Innkeepers, Don't Stick Your Head in the Sand

Today Becky and I were working together in her office and she got a call from a Realtor on the Western Slope of Colorado who asked us if we would co-list a bed and breakfast with him. In the summer of 2009 we had brokered the inn across the street from the one he was listing and he knew that we could help him find prospective buyers.

We've learned over the years that before we say yes to that question, we need to know more about the property. In this case, the news was dismal. The owners wanted to list their property, which had six guest rooms, 4200 square feet, gross revenues of around $65,000 and an owner's quarters in the basement, for $850,000.

The property we had brokered right across the street had 13 guest rooms, 7000 square feet, gross revenues of $220,000 and a three bedroom, two bath owner's quarters that took up the entire lower level of the building. It sold for exactly a million dollars.

What ARE these people smoking?!! Using the sold comp for price comparison, this property should be listing for at least $200,000 less than $850,000. So, after we had shared our pricing concerns with the listing agent, his comment was, "I get to put a sign in the yard, and I'll pick up some business that way". And, he also said, "If I don't take the (overpriced) listing, the broker down the street will take it."

What ARE these people smoking?!! Innkeepers, a word to the wise. Before you put your inn on the market, order an appraisal on the property. Pulling a number out of the air only hurts you in the long run. Don't become grist for your listor's mill, by giving them the opportunity to find some buyers at your expense. If your property doesn't appraise for your negotiated price, it's not going to finance ANYWAY! Don't stick your head in the sand, or you will be on the market FOREVER.

Needless to say, we took a pass on the co-list.