Philip Baskaron

Broker

Seller's Q & A



Seller?s FAQ?s 

(Frequently Asked Questions)

1.  How much is my station worth? We?re asked this more often than any question. Typically  we can give some general value ranges after a 15-minute discussion on the phone and we do this frequently. Depending on the complexity of your particular situation, and how detailed you want our market evaluation to be, you may want us to review your P&Ls to give you a more precise valuation. Regardless of what you provide us, it is kept confidential.

♣  We frequently are hired to do more substantial valuations for use in court, divorce proceedings, deaths, IRS or transfers within families. This process is much more in-depth and we charge on a per hour basis. Simply contact Dan Fallon if you have questions about this type of valuation.

2.  What?s the market like now? Not surprisingly, the market is a moving target, it changes constantly. But, as of the beginning of 1999, our western Washington market looks like this:

♣  Overall, it?s a soft market; that is, there are more sellers than buyers. Demand has dropped over the past few years.

♣  Values have dropped since the 1995-96 time period after an unprecedented 8 year appreciation cycle.

         Exception to this soft market is the elite stations---the top 5% or so. Although these may have also slipped, they have not dropped as much as the rest of the market and there is still a high demand for these stations. Not surprisingly, very few of these stations come on to the market, which also supports their maintaining a higher level of value relative to stations in general.

         In spite of the soft market, there is also a fairly high demand for low priced stations (those under $200K excluding inventory).

         There is also a fairly high demand for stations with land. This is a reflection of simple supply and demand---there are a very small percentage of stations where the land is not owned by a major oil company. And when successful existing dealers want to move up, they often want to kiss their landlord (the oil company) goodbye!

         Financing: Since there has been an increase in available institutional financing, primarily by banks, there has been very little seller financing.

 

3.  What?s your prediction for the market for the next year or two?

         I frequently am asked to write my market predictions by industry periodicals and those much more detailed analyses are available to you by contacting Dan Fallon but I can give you a quick comment here. More of the same! As long as the oil companies continue to provide amortization funds (see ?Terms of the Trade") and there continue to be new stations being built, the supply of fuel and c-store products will outstrip demand, we will have a sluggish market. There will be some pockets hit harder than others, but overall, I do not see any reversal of these trends for at least the next two to three years.

         Because of the strength of the Northwest economy, I see the long-term prospects as being quite strong.

4.  What commission do you charge?

Although it varies depending on circumstances, the range is 7% - 10% for business sales; less if the real estate is included in the sale. There is no commission paid on the inventory portion of the sale. Call Dan if you want to know what the commission would be on your particular business.

5.  Why shouldn?t I sell it myself?

         I naturally have a bias here, but I?ll try to give you an objective answer. I can best do this by relating the risks that other dealers have experienced.

         Removing the station from the market for an unqualified buyer: Having dealt with literally thousands of gas station buyers, we have a very successful record of determining whether a potential buyer is qualified and capable of closing the transaction.

         Not pricing the station correctly---Inexperienced sellers have a tendency to price the station incorrectly----sometimes too high or sometimes too low. Both can cause the dealer a lot of delays and problems. Since we deal with dozens of stations every month, we have a good handle on values.

         Protection: we know the pitfalls of these transactions. Typically, we can, working with your attorney, offer the kind of protection you need to keep you out of trouble and out of court as a result of a sale.

6.   How do you determine that you have a contamination problem?

♣   There are two ways to answer this question depending on which of the two following scenarios are applicable to your particular circumstances. 1.) You own property or wish to purchase property, but you have no direct knowledge of whether or not a release ever occurred at the property; or 2.) You know you have had a release of a hazardous substance, but don't know if it poses a problem and requires a cleanup.

Scenario One:

♣    If you are trying to determine if a release could have ever occurred at your site there are standard Phase 1 Environmental Site Assessment protocols that can be used to identify whether or not historic site uses are consistent with potential contamination problems. Property title searches, surrounding land uses, and interviews help identify potential concerns. If the Phase 1 indicates that a past land use or an adjacent property's land use could have caused a release of contamination at the site, then a Phase 2 Site Assessment is conducted. The Phase 2 Environmental Site Assessment includes a sampling and analysis of soils and possibly groundwater in specifically targeted areas to determine if contamination is present. If contamination is discovered, then a more detailed investigation is planned to determine the nature and extent of the contamination and to determine appropriate cleanup methodologies.

Scenario Two:

You have had a release of hazardous substances on your property and you want to know if it poses a threat to human health or the environment and requires remedial action. Generally Ecology recommends that you use an environmental consulting firm to design a site investigation plan. Soil and possibly groundwater sampling will be required to identify the nature and extent of contamination. This information will be used to determine if you have a contamination problem