The Dangers of Accepting a Direct Offer for Your Self-Storage Property

April 17, 2020

In every transaction, the goal of a sophisticated buyer is to get the product or service at the lowest price possible. Whether the product is a pack of gum at a grocery store, or a self-storage property, the buyer’s goal is to get the best value. As a seller, the first thing you need to do is identify what your primary goal is.  Most sellers want the highest possible price and the best terms for their property.  However, some sellers want a fast, quick deal and are willing to leave money on the table in order to facilitate that.

As a seller, you should know there are significant risks in accepting a direct offer.  Without question you are leaving money on the table, and in some cases, it can be hundreds of thousands of dollars or more. A direct offer is never going to be at full market value and the terms will often be less than desirable. This is why buyers are making the offers directly to you.  A buyer who is making you a direct offer is attempting to pay you a wholesale price instead of a retail price.

In the self-storage industry, the ever-changing market will determine the price of a facility at any given time. The only way to know what the market value is for your facility is to run a comprehensive and thorough marketing campaign by gathering offers from multiple interested buyers. Working with an experienced self-storage advisor through the selling process offers you the opportunity to run this methodical process while getting objective advice from an expert, every step of the way. Our blog post on tips for hiring a self-storage broker can help you to choose the right broker for your goals, here are some of the main benefits:

  • Allows you to generate multiple competitive offers to ensure that your property is valued properly and that all qualified buyers see your property.
  • Gives you leverage in contract negotiations as you have multiple back-up options.
  • Offers certainty of execution on the agreed upon contract terms.

Every seller is different, and it is important to know your goals before even looking at a direct offer from a buyer.

In a self-storage sale, as soon as a contract is executed, all leverage switches from the seller to the buyer. This allows buyers to make certain demands and potentially drag out the process much longer than expected. A typical game that some buyers play is to come back at the expiration of the due diligence period and ask for changes to the contract, such as a price reduction. If you only have one offer, you have no leverage to negotiate. Working with an experienced advisor will ensure you’re achieving full market value for your property and provide you with maximum leverage throughout the entire transaction.

It may be tempting to accept a direct offer from a buyer, however, you owe it to yourself to take the time to clearly define your goals and fully examine your options.  You’ve taken all the risk and worked extremely hard to create value in your business, and you deserve to be getting the best price that the market can bear.

Check out some of our case studies to see how we’ve added value for sellers that originally received a direct offer.

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For More Information 

For more information about issues involved in accepting a direct offer for your self-storage business, or about the advantages of the SkyView process for maximizing your return on your investment, contact SkyView to schedule a quick intro call.