A recent NY Times article reported about two owners who elected to sell their NYC office properties without an exclusive broker. The article will no doubt help bring buyers to the table and accomplish one of the ways of creating exposure for a property: press. However, there are many of the other vital steps that they will miss out on which could result in underselling the property.
The key element to maximizing a sales price is to expose it to the largest audience of buyers. It's very simple: the more people who see a property, the more bids an owner will receive. The odds are overwhelmingly in the seller's favor that if they receive more offers, the price will go up.
An exclusive agent can help expose a property the largest audience of buyers to generate multiple offers. There are many steps an exclusive agent takes to accomplish this. They include:
1) Creating a professional marketing brochure and data room with all the due diligence information.
2) Sending the information to every property owner in the neighborhood.
3) Sending the information to an active buyers list which consists of both previous known buyers and new ones who have entered the market.
4) Sending the information to the brokerage community.
5) Presenting the information in front of trade organizations and conferences.
6) Posting the property's information on a variety of multiple listing sites.
7) Sending out a press release
8) Installing signage
9) Conducting property tours
10) Calling for Offers
11) Qualifying and negotiating bids
12) Assisting in final due diligence review and contract process.
13) Supporting the closing.
Many of these steps will likely be missed if an owner attempts to sell without a broker. In the article, the owners said they would work with the brokerage community by offering a fee to the buyer's broker. Although this should generate some additional interest, it will not create the widespread co-operation amongst the brokers that is required to generate widespread interest.
Brokers who do not exclusively represent the seller are representing the buyer. They will offer the property to their best handful of buyers and look to make a quick sale. They would never share the information with another broker, as this could create competition and potentially cause them to miss out on a commission.
In addition, rather than advocating for the seller, a buyer's broker will work for their buyer to secure the best possible price as quickly as possible, as they have no fiduciary responsibility to the seller.
You certainly don't need an exclusive broker to sell a property, but when selling off market only a fraction of the potential buyers will be reached. With buyers looking from around the world, it's wise to have an exclusive broker, so the information can be sent out to all buyers in the marketplace, the entire brokerage community, and it can be posted on multiple online listing sites.
Finally, selling properties is a full time business. A broker knows the most buyers in the market as they are in the business day in a day out. An owner who sells for the first time will not have this historical knowledge. In the same way a broker wouldn't try to operate and manage a building, it's best to leaving the brokering to the brokers.
James P. Nelson, Partner
James Nelson is a Partner at Massey Knakal Realty Services. Since 1998, he has been involved in the sale of more than 200 properties and loans with an aggregate value of over $1.3 billion in the NY Metro Area. He can be reached at [email protected] or 212-696-2500 x7710.
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