A broker should have one goal: to find you a good deal. In addition to having a reputation for integrity and honesty, he needs to work with the investment community to create an atmosphere of interest in your property. He should also advise you on how to attain maximum value for your site. To do so, he must understand financial market conditions, the investment community and target investors.
The process can be complex, given all of the issues that need to be addressed prior to marketing the asset. Owners need to understand the selling process is a multifaceted task and, more often than not, patience results in maximum value.
Finding a Specialist
Finding a qualified and experienced broker who specializes in self-storage properties isn’t all that different from finding a good doctor, accountant or auto mechanic. A vigorous use of common sense and professional and personal relations, as well as some independent research, should yield a strong candidate list from which to choose.
Obtaining the maximum profit for your property will be best accomplished by an established broker, one who has been in the business long enough to know how deals are put together and how sellers, buyers and brokers work in concert. A knowledgeable and successful broker puts your best interests at the forefront of the transaction.
As broker’s compensation is only secured when a deal is completed, one who is not experienced in self-storage may be tempted to rush negotiations or settle for reduced results. Therefore, it is advisable to avoid brokers who specialize in other areas of real estate. They are unlikely to know the regional and national buyer pools, as well as the intricacies of the industry.
Experience, Reputation, Education
After you have created your list of candidates, you’ll want information about each broker’s background and experience. An experienced, qualified professional should provide you a proposal that includes a list of closed self-storage sales and a personal resume. The following points can be used as a guideline to help with your final decision:
What is the broker’s reputation for honesty, experience, thoroughness and accessibility? Has he been involved in any lawsuits? Is he in good standing with the state real estate board?
What are the broker’s weak points? Even in the best working relationships, there are always a few bumps along the road. Ask whether a candidate returns calls on the weekends or after hours, or will provide you with regular marketing updates. These issues need to be discussed and resolved. If the broker is not a good communicator, your property may stay on the market for a longer time than necessary. When properties stay on the market too long, the buying community tends to devalue the asset.
What are the broker’s strong points? There may be one aspect of marketing your property that is of paramount importance to you, and you’ll want to make sure you find someone who can satisfy the requirement. You want a broker with imagination, one who can think on his feet, speak clearly and with confidence, and write creatively about your property in the marketing documents to highlight special investment features.
What is the broker’s experience in marketing self-storage properties? Ask the broker for a resume of completed sales. Have him provide you sample marketing brochures used in completed transactions and advertisements created in the selling process. If necessary, contact the owners of the sold properties for further input.
How large is the real estate firm? You may have a choice between a broker in a large real estate firm or an office that offers specialization in self-storage. You may receive better service and faster results with a specialist, as market surveys, buyer contacts and requirements tend to be timelier. With large firms, it’s always possible to get lost in the shuffle or serviced by a less experienced broker or assistant. Remember, time is of the essence in attaining maximum value.
What are the broker’s sales skills? Don’t let your evaluation of a broker be solely driven by his self-promotion. In real estate, sales skills are less important than understanding financial records, general construction, facility design, marketing and investor connections. The marketing of a property must be conducted in an industry standard, professional manner. Has the broker sold properties similar to the one being sold? Make sure he is familiar with appraising the asset and setting the asking price to current market conditions. If not, the property will not garner interest and will gain the wrong reputation.
Are your questions being answered? Beware if a broker does not address issues that concern you—either he doesn’t know the answer to your question, or his listening and communication skills are lacking. The investment community will likely experience the same communication issues with the broker, which will cause your property to be on the market longer than necessary.
Are you being rushed? Anxious to close the deal and earn the commission, a broker may minimize or gloss over problems. Carefully review his listing proposal and marketing suggestions. Brokers are responsible for completing a wide range of documentation, and improperly completed documents can create future legal issues for sellers of real estate. Checking on a broker’s ability to handle document formalities is a must.
Will the broker disclose key information about you? Ethically speaking, your broker cannot share important information about you or the property without your approval. Confidential information, such as your need to sell immediately or key negotiating points, cannot be disclosed to any potential buyer or broker. If you learn your undisclosed agenda is being shared, it may be due to the broker’s eagerness to close a deal—any deal—irrespective of what’s best for you.
How will the property be advertised? Find out where and how often the property will be advertised. Will it be listed in the newspaper, industry publications and/or the real estate firm’s website? Buyers typically target a wide geographical area, and find it more convenient to scan real estate-related websites than track down individual ads from multiple metropolitan newspapers; so make sure your broker is comfortable with Internet advertising and savvy about technology. The web has created a strong nationwide buying pool because of its far-reaching capabilities. With the online tools available, you can expect almost immediate e-mail response to new property listings and quick replies to your inquiries.
Signing a Contract
If you’re satisfied with the proficiency level, knowledge, and professional and personal style of a broker, you’re ready to negotiate an exclusive listing agreement. Generally speaking, this is a written service contract that solidifies the business relationship, with conditions for a specified term.
The contract should be drafted in a manner that will protect both parties from misunderstandings that may arise during the working relationship. In all likelihood, the broker will draft an industry-approved contract crafted to meet the unique requirements of the transaction. Most terms and conditions contained in the agreement are negotiable.
Some of the issues include:
- How the broker will be paid
- The scope of the exclusive arrangement
- How your broker will handle conflicts of interest
- Unique details specific to the transaction
- Term and exclusions
- Marketing strategy and advertising budgets
If you carefully document your needs and requirements in the listing agreement, you’ll greatly reduce the chances of disputes during the term of the contract.
Unwavering determination is a necessary characteristic of a qualified broker. Not only does it demonstrate integrity and willpower, it means the individual will work for your best interests. Couple this characteristic with experience, financial know-how, extensive investment contacts, clever writing skills and solid communication proficiency, and you will end up with a broker you’ll use for many years to come.
Stephen Grossman is a senior vice president with Lee & Associates-Newport Beach Inc. He has been responsible for the sale of more than 500,000 square feet of entitled land and the sale or escrow of more than 2 million square feet of existing self-storage facilities. For more information, call 949.724.4709; e-mail email@example.com.