Selling Privately

New Jersey City Skyline

Selling a property privately, or without real estate Brokerage Representation, is a tempting prospect. Whether you are, or are not considering selling an asset now, the question as to which course to take will come up at some point during ownership…”should I sell my asset(s) with or without Broker Representation?”

Conventionally, an asset is acquired to provide a ROI. The risks, expense and time allocation associated with pursuit of Highest ROI are significant; every large or small decision has an impact…in many cases a critical impact. So, as is the case with any decision…identifying and weighing the pros and cons of the “have representation/no representation” question is prudent business management.

Let’s first take a look at the perceived advantages of “no representation”:

  • The primary temptress….No Commission
  • Not having to take the time to talk to one or more Broker(s)
  • Considerably lessons the number of property showings…resulting in less stress for the tenant(s) and or eliminating possible tenant knowledge of a sale pursuit
  • Eliminating what could be a lengthy process negotiating with multiple buyers

An analysis of the “have representation” strategy might be best served with a series of questions:

  • What is the fully supported Current Value of my property?
  • What can I do to increase the value of my property?
    • What capital improvements have the highest return rate and which one(s), if any, should I implement?
    • What are best least cost I and E strategies to increase my NOI?
    • If I changed the use of my property would it increase the value and if so…which use should be chosen and what would be the corresponding value increase for each use?
  • Does my property have development capability and if so what are the options and corresponding values?
  • What amount of Return would I be leaving on the table by not having my property(s) professionally marketed and presented to the buyer/investor communities?
  • Am I sure my site is environmentally clean? And if not what are the value effects of contamination and what is the best course to mitigate contamination disvalue through what degree of remediation?
  • Are we at the end of an up cycle and will a current selling opportunity expire if I don’t move now?
  • Does the buyer really have the money and what are the possible funding glitches I should anticipate?
  • Will the buyer move as provided for in the contract or will they, after getting me vested and removing other buyer interest, attempt a renegotiation at the inspection and other stages?
  • Should I consider a seller note hold or a sale lease back to increase my net and what are the advantages, disadvantages and risks associated with these tools?
  • Has my depreciation deduction reached its period of diminishing value?
  • Is the equity in my property providing the best return or would a re-investment or equity shift provide better/higher return?
  • Is my debt service being covered enough by income to justify current debt/equity ratio?
  • Is my property ownership type providing the best tax position or would a trust or other vehicle provide a better position?
  • Does a 1031 fit my needs and plan?
  • Does my attorney have the ability to answer all of these questions or is his/her scope confined to legal aspects?
  • Do I and or my firm have the knowledge base, “street” expertise and time to answer these questions accurately….and manage driving every stage of the transaction as provided for in the agreement within the timing allotted for each stage?

Many of these questions, and the answers, are not considered to be within conventional Broker purview and indeed they are not. However, it is clear that having Broker Representation that will and is able to thread all elements of Value and the Disposition Process into a well-timed Complete and Complimentary Strategy will critically increase ROI and considerably outweigh perceived advantages of the “no representation” direction.

A more colloquial thought we are all familiar with….”you get what you pay for”.