When you hire a self-storage broker, you should expect the best terms and highest price for your property, with a smooth transaction process. Using a broker is similar to going to a lawyer for legal issues: You could deal with it on your own, but having professional guidance and advice will only increase your chances of success. Like a good lawyer, a decent self-storage broker has the expertise and experience to get you the best possible outcome.
Just like lawyers, though, not all brokers are good; and a bad broker can hurt the transaction process and cost you money. This is why it’s extremely important to choose your partner wisely. There are specific qualities that will determine the value you receive from his services.
What to Expect
Your broker should be very active in the market. Ask not only how many transactions he’s done throughout his career but how many he’s completed in the past year and currently selling. The investment-sales market is very dynamic and can change rapidly. The best brokers constantly have their finger on its pulse. They know about transactions that are under contract and not yet public record. Once these closings are public, they can affect the value of your property.
He should evaluate the market and assess the value of your asset properly. The biggest pitfall for self-storage sellers is to either overprice or undervalue their asset. Your only insurance against this is to hire a good broker who understands all the economic factors, the submarket your property is in, and what investors are seeking.
He should be an expert at creating a competitive environment for your property. The self-storage industry has expanded greatly in the past few years, and a lot of new money is flooding in. You want to make sure your broker isn’t just reaching out to a couple of old buyers or putting you into a contract with just any average investor. He should know the buyers and have experience closing transactions with them to make the deal smooth and decrease the likelihood of price reductions.
He should work with you until the money is in your bank account. There are a lot of details in a transaction and numerous potential pitfalls. A quality broker will advise you throughout the entire process, make sure you aren’t being taken advantage of, and ensure you get your property sold for the best possible price as quickly and easily as possible. In many respects, the heavy lifting really begins once the contract is signed. A good broker will help guide you through the due-diligence period and won’t stop working until the money is in your bank account.
Hiring a Quality Broker
There are several steps to hiring a professional that will help you get the best results from the sale of your property. First, research brokers who work in the self-storage industry. There are some great industry resources to aid your search, including “Inside Self-Storage” and the national Self Storage Association. Both have online directories that allow you to search by category of vendor. Questions to answer:
- Who’s active in the industry?
- Do they specialize in self-storage or are they split between industries?
- What’s their Web presence like?
- Do you like the marketing materials they’ve put together for facilities similar to yours?
Next, choose two or three brokers to evaluate your property. Any good broker will want to compete for your business. Questions to answer:
- Who followed up with your inquiries and how quickly?
- How did they treat you when you asked them to compete for your business?
- Did they take the time to understand your situation personally?
- What’s their track record?
Interview the brokers during the evaluation process. Listen, but also some prepared questions. This is your chance to get into the nitty-gritty before you make a decision. Remember, people are generally on their best behavior during this phase, so if they don’t take the time with you on the front end, it’s doubtful they will once you’re signed up. Questions to answer:
- What are the differences in their process?
- How do they plan their marketing campaign?
- How do they support me\ during due diligence?
- Who’s more likely to achieve my goals?
- Who do I like and want to do business with?
- How detailed was their evaluation?
- Did they follow up after the presentation?
- What’s their fee?
Finally, choose a broker and structure the partnership so he’s representing you. Make sure you sign an exclusive representation agreement. This ensures the broker is on your side and aligns his interests 100 percent with yours. Without this agreement, you won’t get the benefit of the full marketing process, which can lead to lower offers and worse terms. An agreement should generally not last longer than six months. You always have the option to extend, but you don’t want to be stuck if he doesn’t perform to your expectations.
Following this guide is a great way to hire a quality broker to help sell your property, but I also encourage you to follow your own instincts. It’s important to develop a trusting relationship in which you’re certain your broker is not only looking out for your best interests but capable of getting you the highest price and best terms.
Jay J. Crotty is a managing partner with SkyView Advisors (formerly BayView Advisors), a national investment sales and advisory firm focused exclusively on the self-storage market. He provides a range of advisory services including acquisition, disposition and recapitalization strategies, asset valuation, joint-venture structures, and debt and equity finance strategies. BayView team members have completed more than $1 billion in transactions throughout their careers. For more information, call 813.579.6363; visit www.bayviewadv.com.