Here’s Why That’s a Bad Idea
Dreaded words to almost every Realtor….For Sale By Owner (FSBO). We’ve all heard them, and in almost every case, a FSBO property is going to be a messier transaction with more issues, more setbacks, and more hurdles than one conducted by experts in their trade. The sad part is that most sellers trying to “save the fee” are simply misinformed or uneducated regarding the value created by working with a Broker specializing in that field. A true professional makes the transaction easier and can net them more money in the sale. What seller wouldn’t want to do less work and make more money if they knew they could?
The same goes for property owners who try to manage properties on their own (especially if it’s not their primary business). They usually create problems for themselves and cost themselves money because they don’t have the systems in place for marketing, turning, and managing what is likely the largest asset they own. Again, they’d rather avoid the fees associated with a professional property manager because they aren’t aware of all of the benefits (and potentially higher income) that can come from the service. As brokers, we all know that vacancies can ruin your return, delayed turns eat away at profits, and leasing to the wrong tenant can be costly. As a good property manager, you pay for yourself several times over each and every year.
The same goes for selling your property management company. An industry-specific, professional broker can pay for themselves several times over financially and by saving you headaches and heartaches along the way. Starting with an objective opinion of value for your company, setting reasonable and realistic expectations sets the stage for a process to go smoother and increase the chances of a successful closing. An expert broker will help you avoid costly mistakes, and that can keep you from getting full value for your company in today’s market. Even if you think you have a buyer who’s the right fit, you may not be getting his/her best offer/terms; nonetheless, the best offer possible if it’s marketed to the right audience. The only way to know whether you’re getting top dollar is to have other offers to compare it to. There may be a buyer who’s willing to pay a premium for a company with your mix of properties or locations.
Another fatal mistake we see regularly is a company owner who has waited too long to start the selling process. They’ve considered selling for quite some time, but by the time they’re “ready,” they’re also burnt out and want to get out the door ASAP! They put their portfolio up for sale but are too exhausted to invest the time and resources it takes to get full price for the business. They’re willing to sell at a discount just to get out.
Consulting with a broker early in the thought process can keep you from making rash decisions by creating and implementing an exit strategy that fits your timeframe. They will suggest ways to improve the value of your business before you sell. They’ll have ideas on how to optimize your revenue and minimize your expenses before you put your company on the market. Buyers will base their offer on profitability and potential, and seek out companies that have already raised their rents and fees to meet market value.
A broker can also help you negotiate the best terms for your deal. They’ll be familiar with ways to structure the sale and be able to advise you on whether owner financing should be an option for you to consider. Your broker will keep the communication flowing between all parties and help resolve any issues that might hold up the deal or even cause it to fall apart. Creating VALUE.
Just like you do for your clients, a good business intermediary not only saves you time and trouble, they can maximize revenues and pay for their services. You can be confident that you didn’t leave money on the table and have a better chance at closing as quickly as possible.
About the author: Patrick Hurley
He’s a Tallahassee native with almost 20 years of experience in the property management, real estate, construction, and business brokerage worlds. Having owned, operated, bought, and sold property management companies in the past, Hurley is in a unique position to help others in the industry find their exit. He’s been described as dependable, highly efficient, effective, and hard-working with a no-nonsense attitude. He takes pride in his professionalism and attention to detail and focuses on his client’s desired outcome.
Patrick still meets with every client and passes along as much knowledge as he can. He frequently gives back to the property management community in the form of professional speaking and value-packed article content. When he’s not helping others with a business transition, you can find him adventure-seeking with his young family.