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I estimate over 90% of all commercial sales offerings I review come complete with a Pro Forma (PF) operating statement.   Opinions on the usefulness and voracity of PF analysis are as varied as the properties, their owners, and Listing Brokers.   I used to think “Pro Forma” meant the seller has ‘maximized revenue and minimized expense estimates’.   Over time I learned that I was lucky if that was all that was going on.  Now, I only half-jokingly refer to Pro Forma as broker-speak for “I’m lying to you”.  I shouldn’t call my peers liars and I’m not.  I just look at the data as well, shall we say, suspect?  Perhaps Pro Forma is best translated as “do your homework”.
I’ll explain the Headline in a bit, so let me lay out some data to support my brash assertions above, but first my qualifying statement: The break point between brief, casual PFs I speak of here and the very thorough and detailed accountant generated PF seems to be building values above $3,000,000.  Certainly there are exceptions.  While much more likely to be detailed and accurate in capturing actual expenses and revenue, the professionally generated PFs can be as equally optimistic as a quick ... more

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