee is likely to be.
Bear in mind that prospective buyers probably already own a similar palace, castles, or luxury property and already know the advantages and disadvantages of historic, or luxury properties all too well.
Always be forthcoming with your broker and prospective buyer or lessee
After 30 years of experience as broker for palaces, castles and luxury properties that is one of the most important pieces of advice we can give you. Frankness and reliability on your part even when it comes to the small things quickly creates instils prospective buyers or lessees with a sense of trust putting you at an advantage over other owners.
- Request time for consideration and stick to it.
- Grant prospective buyers/lessees time for consideration if requested.
- Provide requested documents and other information as soon as possible.
- Always keep appointments as arranged.
- Always share your impression of prospective lessees or buyers with your broker as soon as possible.
- If a prospective lessee definitely does not meet your requirements and expectations, please turn them down as soon as possible stating both the objective and subjective reasons for your decision in detail. This is perfectly justified; you should have no guilty conscience in doing so.
- Treat all information about prospective buyers and lessees with the utmost confidentiality and do not pass any information on to third parties.
- Do not react indignantly if a prospective buyer or lessee puts in an offer which is considerably lower than your expectations. Work with your ASP broker so as to react in an objective and considered manner. Continue to take your opposite number seriously, even if you consider the offer to be impertinent.
- Do not mention other prospective buyers/lessees to potential buyers/lessees and do not make any insinuations about the intentions of other prospective buyers/lessees.
- Do not flatter prospective buyers or lessees unnecessarily and do not make any insinuations regarding the sale or lease which could be misinterpreted or raise false hopes.
- Forthcomingness and reliability in all matters creates a positive atmosphere for any forthcoming negotiations.
Are potential buyers/lessees allowed to visit your property anonymously?
Yes, of course they are, if the property at question is a palace hotel and you have not strictly prohibited it. You are running an accommodation facility, a restaurant, or other similar hospitality business in a castles or palace. You would do exactly the same! If you had to choose between a number of similar hotel properties, would you not secretly book a night and try to get to know more about the business from a guest’s perspective? If you then decided you liked what you had seen, would you not organise an official visitation to see the parts of a hotel that guests do not generally get to see and to discuss your impressions with the owner? Members of the public (which includes prospective buyers and lessees) are also entitled to take part in any palace tours, museum visits, riding lessons, etc. which you may offer.
Expert broker mediation
In the event that negotiations with your prospective buyer or lessee come to a head as a result of certain differences in opinion, do not hesitate to make use of your experienced ASP broker‘s mediation skills. They are trained to act as an impartial mediator and to find a happy medium that is satisfactory to both parties. There is almost no problem that they have not been able to solve at least once, if not several times. Put your trust in their professionalism and experience in dealing with prospective buyers/lessees, authorities, lawyers, tax advisors and banks.
Your expertly trained palace broker or luxury property broker is on your side and will go to great lengths to ensure that you find and keep a suitable buyer or lessee for your property, they will help prospective buyers set up their financing and help you obtain the selling price you envisage, support you in selling price negotiations, drawing up contracts, dealings with authorities, exchanging contracts and handing over your palace / castle or luxury property. ASP expert brokers will support you every step of the way and can work wonders in their dealings with buyers, lessees, authorities and banks. With mutual trust and the right chemistry anything is possible.