A Practitioner’s Guide to Scoping, Findings, Pricing and Closing
Julian R. Sterling
These are the companion files of Real Estate Transaction Due Diligence by Julian R. Sterling.The book on Amazon →
One Excel workbook that asks whether the diligence paid for itself, checked again and unchanged. Around it, a blank set with two new models for your own deal, thirteen working documents to print, forty questions that mark themselves, and three cases the book does not work. All free. Nothing is gated behind a sign-up, and no email address is asked for.
Eight workbooks, the printable documents and the read-me. Each group below can also be
downloaded on its own. Last revised 24 September 2026.
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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.
What the arithmetic does not settle
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.
The same models, for your own deal
Three workbooks with every input emptied. The checks sheets count what is still missing and test what holds for any inputs.
Chapters 2, 9, 10, 16, 19 and 20 · Appendices C and F
A blank set, and two new models
The book’s workbook with its twenty-seven inputs emptied: your deal, your six findings, your thresholds and your fee quotes. And two new files for the arithmetic the chapters do by hand. From findings to price: quoted income to verified value, with permanent items capitalised and temporary ones costed once (Chapter 9); a survey cost schedule loaded, inflated, discounted and split at the end of the hold (Chapter 10); and up to ten findings turned into one composed ask, instrument by instrument (Chapter 19). Completion statement: the apportionments on actual days (Chapter 20) and the locked-box payment (Chapter 16).
The book’s figures are listed in a text file inside the archive, and three of them do not come back as printed. Chapter 9 capitalises a rent step that is short for twenty-two months as though it were short forever; costed as the one-off of 44,000 it is, the gap is 9.1 per cent, not 11.5 — which is exactly what Appendix C, Case 1, says to do. Chapter 20 apportions a ground rent payable yearly in arrears over the current quarter only; over the year, the completion payment is 23,761,123, not 23,779,205. Chapter 10’s short-term band is worth 594,756, not 594,944. Appendix C’s cases reproduce, except one sentence: Case 5’s “roughly 2,142,000” is 1,511,208 on its own figures.
Thirteen pages to print and use. A4, with margins wide enough for US Letter.
Chapters 1 to 20 · Appendices A, C and D
Thirteen working documents
Scope and the instruction to each adviser, with the materiality thresholds set before the reports arrive. The critical path and the six-week calendar with its decision gates. The issues log. The data room: absences, nil returns and the disclosure log. The verified tenancy schedule with a source in every cell. Quoted income to verified value. Title, rights over the land and the site walk. The planning consent history and its evidence. Survey and plant schedules to price. Ground, environment and compliance. Measurement and insurance. The vehicle and the counterparty. And the ask, the accepted-risk register and the handover pack.
A workbook that marks itself. Answer in the yellow cells; the marking fills in as you go.
All parts of the book
Forty questions on the book
Seven on purpose, scope, process and the data room, seven on the paper from title to income, seven on the physical asset, seven on the deal from the vehicle to closing, six on Appendices C and F, and six on the three cases below. Numbers are marked to a tolerance, multiple choice to the letter, and the score sheet counts your errors part by part: that is your revision list.
Nothing is hidden. The marking sheet holds every answer, every tolerance, and the reason for each answer.
New material, not a restatement. Three situations the chapters name and never take to a number. Each case is one workbook: the note is the first sheet, the model is the rest, and a checks sheet closes it. Type your own figures in and every finding recomputes.
Chapter 7 · Case one
Bid the fallback, pay on consent
Chapter 7 weights a consent at 60 per cent and gets 3,972,000, then gives the timetable, nine months plus nine on appeal, and never uses it. Priced at 7 per cent, the weighted value is 3,670,917. The three structures the chapter names are one value divided three ways: the fallback today plus an overage of 333,686 on consent, or a conditional exchange at the consented 4,300,000. Pursuing the consent pays above a 38.5 per cent probability, and stops paying above 13,582 a month of holding cost.
Chapter 14 · Case two
The do-nothing case
The chapter says the retrofit should be compared with the building left alone for ten years, sold at “say, 8.25 per cent”, and never runs it. Run over ten years in present value, with nothing drifting the retrofit adds only 139,728, not the static 1,392,560, and needs an exit of 6.57 per cent to tie. At the chapter’s 8.25, on flat income, it leads by 1,243,244 at 6.50 and still by 524,698 at the 6.85 test the static appraisal fails. The retrofit is a bet on the gap between two exit yields ten years away.
Chapter 16 · Case three
A quarter or a third of what?
The latent-gain deduction the chapter calls “unremarkable” at a quarter or a third of face, derived: deferral and passing the charge down give a share of f = d(1 − p) / (1 − pd). On a seven-year hold at 7 per cent, a quarter implies a 79.8 per cent chance that the buyer itself exits by selling the vehicle, a third 69.7. And the transfer costs saved can outweigh the whole deduction: here by 1,123,597.
an input the book does not state — in the book’s workbook the ten fee lines and nothing else; in the cases, every added figure, marked wherever it appears
Checks sheet
thirty-three controls in the book’s workbook — ten exist only to reproduce the book before disagreeing with it; every other workbook ends with its own
Every figure is illustrative. The building, the occupier and the findings are the book’s own
and fictional, as they are in the book. In the book’s workbook every input is one the chapters
state, except the ten fee lines, which are anchored on the single fee figure the book gives.
Opening the files
The workbooks open in Microsoft Excel, LibreOffice Calc, Google Sheets and Numbers; the PDF prints on A4 or US Letter. They use 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.
What changed, and when
24 Sep 2026
The book’s workbook recomputed independently: unchanged, thirty-three checks passing. Added: a blank set with two new models (from findings to price; the completion statement and the locked box), thirteen working documents, forty questions that mark themselves and three new cases. The new models correct three figures in the chapters: Chapter 9’s gap is 9.1 per cent, not 11.5; Chapter 20’s completion payment is 23,761,123, not 23,779,205; Chapter 10’s short-term band is 594,756, not 594,944. The workbook can now also be downloaded on its own.
Articles on this book
What a diligence exercise actually recoversEighteen basis points is only the part that reaches the yield. Three of the four instruments never do, and the exercise is worth thirty-one.
Closing the DealTwo defensible bridges 20.70 million apart, a peg worth 7.00 million, and the six choices that remove 6.60 of a 12.00 earn-out.
CMBS and CRE CLOsWhere the loss actually lands, from appraisal reduction to realised severity, and what the B-piece is really being paid for.
How to Read a Commercial LeaseThe three refinements chapter 19 names and never performs, and the renewal rate below which the mark-to-market is worth nothing.
How to Read a Credit AgreementWhere the default actually comes from, the cure that costs 5.5 times the other, and the capacity nobody adds up.
How to Read a Real Estate Loan AgreementThe cure ratio in closed form, the four-point window in which the cheap cure works, and the cure sized to the wrong threshold.
Office Real EstateA six per cent yield that returns 3.2 per cent once the re-letting cycle is paid for, and the headline-to-net-effective rent arithmetic.
Private Equity Real EstateBoth worked waterfalls to the dollar, the two capital stacks, and the arithmetic of the promote made changeable.
Private Markets PerformanceThirty-one of the thirty-three figures chapter 19 publishes reproduce exactly — and the two that do not are named rather than quietly adopted.
Raising a Real Estate FundThe chapter 17 funnel run on a calendar — when the first close actually lands, and why more travel does not help.
Real Estate FinanceFour people look at one building and reach four numbers; the lender is whole only above 105,109,489, twelve per cent below today’s value rather than forty.
Real Estate Financial ModelingProperty, development and fund models built line by line, and the modelling test worked end to end.
Real Estate Fund ManagementThe waterfall of 6.11, the build-to-core of 8.7 and the proceeds gap, reproduced as live formulas rather than asserted.
REIT Analysis and ValuationFFO of 532.0, AFFO of 381.0, net asset value and dividend safety — every figure a formula you can change.
Retail Real EstateThe occupancy cost of every unit in a centre, the sixteen per cent of the rent roll no tenant can sustain, and the right-size-convert-or-hold decision priced.
Sale and LeasebackA €179.5 million transaction end to end, with rent cover measured on the entity that actually signs the lease.
Self-Storage Real EstateThe cohort engine behind a 590-unit store, and the rate increase on existing customers priced against the move-outs it causes.
The Fund Finance ProfessionalChapter 8 builds the reported-to-eligible NAV bridge; chapter 9 computes every ratio without it. Two points at every state — and what a subscription line does to the IRR.
The Growth Equity InvestorWhat a pro rata cheque really costs, and the band where defending your ownership loses money.
The Private Credit InvestorThe two coverage ratios are not measured on the same thing: the erosion is 47.7 per cent, not the 28.7 the headline implies.
The Private Equity Fund Controller PlaybookThe book defines IRR, DPI, RVPI and TVPI, tells you to update them at the exit, and prints not one value. Computed: a 1.833× deal inside a fund at 0.892 TVPI.
The Venture Capital AssociateWhat defending a position costs, and how many companies a reserve pool actually defends.
Financial Risk ManagementA fund inside every limit that cannot meet a redemption — and the number that decides it is the one with no currency attached.
Business ValuationThree advisers land 26.8 per cent apart on one company, and the whole gap turns out to be 1.96 points of perpetual growth.
Quantitative FinanceThree models agree to a quarter of one per cent about a number that one unobservable input moves a hundred and three times as much.
Asset ManagementFour people quote four returns for one mandate, all correct and 2.7017 points apart — forty-eight times the manager’s net skill.
Alternative InvestmentsA manager reports 13.29 per cent and the endowment earns 6.26 — both correct, and only a third of the advertised advantage arrives.
Credit AnalysisFour defensible EBITDAs on one borrower give leverage from 3.19x to 6.47x — and the add-back argument is fifty times the covenant headroom.
Venture CapitalOne company out of twenty-eight returns 56.7 per cent of the fund, and half the capital goes in after the decision — at half the return.
Machine Learning for FinanceFive people quote the accuracy of one credit model, all five are right, and the number that decides how much money it makes is none of them.
Commercial Real Estate InvestingThe equity earned 8.6647 per cent and the investor received exactly 8.0000 — the preferred return, and nothing above it.
Mergers and AcquisitionsThe board paper says the deal creates 13,436,667 of value. The arithmetic says it destroys 17,530,855. Nobody is lying.
DerivativesThe treasury report says the hedge cost 1,233,698. That is the interest differential, not a cost.
Treasury ManagementFive cash balances for one company, all correct and 145,600,000 apart — and the revolver that is two-thirds of the liquidity leaves at a revenue fall of 8.4127 per cent.
Financial Planning and AnalysisRevenue 3.0190 per cent above budget and operating profit 16.3209 per cent below it, in the same quarter, with every figure correctly stated.
Energy TradingA position report that is 91.7031 per cent hedged and correctly computed, on a book that is short 2,542,000 MWh — and a margin call of 198,400,000 the next morning.
Construction Cost ControlA contract sum of 26,301,102 became a final account of 29,153,363 on the building that was drawn — and 85.8 per cent of what was lost was knowable on the day it was signed.
Pricing StrategyA list price of 148.00, a pocket price of 112.51, and the nine deductions in between — with what one point of price is actually worth.
Trade FinanceSix routes to payment on one 4,200,000 export order cost between 178,040 and 223,268, a spread worth 14.8 per cent of the margin, and a day of buyer credit costs 1,031.76.
Cost AccountingOne factory costed twice on the same 13,440,000 of overhead, and 4,053,091 moves between four product families.
Contract ManagementA bid 5.50 a unit cheaper, signed on paper worth 9.81 a unit more — and 94.68 per cent of it was knowable on the day of signature.
Capital MarketsFour defensible readings of one bond, the cost of an issue under each convention, and the placement discount computed at a constant discount.
Financial RegulationThree ratios pass and the fourth is in breach by 1,956.0 million: the output floor, the liquidity buffer after encumbrance, and the loan split.
Bank ManagementFour defensible readings of one balance sheet, the deposit beta measured two ways, and the liquidity that lasts 3.9 days.
The Real Estate WorkoutFour ways out of one broken loan, discounted to today, and the 58.7 cents at which a payoff beats enforcement.
Go beyond the companion files
Real Estate Transaction Due Diligence develops the complete framework behind these models, with the assumptions, trade-offs and worked examples tied together.
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