Choosing the Right Broker for a Distressed Multifamily Sale
Be Careful What You Wish For……
Selecting a broker to sell your apartment community is always an important decision. When the asset is distressed, it becomes one of the most consequential decisions you will make. Watch the video or read below for more detail.
When a debt maturity is approaching or your property is facing near-term consequences tied to distress, broker selection is critical. Unfortunately, this is also where I see sellers make some of their most costly mistakes.
Below, I’ll cover why broker selection matters, how to evaluate a broker, and the ways a distressed seller can be taken advantage of.
Why Broker Selection Matters
The dynamic has changed. The broker already knows you are under pressure, and that knowledge often shifts the entire relationship.
There is no margin for error. Once you engage a broker, you are effectively committed. There is rarely time to change course if the first choice doesn’t work out.
The outcome is critical. At this stage, the results of the sale carry real and lasting consequences.
How to Vet Your Broker
Underwrite your own deal. It is that simple, yet most sellers put little effort into evaluating their own property. Doing your own underwriting makes it easy to see where a broker’s valuation deviates from yours and to ask why.
Ask detailed questions and expect specific answers. Most owners know very little about the brokerage side of the business, and many common assumptions are incorrect. A strong broker should be able to clearly explain every step of their process.
Evaluate their track record. Look closely at how the broker has performed on comparable listings. If the results were weak, ask yourself why your listing would be handled any differently.
Where Distressed Sellers Get Hurt
Over-promising. When an asset is distressed, whether operationally or due to a debt maturity, the broker knows you have limited options. That creates a strong incentive to over-promise on price, because whoever wins the listing is all but guaranteed a sale when time and capital have run out.
You may not be the only seller. If the broker over-promises and you are unable to perform, they remain in the lead position to sell the property on behalf of the lender or the receiver who takes over. This is even more likely when the broker works for a large national firm that lenders routinely use.
Silence is treated as agreement. In fairness to brokers who over-promise, if a seller doesn’t challenge their projections, the broker may reasonably view the seller as accepting of them. That is how the practice is justified.
ABOUT ME
I have spent more than 27 years selling multifamily properties throughout the Southeast, including Florida, Georgia, South Carolina, and North Carolina. My experience spans Class A through Class C assets across market-rate, affordable, and ground-up development transactions.
If you are interviewing advisors for an upcoming disposition, I would welcome the opportunity to share my perspective and qualifications.
Chris Yeagle - EastGate Multifamily
Mobile: 843-860-6908
183 Brady Street, Charleston, SC 29492
Licenses: FL: 3010970, GA: 220941, SC: 68049, NC: 299692