Companion file
A Practitioner’s Guide to Scoping, Findings, Pricing and Closing
One Excel workbook. Chapter 2 tells you how to decide what not to investigate and supplies one number. Chapter 19 turns six findings into a composed ask and reports eighteen basis points. No chapter puts the two together and asks whether the exercise paid for itself. This file does. It is free. Nothing is gated behind a sign-up, and no email address is asked for.
Appendix F · Chapters 2 and 19
The chapter understates its own answer, in its own unit. Chapter 19 calls eighteen basis points “the entire return on the diligence exercise”. It is the part of the return that reaches the yield. Four instruments came out of that negotiation and only one is cash off the price: the retention makes the seller fund 175,000 of work, the indemnity carries 280,000 of expected value, the 38,000 premium is paid by the seller. Total recovery 1,183,000, of which the deduction is 58.3 per cent. Adjust the price by the whole of it and the improvement is 31.1 basis points, not 17.8 — a thirteen-point understatement, in the sentence that names the unit the committee recognises.
Two workstreams paid for everything. Appendix D names ten; chapter 19 produces six findings. Attributed, the exercise costs 422,400 and returns 2.8 times — but the building and services survey alone returns nine times, the legal review 3.8, and eight of the ten recover nothing at all, at a cost of 242,400 between them. That is not an argument for cutting them. It is the calculation chapter 2 asks for in words and never performs.
The one investigation the book skips, priced. Chapter 19’s sixth finding — a light industrial history, no site investigation, risk accepted — is the only one it leaves unpriced. The timing reason is sound; the money is never tested. At 24,000 the investigation breaks even at a 2.4 per cent probability of contamination against a million of remediation. “Low” usually means two to ten. The decision is marginal, and it fails only if you believe both that the probability is at the floor of low and that the remediation would be small.
And the one piece of scoping arithmetic in the book is wrong. Chapter 2 says spending 80,000 before exclusivity in a four-bidder process “has an expected cost of four times its apparent one”. It does not: the expected cost of spending 80,000 is 80,000, which is what makes it a sunk cost — and the same chapter is right about sunk costs eleven pages later. What is four times apparent is the cost per completed acquisition, 320,000. Run it properly and the sentence gets a stronger conclusion than the one it made: at one win in ten, pre-exclusivity work costs 333 basis points of the deal you close — more than the entire survey that found three of the six items.
The threshold filters the wrong variable. The 50,000 reporting threshold suppresses one finding, at 3.2 per cent of the recovery — harmless, and it hides the point. The mezzanine is worth 38,000 only because the instrument chosen was a policy; its consequence is removal and loss of income. A threshold on the cost of the remedy suppresses exactly those findings whose remedy is cheap and whose exposure is not. And the basket at one per cent is 240,000 — three of the five findings would not clear it alone. Thirty-three checks.
Go to sheet 3 and read the last three rows. Then go to sheet 5 and change the remediation figures to whatever a light industrial history means on your own sites: the break-even column is the only line you need to hand a committee to justify three more weeks before exchange. Then go to sheet 4 and replace the ten fee lines with your own quotes — the ratio column is the argument for every workstream you are about to be asked to cut.
It cannot tell you the probability that a particular site is contaminated, and that is the whole point of the inversion on sheet 5: the file gives you the probability at which the decision flips, and the belief remains yours to state. It cannot tell you what a finding is worth before you have found it, which is why the workstream returns on sheet 4 are a record of one deal rather than a forecast — two years of that record is the only real evidence about which investigations pay. And it cannot judge a scope: a workstream that found nothing on this asset was not necessarily wasted, and the book is right that an unrecorded exclusion becomes an accusation later.
| Amber fill | an input — you may edit these |
| Grey fill | a formula — do not overtype these |
| ADDED | an input the book does not state — the ten fee lines, and nothing else |
| Checks sheet | thirty-three controls — ten exist only to reproduce the book before disagreeing with it |
Every figure is illustrative. The building, the occupier and the findings are the book’s own and fictional, as they are in the book. Every input is one the chapters state, except the ten fee lines, which are anchored on the single fee figure the book gives.
The workbook opens in Microsoft Excel, LibreOffice Calc, Google Sheets and Numbers. It uses no macros and no add-ins, so nothing needs to be enabled or trusted. If your spreadsheet asks to update links on opening, decline — there are none.
The other books with companion files. The full list of titles is on the author page.
These files accompany Real Estate Transaction Due Diligence. The book is on Amazon.
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