Seller Won't Provide Financials

12 Replies

Trying to purchase a 12 unit but the owner says he can't give me the Financials because they are in his tax forms and it will cost $500 for his CPA to produce the data.

Shouldn't the the books be separate from his personal return? I know the LLC is a pass through but to keep the corporate veil in place there should be a separation between personal and business records.

Is this a common predicament? 

P.S. The seller says I could pay the $500 if I want the data.

Sounds like BS to me.

Even if it does cost the seller something it's the cost of doing business.

Any buyer wants to validate records.

WHY is the seller selling?? Sounds like they are not motivated and lazy and looking for a sucker buyer. 

@Joel Owens

Thank you for the reply.  I haven't been able to talk directly with the seller...just through the agent.  The owner is selling three multi units and moving away from the area but that's about all I know concerning motivation for selling.

I called the CPA hoping to get information but had to leave a message.  The building is in good condition and the tenants like the place.  

Will update.

Walk away. If you don't have the financials you are buying blind and are probably overpaying. If there is a cost to get the figures, which I doubt, it is the seller's problem.

Are you trying to get this info before going to contract? It is not unusual for a seller to avoid giving that out in advance. 

You can put in an offer that has a due diligence period and say that the seller must supply tax returns and other due diligence items needed.

Anyone can go to the library and copy even a very large tax return for $10-20. Really you  only need the schedules that apply to that property and that is $5 max. My accountant has sent me that kind of stuff same day PDF for free.

@Brian Kennedy  

I keep my client's documents very well organized. It would take me about five minutes to pull the needed information. I couldn't imagine a scenario in which I would charge a client for this.

It sounds sketchy to me. 

@Ned Carey

I haven't officially made an offer yet...my thought was to get the info in order to make a fair and reasonable offer.  But I see your point and will contact the agent with an offer and then see if that opens up the dialogue.

Man, I love this site...what a wellspring of information.

Originally posted by @Ned Carey :

Are you trying to get this info before going to contract? It is not unusual for a seller to avoid giving that out in advance. 

You can put in an offer that has a due diligence period and say that the seller must supply tax returns and other due diligence items needed.

@Ned Carey

What is a typical due diligence time period?  What other due diligence items would the seller provide and how many years of tax returns would you ask for? 

Thanks in advance.  I'm looking for a property and have come across this same question.

@Brian Kennedy the seller is not a very bright person.  First off who is going to buy the 12 unit without looking at financials?  Buyers typically want to know if the property cash flows.  On top of that a lender will require the seller to provide financials.  If the seller won't provide the financial well than you can offer a lower price.  But be aware without financials you will have to put more money down on the purchase and the rate is going to be higher aka hard money loan.

@Brian Kennedy Is this one (1) 12 unit building or three (3) 4 unit buildings? If they are fourplexes on different plots of land, they would be valued using sales comps.  This could be why the seller does not want to provide info.

It is BS. Provide your own estimated lower financials back to the seller along with your lower offer price and let the seller know you would be happy to review any real documentation they can provide.

@Brian Kennedy

Hi Brian,

Sounds like what I like to refer to as a "Mom and Pop".  Just tell him you need the financials to present to the bank for financing.  Try to assemble whatever you can in the meantime to do an analysis, rents, expenses, etc.

A seller should always have financials ready when he is marketing his property for sale.  I fault the broker for not having this info ready.  They should be able at the very least to provide last 12 months yr to date operating stmts.

Good Luck

Gino

You're only after the Schedule E, not the whole 1040.  If he's too lazy or refuses, then he's not serious about selling.  Make it a contingency in your offer, he'll have to produce or you get to walk.  You disapprove when produced, you still walk.

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