Should I Take a Direct Offer or Hire a Broker?  

July 28, 2021

If you’ve ever considered the future of your self-storage asset, you’ve likely thought about selling the property. Additionally, if you’ve owned your property for an extended period, you’ve likely received calls from both buyers looking to provide you with an offer on your property and a broker wanting to help you sell your property. While, depending on your circumstance, you may or may not be ready to sell, the question remains: Should I sell directly to an interested buyer? Or, should I use a broker to sell my property?   


And just as with most other decisions you make in life, the short answer is: it depends. 


Your decision depends on your goal. Do you want a quick, discreet offer? Do you want the most money for your property? Do you want the best terms during the process? While it is common for goals to overlap, there is usually one goal that sticks out as the primary goal. To make sure you make the best decision for you and your business this article will highlight three common seller goals and the potential effects of choosing one over the other.  



Goal #1: Speed of Sale  

Life can come at us fast and certain circumstances require that we sell our investment property quickly. So quickly, that while price and terms are important, they are secondary to a quick sell. Having a direct offer can be the quickest strategy to exit your property. The buyer can work with the seller to agree on a price, prepare the property for sale, and ensure a smooth transaction without a third-party broker.   


While, in theory, there are a lot of benefits, experience shows that there are significant drawbacks to not having a broker represent the seller when speed is the primary goal. First, a seller should understand that the buyer is almost always sophisticated and is usually trying to accomplish their own goals and maximize their investment. Typically, a buyer will have a good idea of the property’s value before they approach a seller. If an offer seems too good to be true, it’s almost always too good to be true.   


Without representation, a seller can fall victim to buyers that will renegotiate terms and pricing more favorable to the buyer, and the amazing terms and price that was originally promised can quickly become undesirable and if not agreed to, can significantly elongate the sale beyond the time it would have taken to work with a broker.   


If speed is the primary goal, even if a buyer is already chosen, a broker is a sophisticated advocate for the seller’s goals and work to help a seller maintain leverage and exit their asset promptly.  



Goal #2: Best Sell Price  

Rash decisions often wind up with rash backlash. If your goal is to sell for the most coveted price, then selling off-market will almost certainly not yield this result. By limiting yourself to one or more direct offers, you’re removing the visibility of receiving solid competition for your facility with a deeper understanding of the deal.  


A broker, backed by a viable staff, can provide an entire network of vetted buyers, known for historically closing deals with success, and can take an opportunity from LOI (letter of intent) to closing. With strong personnel and an artillery of potential investors to market to and have conversations with, your property will be showcased to the entire market. A broker may follow up a self-storage opportunity with a call for offers deadline too, then a best and final offer to further demonstrate the market’s price for the property.  


Selling directly will not allow the opportunity to be backed by a tried-and-true brokerage marketing plan for strong exposure and subsequent offer deadlines circulated across multiple venues. Nor can your facility’s story be told through numbers and upside potential.   


The ease of accepting an off-market offer may be lucrative, but off-market deals limit the marketplace of prospective buyers, reflecting the sales price. When your property isn’t on a shared platform for a plethora of investors and investor types (national, regional, and individual) to review, the pool of fish in the sea is scant. If your goal is to see if your asking price is viable, showcasing your property to an entire market will also provide a fuller illustration of the market’s outlook. Exposure to only a handful of individuals may result in pigeonholing yourself into a commitment that may backfire on you price-wise, not giving you the most in returns on your self-storage asset.  



Goal #3: Best Terms  

With the speed of an off-market transaction seeming too good to be true, it generally can be. A domino effect is created, resulting in a chain reaction of deal components falling over one another during litigation until the deal spirals out of control. Not all opportunities erode from negotiations regarding the terms, though, but an investor may end up settling for terms that are less-than-desirable from what greatness was once present; unrealistic expectations weather to uncloud realistic expectations for both you, the seller, and your buyer.  


Over the years, self-storage has proven itself to be a lucrative asset with buyers on the individual to the institutional level. Storage, once an enigma in the CRE universe, has emerged and piqued a wide variety of investors’ interests with its steadfastness and ability to bounce back in a downwards economy. By limiting yourself to one or more direct offers, you’re removing the visibility of receiving solid competition for your facility with a deeper understanding of the deal.  


A broker, backed by a viable staff, can provide an entire network of vetted buyers, known for historically closing deals with success, and can take an opportunity from LOI (letter of intent) to closing. Limiting yourself to unknown variables in the off-market process without a broker and their respective staff to support you, can often lead to the tale as old as time: a dissipating deal lost in contract negotiations. At the end of the day, a deal garners the most traction when it’s exposed to the market, resulting in conversations taking place about the opportunity due to its relentless visibility. The broker and staff’s expertise becomes yours.  



Success: Speed, Sale Price or Terms?  

Speed – If you’re seeking a speedy sale, either methodology will work. Off-market provides a brisk speed that the opportunity sets forth on initially, while historically a broker-run transaction will make it to the finish line more expeditiously and hassle-free.  


Sales Price – With regards to the sales price, it’s no surprise that more often than not, the price will be more competitive by marketing the property to the desired target audience. Self-storage assets remain vigilant despite any economic woes. They have proven this time and time again, piquing the interest of investors outside of the self-storage spectrum due to a broad marketing footprint and the allure of such an asset class.  


Terms – Terms go hand-in-hand with realistic expectations. An experienced firm can ensure that these expectations stay grounded, with a well-managed transaction branch for the property and of course the competitive listing yielding multiple offers across the investor arc. The terms link to both the speed of the due diligence period and closing after negotiations are squared away. Without agreeable terms, a deal will revert to a tale as old as time in real estate: another fallen deal among many. A brokerage firm will continue to bring value in having dedicated personnel to your opportunity to ensure a sure victory navigating the labyrinth that is marketing and deal management.