The level of trust and intimacy with which an accountant knows their clients’ family, finances, and fears is second to none in the professional world, and with that comes added responsibility with advice provided.
For a client selling land or property for development, the process can be intimidating. As an accountant, you may be the first, beyond close friends or family, to know if a client intends to sell, therefore the advice and feedback you offer will be instrumental in their mind throughout.
As a landowner advisory, we’ve identified 10 steps which will help you guide your client to a more secure and rewarding transaction:
- Make sure the client has discussed with relevant family members or fellow directors what the potential sale or release will mean for all of you, and work through any concerns or objections early. A clear vision will help them with progress and later discussions.
- Encourage your client to consider their ultimate goals and deadlines for agreeing a deal, receiving part or all of the funds, and when they’d be releasing ownership to a 3rd party, so that they can map this out.
- Work with the client early on to identify tax considerations, such as timings, capital gains and payout structures. Too often the landowner will be encouraged to consider certain purchase terms without considering how this could impact their tax position and banked proceeds.
- Onto their property, suggest a considered view around their surrounding area. From this, they can identify if nearby land or properties have been redeveloped and if their property is the same size as others or if the land connects well with the rest of the settlement.
- Help clients avoid attachment to the housing crisis. This is too readily used as the expected justification for redevelopment, and strict planners and politicians could soon put up significant barriers. Recommend that they review local newspapers or news websites to understand what planning has been approved or rejected recently, and why.
- Your client will need to identify any professional support they need, and know what questions to ask. A property lawyer will be crucial as they approach an offer, although often needed well before to consider any covenants or restrictions held within the Title or Lease.
- Suggest that they identify any experienced friends or family members that may be able to act as an ally throughout the process. They must be conscious of special interest from this person, however, this ally can be vital to maintain perspective and can focus on listening during meetings or negotiations for positive or negative signals and comments.
- Sale price is an area that is most often misunderstood, and the third’s formula significantly misleading. Recommend to be wary of stock hungry agents providing ballooned figures. Good commercial surveyors can help set a range, although inviting bids from a shortlist of capable and screened buyers will help the owner understand true market values.
- One accountant we’ve worked with insists that all potential bidders provide proof of funds, or clear funding history, before they’re invited to visit the site or to submit proposals. In many cases, a clear track record of their previous similar acquisitions should be sufficient. For smaller sites attracting smaller firms this is a good way to remove time wasters or cowboys.
- With a support team in place, the client is ready to meet representatives or buyers. Each must put each other through their paces, insisting on track records, meeting key personnel, and asking question around what will be developed. Get specific details in writing, even if by email. Transparency is vital.
By establishing initial expectations and a basic level of understanding, your client will ultimately enjoy a more rewarding end result. Rushing into the first offer under poorly considered terms are where we see deals dragged out for several years and which provoke uncomfortable conversations. Tick off the ten steps above as yourself and the seller approach a potential sale to create a better experience and help you move your client into the next phase of creating their legacy.
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