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Multifamily brokers frequently hear this comment from apartment property owners: “I don’t want to list, but you can bring me a buyer.” Their reasons sometimes include previous bad experiences, fear of getting “tied up” in a formal agreement, tenants finding out the building is for sale and making anxious calls to management, thinking the commission will be halved, or not really being interested in selling. Whatever the reluctance, the reality is that if an investor wants or needs to sell, the best thing they can do is hire a broker. Let’s address a few of those common objections first.
If you had a previous bad experience, more than likely, you hired the wrong broker. The specific agent you hire or the firm they work for should have experience in both the geographic market and transaction size — ask for their track record. While you’re at it, ask for references from clients, and make sure at least one is for a listing that did not sell. These simple steps will give you insight into whether you’re working with a pro.
As for getting “tied up” or having anxious tenants because the building is selling, a professional broker typically allows you a cancellation right for the listing. If there are deadlines you need to meet, make sure your broker understands. And while no broker can guarantee tenants won’t find out the building is being sold, experienced brokers can modify marketing by limiting showings to only vacant units, specific hours for low visibility, limiting digital footprint tenants might see, etc., to reduce the probability of tenants finding out.
That said, the best course is simply to announce to tenants that the building has been listed for sale, explain the sale may not be successful, and assure them that their lease runs with the building, not the owner, and is their protection during the lease term against rent increases or being forced to move.
These are certainly not the only reasons clients are reluctant to list but whatever is yours, talk to your broker about your real concerns. A seasoned broker will most likely have previously faced a similar challenge and should be able to address your concern. But this only addresses your concerns about why you shouldn't hire a broker — it doesn’t explain why you should.
The first benefit is understanding the value of your property. A professional, qualified broker who specializes in your asset or area will be able to give you a price range to expect so that you can decide whether selling makes sense. If you move forward, this specialist will also have databases of the most qualified, active investors in the market and have relationships and influence with them. The ultimate buyer of your property will more than likely come from one of these relationships. But a broker won’t rely exclusively on these relationships. A good broker will also create a professional marketing plan with appropriate amounts of promotion across email, mail, websites, and listing services.
All this leads to the most important part of hiring a broker: competition. Trying to sell your building by letting a broker “bring you a buyer” is like having an auction for a painting, and one person shows up to bid. If the building is priced correctly, a professional marketing plan will create a competitive environment for investors so that the process itself determines not what the market wants to bid but what the market is willing to bid.
Larger portfolio owners might be reluctant to list with a specific broker because they have relationships with numerous brokers or firms in the market, and they don’t want to offend anyone by choosing a competitor. Instead, they tell every relationship to “bring me a buyer.” If this is you, think a few more steps down the chain of events.
First, this may only create chaos. You not only have brokers racing each other to bring clients, but each is advocating to you why their buyer is the best so that they can get the commission. Then you ultimately have to pick one buyer/broker anyway and disappoint the others after they’ve put work in. Alternatively, a listing agreement assures a commission for the listing agent if the property sells; therefore, there is no incentive to advocate for any one specific buyer.
An additional benefit of listing a property with a broker comes after a sale contract is signed. Any number of unexpected or challenging issues can arise during the escrow period of a sale. A seasoned broker has probably experienced something similar before. This person will also quarterback the entire process of due diligence, appraisal, and loan approval.
The most important benefit of exclusively listing your property with a broker is representation. You will have a hired gun with a fiduciary obligation to advocate for your best position in a deal. A professional broker will be ethical, transparent, and fair but will also be your personal fighter in the arena of marketing, negotiation, and escrow management.
This short list does not address every objection an owner would have for not listing, nor every benefit you receive from hiring a professional broker, but hopefully, it gives you a few things to consider. If you want to maximize your price and minimize your anxiety with the selling process, hire a broker. The benefits far outweigh the cost.
eXp Commercial Chicago Multifamily Brokerage focuses on listing and selling multifamily properties throughout the Chicago Area and Suburbs.
We don’t just market properties; we make a market for each property we represent. Each offering is thoroughly underwritten, aggressively priced, and accompanied by loan quotes to expedite the sales process. We leverage our broad national marketing platform syndicating to the top CRE Listing Sites for maximum exposure combined with an orchestrated competitive bidding process that yields higher sales prices for your property.
https://www.creconsult.net/market-trends/if-youre-hesitant-to-hire-a-broker-for-your-multifamily-property-read-this/
As the year ends, renting is at its highest level in half a century. The increased adoption of “work from home” provided many people the freedom to experience life in a new location.
What were the hottest rental markets in 2022? RentCafe.com analyzed the largest markets in the U.S. where data was available by honing in on (1) the number of days apartments were vacant, (2) what percentage of rentals were occupied, (3) the number of prospective renters competing for an apartment, (4) what percentage of renters renewed their leases and (5) the share of apartments completed this year.
Vacant units, nationwide, were occupied within a month, on average, and a heightened number of renters chose to renew their leases. Rapid inflation and surging interest rates forced many people to put their dreams of homeownership on the backburner, but with 95% of apartments already occupied, finding a new unit in any market was competitive, to say the least.
Renters in search of a lower cost of living flocked to the Midwest. Milwaukee, Wisconsin, and Grand Rapids, Michigan, were among the most competitive metros this year, based on the report, the latter boasting a city occupancy rate to nearly 97%. The shortage of supply there only increased demand, with 18 prospective renters in competition for each apartment. Milwaukee, too, had an average of 18 renters vying for a single unit, taking each off the market in less than a month.
Suburban Chicago ended the year as the country’s 18th most competitive rental market, according to RentCafe. Nearly 70% of renters here decided to stay put and renew their leases, further driving competition—close to 17 renters applied for each available unit, a number well-above the national average. With occupancy rates touching 96%, the metro was far from meeting the aggressive demand for housing, despite the increase in newly delivered units.
Surprisingly, Chicago Urban didn’t make the cut on this list. Good or bad news, depending on who it’s being considered by. The rate of renewal leases here reached 56.5%, and an average of 11 renters competed for each vacant apartment.
Source: Midwest home to most competitive rental markets in U.S. for 2022
https://www.creconsult.net/market-trends/midwest-home-to-most-competitive-rental-markets-in-u-s-for-2022/
After the strong economic rebound in 2021, growth in the U.S. has slowed in the face of rising inflation, the household income squeeze, and geopolitical events. In commercial real estate, third-quarter 2022 data showed slowdowns in the apartment and office sectors, while industrial and retail retained strength.
Multifamily absorption and rent growth decelerated in 2022, with absorption in the 60,000–70,000-unit range. That’s below pre-pandemic levels. In the meantime, rents rose year over year, but at a slower pace than a year ago. However, multifamily housing demand remains strong. Given rising mortgage rates and home prices, people may be forced to rent for longer due to decreasing affordability.
As the country navigates hybrid work, the office sector continues to struggle. In Q3 2022, about 1.34 million more square feet of office space was vacant and placed on the market than was leased. Although more people returned to their offices, after four quarters with positive net absorption, demand for office space dropped. As a result, the market’s net demand for office spaces decreased relative to supply, and the national vacancy rate rose to 12.4% in Q3 2022 from 12.3% in the previous quarter. The office sector has the highest vacancy rate across all sectors.
Although spending slowed this fall, it remained strong in Q3 2022, driving growth in demand for retail spaces for the seventh straight quarter. Retail sales, excluding gas, auto, and non-store retailers, advanced to $383 billion in August, a 19% increase from August 2019. As a result, net absorption increased to 23.3 million square feet in Q3 2022, a 22% increase from the second quarter. Neighborhood retail that offers in-person services continues to advance even faster. Net absorption for neighborhood centers rose by 35 percentage points compared to the year’s second quarter.
Demand for industrial property remains robust. Net absorption was nearly 425 million square feet in the 12 months ending in Q3 2022. Although demand may have tapered, the volume of industrial space absorbed continues to be double that of pre-pandemic times. As a result, this sector had the lowest vacancy rate in Q3 2022, at 4%.
With such strong demand, rent growth continues at historic highs, rising 12% year over year in Q3 2022. Rents are rising even faster for logistics space, at 13.5% year over year.
Source: Inflation War Take Their Toll
https://www.creconsult.net/market-trends/inflation-war-take-their-toll/
Join us via Zoom for our Comprehensive Intro to Commercial Real Estate event on Jan. 10! Professionals from every sector of the industry will share their knowledge as we explore the fundamentals of commercial real estate.
Date: Jan. 10, 2022
Start Time: 7 a.m. PT / 10 a.m. ET
Location: Zoom Webinar
The Comprehensive Intro to Commercial Real Estate course will focus on training new professionals with the basic skills and knowledge needed for a successful career in commercial real estate, including a detailed look at the different product types, services and technology you need to succeed, as well as industry trade groups you can tap into, and more.
We’ll also be covering renewable energy with experts from Qcells and IREM.
Add it to your calendar: Google Calendar Outlook Calendar Yahoo Calendar
https://www.creconsult.net/market-trends/free-comprehensive-intro-to-commercial-real-estate-course/
