Saturday, May 5, 2018

Liar, Liar, Pants on Fire - The Alberta Connection


The Alberta Connection
I had family in the real estate business in Alberta a number of years ago. It was a volatile time in Alberta with fluctuating prices; down one day and up the next. It was a little bit like them Chinooks they get down there. One day I got a call from one of them wanting an evaluation on an investment property one of his clients had purchased in Winnipeg. The downturn in Calgary had prompted disposing of this unnecessary investment.
When this fellow had bought the property, it had been a bargain according to his reckoning. Well, you have to understand that for Albertans, Calgary and Edmonton are the centers of the universe and all the world’s wisdom flows from there. Had he done his proper due diligence in the first place, he would have found that Manitobans have a slightly different view of things. Now he had to find out the hard way.
You can bet your boots that I had a ten page summary of pictures, comparable costs and sales to hand over to support my appraisal. It all came in at about a third of the price the client had expected and I wanted to protect myself as well as my brother-in-law without making apologies.
Needless to say there was an awkward silence of some duration at the other end. I had expected that, wondering if I had alienated that whole end of the family. The thing was that I had a verbal offer from the tenant of the property who was already at odds with his landlord. It seemed as though I had walked myself into another mess (again). Would I never learn to leave this commercial stuff alone?
When I finally heard from my brother- in- law again, he expressed total disbelief in the evaluation. How could this be possible? Places in Alberta were going for much higher prices. His client was still trying to reconcile this anomaly and he needed some time to think about it. I told my brother-in-law I could likely prompt an offer close to the price shown and he promised to consider it. Finally he said “Bring it.”
The tenant, having other businesses as well, put in an offer under a numbered holding company. I encouraged him to come close to my appraised price (which was fair) and he agreed. I don’t remember exactly how the whole thing went together, but it did and my client (the tenant) continued on cooking his Indian food.
What I wanted to mention here has nothing to do with real estate, but rather the Alberta mentality which shows up in the oil business these days. The story illustrated here is exactly the same as the basis for the oil business. They discovered they had a valuable resource, started to develop it and then called on the country to allow them to transport it here, there and everywhere. They were totally surprised by the push back to their preconceived plans and couldn’t understand the unfairness of it all. It seems nothing has changed since the days of Peter Lougheed and P. E. Trudeau.
Just think what might have happened in either case if Alberta(ns) would have consulted with stakeholders first before making decisions based on Alberta wisdom. I’ll leave that with you.

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