Jason called me recently, frustrated at the dealing he has experienced with a broker who was selling his apartments. While he would have thought they should sell for more, the offers provided were a good bit less than what he was hoping for.
The listing information had been lacking, with incomplete financials and sorely lacking pictures. While Jason knew investment real estate sold on income, he still thought he was missing out on the marketing.
Oftentimes owners get themselves into a situation where the broker they hired may not provide their dream experience, so today we are sharing some insights owners can ask before proceeding to sign a listing agreement to sell their property.
Pick the right broker and you unlock the best price the market will pay; get it wrong and you burn months of holding costs while the wrong buyers cycle through, and ruin your debut to the market.
1. Quality of the Frim and Agent Integrity
Track record and ethics matter more than personality. Ask for verifiable data and independent references — not just a polished pitch deck.
- What is your list-to-sale price ratio and average marketing time over the last 24 months for assets like mine?
- How many deals have you closed in my asset class, submarket, and price band?
- Can you provide three references from past sellers (not buyers)?
- Have you or your firm been subject to any license complaints, or ethics violations?
- Who actually works my file — you, a junior associate, or a team — and who is the point of contact?
Trust is huge when dealing with significant equity that most sellers have on the line- so make sure that your trust is built on a solid reputation.
2. How and Where the Property Will Be Marketed
A listing agreement is, at its core, a paid promise to market. Demand specifics. A generic answer (“Online, social media, our network”) is a red flag.
- What written marketing plan will be executed in the first 14, 30, and 60 days?
- Which platforms will carry the listing — CoStar, Crexi, LoopNet, Ten-X, MLS, proprietary buyer lists, and email blasts to whom?
- Who pays for professional photography, drone video, floor plans, offering memoranda, and targeted advertising? Is there a minimum marketing budget?
- Will you use paid promotion?
- What reporting will I receive, how often, and what metrics will it include (inquiries, tours, offers)?
- How will you vet buyer qualifications before bringing offers — proof of funds, loan commitments, closing history?
The details about how they will market help to separate agents who do this part time and may not prioritize your property, from the professionals who have the marketing down to a science.
3. Cooperation
Your broker works for you, but sometimes the best buyer is working with another agent. A listing office that quietly suppresses outside cooperation in pursuit of a dual-sided commission can cost you real money.
- Do you cooperate with outside brokers, and what co-broke split do you offer?
- Will my listing be available to the full brokerage community from day one, or do you run a pre-marketing / “pocket” period?
- Under what circumstances would you represent both sides (dual agency), and how is my interest protected if that happens?
Often times owners are not even aware of how public their listings is, or is not to all buyers and other brokers. Sometimes there may be a reason for keeping a listing confidential, but if that is not your marketing plan, then wide distribution will almost always result in the best price for the seller.
Your list broker will need to take proper care to ensure all buyers are carefully vetted, but any serious buyer welcomes this process and will be ready with details on experience and qualifications.
4. What Makes Your Firm Uniquely Suited to Sell This Asset
The right broker is the one whose contacts, specialty, and deal flow align with your property. Make the firm prove the fit.
- How many active buyers do you have right now for an asset of this size, use, and location?
- What comparable deals has your firm closed in the last 12 months?
- Do you have institutional, 1031, private-capital, or international buyer relationships relevant to this deal?
- What is your pricing strategy, and can you walk me through the BOV you prepared?
- What challenges do you foresee in this listing, and how will you overcome them?
You rely on your broker to identify any hidden value, and communicate that to your buyers. Make sure the broker is qualified on your property type and has experience in presenting the value to buyers.
5. Other Terms That Deserve Scrutiny
The final quarter of your diligence should focus on the contract language itself. Small clauses move large amounts of money.
- Commission structure — What is earned on a buyer default, a 1031 exchange up-leg, or a partial-interest sale?
- Term length and extensions — Shorter (90-day) terms with optional extensions give you leverage if performance slips.
- Protection (tail) period — How long after termination can the broker still claim commission, and is there a named-buyer list requirement?
- Early termination rights — Can you exit for non-performance, and what costs follow you out the door?
- Exclusivity and carve-outs — Owners may want right to exclude named prospects (existing tenants, partners) you sourced before the engagement.
- Confidentiality and data ownership — Who keeps the buyer list, the OM, and the marketing materials when the term ends?
- Disclosures and conflicts — Has the broker disclosed any financial interest in the property, affiliated service providers, or partners they have that may want to purchase the property?
Often the devil can be hidden in the details, and while these situations are less common, preparing for them upfront is the best strategy to mitigate later.
Bottom Line
Note that the above does not include “How much is your commission?” which is the most common question we hear. To get our take on this, see ARTICLE HERE ABOUT THAT.
The above questions are actually more important, because like most things in life- the best price does not always mean the best value.
Make sure when you sell your valuable asset, you are getting the right fit broker for your property that will maximize your hard-earned equity and make the process look easy.
Many owners we work with appreciate the transparent information and fiduciary guidance we provide. If you own investment real estate, and would like a straight-forward opinion of value, CONTACT US to get started.
