Thinking About Selling Your Asset “Off-Market”?
The idea of selling an investment property in an “off-market” transaction – that is, without a publicized marketing effort – may appear desirable to some owners for several reasons:
- Minimal disruption to tenants and on-site management;
- Maintain confidentiality of income and expense information;
- Keep potential sale from lenders, neighbors, and competitors;
- Avoidance of seller-paid brokerage fees
That said, the commercial real estate industry and economic environment are constantly changing. For non-professionals without a pulse on the day-to-day of the market, the practice of selling an asset off-market may be more challenging than ever contemplated. And the perceived benefits in confidentiality and fee-avoidance are inevitably outweighed by the unanticipated cost to many sellers in “off-market” transactions.
We refer to the cost inherent to a non-competitive marketing process.
The #1 benefit to sellers of a professionally marketed investment property is the competition created among qualified buyers. It is this competition, and the “fear of loss” which ensues, which can drive the building selling price up and net the seller higher proceeds at closing. In many ways, the risks of going it alone outweigh the benefits of using an investment real estate professional.
“I truly believe competition drives pricing. The more eyes on a property, the more tours, the more offers, etc… There’s no substitute for a full marketing process led by a qualified Investment Sales Broker under an exclusive representation agreement to create an environment where as many qualified bidders as possible are pursuing a property. Objectively that process will yield the highest possible price at the best possible terms for a seller.” -Bradley Balletto, VP of Investments
Here are some things to consider:
- How will you position the property correctly and communicate the opportunity to qualified buyers who will pay the highest price? Selling a property off-market means that it will get less exposure than if it’s listed with an investment sales professional. This results in fewer potential buyers seeing the property, less competition, and fewer qualified offers. When an asset isn’t marketed correctly, it’s lost the benefit of having a competitive process that a broker brings.
- How will you run an off-market campaign, find a qualified buyer, manage the transaction, and remove all contingencies, and maintain a negotiating position of strength throughout the process? Marketing and transaction management is an acquired skill set, with a dramatic impact on the probability that your sale ever closes.
- Facilitating the sale of investment real estate is a high-stakes activity, not for the faint of heart. In untrained hands, and the absence of competition, transactions rarely go smoothly, and buyers are notorious for renegotiating. Having the experience and knowledge when these issues arise will determine whether the transaction is financially successful or leaves you frustrated or worse.
The right investment professional will give you the advantage:
- An investment professional should be an expert in your chosen property type and submarket. This will be reflected in the financial analysis of your investment property, as well as the pricing and marketing strategy proposed.
- An investment professional should demonstrate a relationship-based approach that seeks to put the client’s long-term interests first, as opposed to being transaction-driven. The professional should not only know the specific product type and market, but also the many owners and investors and their acquisition requirements and transaction history.
- These attributes of an investment real estate professional will position the agent to serve in an advisory role throughout the process, and ultimately manage the transaction through all stages to closing.
As a seller, your goals are typically to sell your property for the highest price, to the most qualified buyer, with the quickest and smoothest roadmap to a closing. By entering into an exclusive representation agreement with the right investment procession, you will typically net higher returns, benefit from the competitive process of a well-managed listing, and secure the best buyer for your property.
To learn more about our award-winning investment sales team, and to benefit from our regional platform and expertise, please reach out to us.