Selling Your Self-Storage Property: Should You Hire a Broker?

March 20, 2019

Experienced self-storage owners and prospective buyers, from independent property owners and buyers to the REITs, are increasingly opting to use brokers. Sellers use brokers in order to achieve the maximum value for their facility, to expose their facilities to a broader audience and to handle all the details of selling their businesses. A good broker will have an abundance of industry knowledge and a proven track record in the industry.

Why use a Broker When Selling a Self-Storage Facility?

Even the most well-prepared owner is missing multiple key resources when doing it alone in an effort to sell a self-storage business. Here are some of the most important benefits that sellers have to gain by taking advantage of all that a professional broker can do to execute a smooth selling and closing process and to ensure that all possible resources are brought to bear on selling the property as quickly as possible and for the maximum possible sale price.

Large Pool of Prospective Buyers

Rationales for choosing to work with a broker vary, however there is one that is universally agreed upon. Using a national level commercial broker that specializes in self-storage facilities gives a property owner the benefit of attracting a broader base of prospective buyers.

A broker has relationships with the most qualified buyers in the industry and there's simply no way for you to get your property in front of those qualified buyers other than working with a well-experienced broker. A larger buyer pool means there is a higher probability of getting the maximum potential sale price for your facility.

Pricing Your Property to Your Best Advantage

Your broker knows how to evaluate your property based on real-time industry-wide, regional, and local pricing factors. A broker provides a reliable assessment of your property value and then advises and works with you to identify changes that can be made to maximize its value.

Ideas your broker may offer can range from making minor physical modifications to the property, to being more aggressive in collecting delinquent payments, to reducing the numbers and sizes of your discounts.

The way to ensure that a seller receives the highest price and best sale terms for a self-storage facility is to have a broker running a quality marketing campaign for the business, taking the business directly to the market, and actively soliciting multiple bids.

Protecting Your Best Interests

Highly experienced buyers strategize to obtain your property as cheaply as possible. They don't want to compete against multiple other buyers. They know the tricks of the trade, and uninitiated independent sellers are all too often outmatched in this regard. Small independent operators put their interests at much higher risk when they try to sell their property on their own without the support of a professional broker.

Finding a buyer who’s ready to pay your desired price is just one step in a very complex transaction with its many moving parts. Real estate deals are notorious for falling through during contract negotiations. Seller and buyer due-diligence, managing contingencies, and finally, closing are all very involved processes that require careful and thorough management, to ensure that neither sales nor closing processes become derailed by surprises.

Having an Expert Mediator

A quality broker is more than a marketing and sales expert. Throughout the process, to the end of closing, the broker performs certain forms of mediation that are inherent in a broker's role within specified legal limits. The broker stays on top of every possible issue involving the legal aspects of the process, including the surveying, finance and banking components. The effective broker not only helps you get the best possible price for your facility but saves you the headache and valuable time necessary to ensure that your deal actually makes it to closing.

Resources A Quality Broker Provides

Choose a broker who has a team of experts to manage each of the above areas of the transaction process, so that you will receive individual attention to each step. Avoid using a broker that has only one person juggling all of the responsibilities below.

  • Full-Time Marketing Department The best brokers have dedicated marketing team to prepare state-of-the-art customized marketing packages, including OM research and presentation, email campaigns, web presence (including website, site listings, and SEO), and social media management.
  • Transaction Department A high-quality broker will have a full-time transaction manager on the team, who has a record of success in handling any issues that can arise between parties to such a complex transaction. The broker understands that obtaining a purchase contract is merely the start of a very great amount of work that must be done to make it to closing. A transaction manager is devoted to helping you avoid the many common pitfalls that sellers so often fall into along the numerous sub-processes of the larger undertaking, such as the defeasance process, 1031 exchange, legal easements, etc.).
  • Underwriting Department The best brokerage firms come with their own underwriting department, complete with a full-time financial analyst, to ensure that your deal is underwritten in a high quality manner that encourages buyers to pay you the maximum value for your property.

What About Paying the Broker Commission?

Selling on your own in an attempt to avoid paying a broker's fee may end up costing you more in the end. If you lack market expertise, professional connections, and an abundance of time to devote to a highly detailed and otherwise challenging undertaking, a broker is an invaluable resource. Sellers normally find that the brokerage commission they pay is well worth it.

You may imagine that you would have saved the commission if you sold your business on your own. But, if it takes much longer to sell than you had hoped, or if you settle for less than you believe your business is worth, or if you regret concessions you made to get the deal done, or if many errors were made in the transaction process, you may realize too late the benefits of having a broker. A successful broker works hard, drives the right prospects to you, and is relentless in protecting your interests throughout every detail of complex negotiations and sub-processes in the selling of your property.

Takeaway

Successful brokers have built industry relationships throughout their careers that are very beneficial for sellers. However, you should consider several criteria to ensure that you choose the best available broker for your needs.

  • Self-Storage Specialist Choose a real estate broker who not only specializes in self-storage facility sales, but who has extensive experience and a strong track record of success in this particular market segment.  
  • Team ApproachAs a seller, select a broker who uses a team approach and a thorough, formally detailed sales and transaction process, to ensure that all requirements for your transaction are met.
  • References and Track Record You need to feel comfortable with your broker. Ask for references and call those reference to hear about their experience. A successful broker is proud of having great references and will welcome you to contact some of them. Also, examine your prospective broker’s track record. See how many storage facilities have they sold in the last year or two, and whether or not they are involved with the most active buyers in the country.

An experienced broker brings vast industry knowledge to the process and is skilled in optimizing pricing and resolving typical issues that are inherent in selling and buying a self-storage business. For these reasons, both sellers and buyers find that having a broker executing the requirements, and guiding the necessary activities, results in a much smoother, more accurate and thorough process for all involved, and yields an outcome that ultimately satisfies both parties.

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