In a hot real estate market like this one, be cautious about doing a deal directly with a buyer. Buyers are hungry for buildings and have excess capital earmarked for real estate investment.
Picture this: An owner of a well-maintained, well-occupied neighborhood multifamily property gets an unsolicited call from a buyer. The buyer wants to buy the owner’s property, names a price and sets a timetable. The owner perks up. It’s a good number (probably far more than he or she ever thought the building would sell for when it was originally purchased). After a little deliberation and back-and-forth, the owner agrees to sell. Sounds like a winning scenario, right?
More so in a bullish market than any other, getting the best price and terms requires professional marketing and negotiating skills delivered by a seasoned commercial real estate broker.
Although a good price might be obtained in a direct sale, by taking the first offer that comes along and not expanding the potential pool of buyers, the owner will never know if it was the RIGHT price. That is the problem with a direct sale. It’s like having an art auction and only one person shows up to bid. How can you ever know for certain if the auction was successful?
In a hot market, working with a broker is more important than ever. Professional marketing and listing services will help an owner control the process and maximize the value of a property by creating greater exposure for an asset. A great example of this is a portfolio deal Kiser Group’s Michael D’Agostino recently sold. The longtime owner of an eight-building portfolio on the North Side wanted to sell. Although buyers had called them for years, they wanted to set a controlled environment and offer the assets to a pool of qualified investors. We vetted 20 potential buyers and marketed the listing. This strategy generated eight bids, which we narrowed down to four and then selected a winner. Several of the bidders had been some of the same buyers contacting the owner directly for years, but the eventual buyer who emerged had no knowledge of the sellers or the properties prior to our efforts. The portfolio sold for $28,850,000, a number that would not have been achieved if the owner had done a direct sale prior to professionally marketing the properties.
This is one example of many I can point to where professional marketing efforts generated multiple bids, maximized the value of a property and delivered the best results for a seller.
This is why I always give owners caution about direct sales. I’m not denying direct sales can yield good prices, but owners will never know if it is the best price possible.
The only way to know for sure is to go with a professional broker and get the market to pay what it is willing to – not what it wants to.
Lee Kiser