sloppy vs dishonest/retrade

[Rebecca Brannon]

At what point do you come to believe a sloppy seller is being dishonest?  The offering document was based on higher rents and lower expenses than the seller's tax returns or the current leases (now produced, mostly) would support.  The seller also failed to disclose a long-running, 6% a year brokerage fee for every renewal for 3 of the 5 leases in a strip mall.  For one of the properties it could run more than 10 years from purchase.  We discovered the brokerage because it was in one of the leases, but not the others.  After asking the broker, we learned about the additional ones.  The seller claimed the obligation ended with the sale of the building.  That is clearly not true.  The seller is represented by a broker.

We are going back and asking for a price reduction to cover the differences in cash flow between the offering document and the reality. This is the difference between the property having an 8% CAP and cash flowing and not cash flowing at all. The bank that is willing to lend at a reasonable rate also agrees it does not cash flow until 2024/2025 BEFORE the brokerage fee disclosure.

So how common is this?  We are only trying to hang in there because we own a business with an expensive buildout in the strip mall.  But at what point do you just throw in the towel and walk away?

Thanks for any thoughts.