The value of your self-storage facility is as high as it’s ever been, and you have decided to sell.
Now you face another big decision, choosing which broker is right for you. Here are a few tips on what to expect from a self-storage broker and how to choose the best one to sell your facility.
A good broker will give your property the widest possible exposure, said Bill Alter, a broker who handles self-storage facility sales throughout Arizona.
Alter says you’ll reach the largest number of potential buyers if you hire a commercial real estate broker who understands the market. The ideal salesperson will “create an environment where the buyers compete with one another to drive the value up to the maximum number,” he said.
If you don’t have several offers within the first 30 days of listing your property “you probably have the wrong broker or your property is overpriced,” Alter said.
Your business may have a great location, a record of timely maintenance, and a strong income stream, but you won’t be able to sell it for what it’s truly worth unless you can connect with buyers who recognize its value.
Amy Hitchingham, vice president of the Argus Self Storage Sales Network, a nationwide network of real estate brokers based in Denver, said skilled brokers target their advertising to a narrow group of potential buyers.
“The self-storage universe is pretty small,” she said. “Your broker needs to know how to get to those people, to have good contacts within the self-storage industry.”
Terms and conditions
When searching for a broker, consult your contacts in the storage business about recent sales in your area, Alter suggested. If the sellers are willing to refer you to their brokers, it means they’re satisfied with their work.
Broker commissions typically range from 3 to 6 percent, Alter said.
“It’s all negotiable,” said Dean Keller, a broker specializing self-storage facilities that is based in Laguna Beach, CA. “It varies from deal to deal.”
You should look for a broker with deep experience, Keller added. “You want to see dozens of transactions and longevity in the industry.”
A successful self-storage broker won’t hesitate to tell you how many properties he has sold in recent years. If your broker has had numerous successful listings, it means he understands the market.
Setting the right price for a property is an important skill. Brokers must set prices high enough to get you top dollar, but not so high that they misjudge what buyers are willing to pay.
If your facility languishes for months on the market, buyers will be encouraged to offer you less than you’re seeking.
“The property should be realistically priced at the top of the market, but not above the market,” Alter said.
Thanks to the Internet, you don’t have to rely on trade publication ads and for-sale signs to publicize your sale.
A good broker will have an outreach plan that places your property before the maximum number of potential buyers. The marketing plan should go well beyond your immediate area, Alter said.
“There are so many ways to put information out there,” said Hitchingham. “There’s social media and Twitter feeds and LinkedIn groups. It’s important that the broker is staying up to date with that.”
Here are a few questions a good self-storage broker should be able to answer:
- Is now a good time? Your broker should be able to tell you how much comparable properties have sold for in recent months. He’ll also know if now is a good time for you to sell or if you’d be better off waiting until there’s greater demand.
- What can I expect to get for my facility? Choosing the broker who says he can get you the highest price for your property may sound like a wise decision. However, if that broker doesn’t have a good track record of sales, he may be inflating the price just to get your business. You’ll be better off with a successful broker who isn’t afraid to give you a realistic number, even if it’s less than you’d like to hear.
- Why can’t I get more than that? Not even the best brokers can get more money for properties than they’re worth. Buyers take into consideration such things as your revenue and how much deferred maintenance there is on your property. Are your books in good shape? If you’re carrying numerous tenants who’ve fallen behind in their rent, it could reduce what a buyer ultimately will pay.