REAL ESTATE INVESTORS: WHY USE A LISTING AGENT?

INVESTORS: WHY USE A LISTING AGENT?

“I’m an experienced investor. Why would I use a listing broker to sell my property?”

As a commercial real estate broker specializing in multifamily and net lease properties, I hear that question every day. I know at some point during every conversation those words will be spoken.

I have to admit that in the beginning of my career those words were a gut punch. Then over time, I found the answer. You see, the problem with that question is that the person saying it feels like they know what a great commercial broker does in order to sell a property.

Investors imagine that a broker comes out after some light financial analysis, some comparable information, has a listing agreement signed, puts a sign in the ground (maybe), and then uploads the information into various commercial listing platforms. After that, the commercial real estate broker just puts their feet up on the desk and waits for the onslaught of buyers. Investors also imagine they can put their own multifamily or net lease property on social media sites and effectively find a buyer.

They are almost always wrong!

Now, that’s not to say this image is entirely misguided. The brokers that work in this manner are not long for the industry. You see, this is a very passive way to sell multi-million dollar investment real estate. Passivity does not work well in the long run. It leaves entirely too much to chance.

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What It Really Takes!

A great commercial real estate broker has a plan; a process that is followed on each and every new investment property listing undertaken. Without a proven process, results will vary wildly oftentimes delivering undesirable results.

First, in the realm of commercial real estate investment sales, if the broker has a deep, vetted database the property will receive all the exposure necessary to meet the client’s goals. A broker’s technology must be up to the task of repeatedly emailing and following up to several hundred, if not thousands, of prospective buyers during the marketing phase.

Second, knowing exactly how the investment property ought to be marketed is absolutely essential. Especially in a market like today’s seller’s market. Online marketing platforms create an even larger audience beyond the broker’s database. The best multifamily and net lease properties draw attention from the best, well capitalized buyers. These activities are all very time intensive and beyond the scope of most sellers.

Third, many hours are spent locating and negotiating with the best possible buyers before even arriving at the due diligence and closing phases. These phases will often take 60-90 additional days. Do investment real estate sellers, especially passive investors with full time careers, have the time necessary to work through these processes? Be honest, the answer is no. An inspection for a hundred unit apartment will literally take a whole day! An appraisal on the same property will likely take another half day of your life. Do these sound like activities you’d like to set time aside for?

Probably not.

And we haven’t even touched on the upfront work of in depth financial analysis or digging for and locating the best comparable sales. Or verifying that a prospective buyer can actually perform on the purchase contract.

Last, and most important, national data shows that working with a multifamily or net lease specialist nets sellers higher prices when they decide to sell. It's a fact!

Many investors erroneously believe they can sell for greater profit if they do it themselves. This belief has its roots in the notion of saving on commission will equal a greater return. Unfortunately, the facts do not support this line of thinking.

Ask yourself this question, "Why do so many buyers look for off-market or non-broker represented deals?" The answer is simple. They want to pay as far below market prices as possible. They want a steal! If a multifamily or net lease commercial property has broker representation, they know a below market price is not likely.

So the next time you, as a real estate investor, question whether or not you should hire a commercial real estate broker keep this in mind: Specialized, professional representation yields greater returns in all areas of our lives.

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