Three (3) Reasons Why Choosing the Right Broker Will Make or Break Your Investment
By Jaclyn Chapman Posted June 22, 2021
Three (3) Reasons Why Choosing the Right Broker Will Make or Break Your Investment
By Stash Geleszinski, CCIM (Managing Director of Cincinnati, OH Office)
When choosing a broker to sell your commercial property, owners and investors typically ask for proposals from several different brokers. You’ll usually invite the company or broker that sold you the property to send a proposal as well as invite a few of the large national companies.
Proposals, however, only offer half the story. They tell you what the brokers think you want to hear, not what you really need to know as a principal making a decision on who will deliver the best price and terms for your property.
With so much happening in today’s commercial real estate market, it is more important than ever for property owners to look for what will truly make a difference in the successful sale of their property–someone who will hustle to add the most to your bottom line.
After all, you don’t just want someone who will list your property, you want to select a selling broker who is going to go out there and hustle to identify and target the ideal buyer pool for your property. You’re also relying on them to screen prospective buyers and help you choose the one with the highest probability to successfully close. Then, you want them to negotiate on your behalf like it’s their deal, push the buyer to close in the shortest feasible contract time, and get you the best possible price and terms for your property.
Not all listing agents are equipped or willing to do that. The difference between those who are and those who aren’t can make or break the deal.
If you’re thinking about selling, here are three not-so-obvious and revealing characteristics to look for in a selling team that will hustle for you and your bottom line.
Hunger Not Size
When it comes to commercial real estate brokerage, bigger is not always better. Anyone in the business will tell you that some of the larger firms get property listings because of their name, not because they will do a better job.
Their volume can often lead them to treat incoming assignments as widgets to process. They’ll package them up in a standardized and templated fashion, put them on the shelf for the market to admire, and offer them to a small group of buyers along with their other listings. This group of buyers tends to be a small circle with whom the broker tends to do many deals thus limiting your property’s exposure to the broader market as well as the amount of work they have to do.
For many of them, it’s not about achieving the highest price for the client, it’s about trading favors and doing the least amount of work to get them their commission check. They have little incentive to individually find the ideal buyer for your property and maximize the price and terms for your property.
Why? Because they’ve got other properties to list and just want to get your deal done and closed so they can move onto the next listing opportunity. Their goal is often to get as many listings as they can, not to sell your property at the highest and best price and terms. Their game is about volume, not value. Your game is the exact opposite…you want maximum value and price for your property.
If you agree that achieving maximum value, price, and returns for yourself, your investors, and your partners is what you want, then look for the team that is not out to win the listing for themselves, but to make the sale a win for you.
That’s not about the size of the team or the firm. That’s about the hunger for the win.
Who wants to make the sale a win for you?
Look for the team that’s been out there grinding, hustling, and is hungry for an assignment like yours. This is the team that is actually going to want to work with you and maximize the value you get for your property, not just add your listing to the system and move on.
Here’s a hint, they may not have the deepest track record of similar-sized opportunities, but you can bet on the fact that if you select them, they’re going to be excited and enthusiastic about the opportunity.
They are the ones that are going to want to show you what they can do and will view your property as an opportunity to achieve the highest possible price to win your repeat business. Your deal won’t just be another widget for them to churn through the mill.
They’re going to bring fresh new ideas on how to position the asset in the market, how to wrap it up, and how to showcase the investment’s high points.
They are the ones that are going to look at the opportunity from different angles to determine the highest and best use to get you the best price and terms.
And, they are the ones that will get more eyes, more tours, and generate more and better offers from qualified buyers.
Most importantly, they are the ones that will give it all they’ve got.
Just because a company can say they are the largest, it doesn’t mean they are the best for the job and your bottom line.
Authenticity Not Showmanship
When you are looking to create a relationship where someone is going to be responsible for your asset and a great deal of your money…look for authenticity, not showmanship.
Many companies will come in and put on a great show but it’s essential to look at what’s really behind that show that matters to you.
Many of the large national firms have standardized templates for their presentations. They fill in the blanks of a glossy pitch deck and tell you what you think you want to hear. They’ll show you snazzy videos and pages of team members.
The key thing is not to get blinded by the light but to look beyond it to see what and who is really there. Remember, it’s not the brand or the large company who will be responsible for selling your property, it’s the team in front of you in the presentation.
In fact, many large national firms are quite siloed and often pit their advisors and offices against one another. They don’t share databases even though they focus on similar properties, in similar markets, at similar price points.
If the team in front of you was all that you were getting, would you still choose them?
Most owners–from REITs to individuals–will invite multiple groups to present a pitch for a listing. The only way to determine which group is best for you is by interviewing all of the teams, not just asking for the paper pitch. Look through the presentation–the showmanship of it–to the people. Here are some things to consider:
- Does the team in front of you go above and beyond in their presentation, or do they assume they will be handed the listing? Do they want to earn the listing or do they expect it?
- Which team approaches your property’s unique value proposition with a fresh perspective–not as a commodity–just one of many they have on their rosters?
Remember, commercial property should never be approached as one of many. The minute it is, it becomes a commodity. This is your asset, even if you work for a large company, you’ve been made its steward.
Do you want to give the privilege of selling it to a team that will list it as a commodity or to one that will market it as a valued asset destined for highest and best use?
- Does the team presenting offer straightforward answers and details, or do they skim the surface?
Don’t rely on what’s written in the paper presentation alone. It was likely put together by the company’s research team. Did the presenting team take the time to learn about your property and its potential for highest and best use, and highest and best terms for you?
Results Not Rhetoric
At the end of the day, what matters are results, not rhetoric.
But you don’t just want any results, you want the best possible results in the market which translates to the bestselling price and terms for you and your property.
Just because a large national firm sold many properties, doesn’t mean they achieved the best prices and terms.
The best price and terms are not achieved through rhetoric, they’re achieved through hustle that focuses on your win, not theirs.
They’re achieved when their volume doesn’t work against your deal.
And, they’re achieved when your property gets more eyes, more tours, and generates more and better offers from qualified buyers.
Here are our results:
- The Case of the Frustrated Multifamily Owner in Kentucky
A mid-sized apartment building in Northern Kentucky was listed by a well-known national company. The firm had it on the market for 90 days and generated 63 leads.
After the firm failed to receive an offer for even the lowest price on the ownership’s acceptable price range, the frustrated seller gave us the listing.
Within two weeks of launch, we were able to put the property under contract at the high end of our BOV (broker opinion of value) range–which was also at the high end of the seller’s acceptable range.
With no plans to sleep on our laurels, we continued to market the asset and generated 113 registered prospects. We successfully sold the property within 60 days at the highest market price. The owner was very pleased with our results.
- The Case of the Owner Who Made $2,000,000 More Than Expected
The Capstone Multifamily team and a large national firm were given one listing each by the same client.
The large firm was given a “down the fairway” value-add deal to market and sell. While our opportunity had size, nearly 400 units, it was carrying a negative operating income and a troubled history with a murky value-add story behind it.
We developed a clear story and strategy to reposition the property’s value-add opportunity. Leveraging our Capstone Multifamily team’s shared national database and putting our hustle to work, we conducted double the number of tours than the national firm and generated double the number of offers.
As a result, we successfully placed the property under contract $2 million above guidance.
- The Case of 18 Months Off-Market Versus 45 Days On-Market
The owner of a multifamily asset in Kentucky was attempting to sell his apartment building off-market. Eighteen months and a great deal of frustration later, the property had received very little attention except for a couple of low-ball offers.
The owner got tired of waiting for movement on his offering and gave us the listing. He settled in expecting to wait several months for any serious activity. Within 45 days of getting the listing, we had generated multiple significant offers. The owner was extremely happy with the results, especially when we successfully closed on the property at the beginning of 2020.
When selling your multifamily asset–whether you own one or 30, or are managing a portfolio for a REIT or your family–selecting the right listing team is the single most important decision you will make. Don’t let size, showmanship, and rhetoric blind you.
Look for a hunger to win for you, authenticity in their communication, and results that demonstrate a win for the owner and not just a sale. In other words, those who will look to make the deal for you.