By Matt Halper
Have you ever needed work done in your home and asked a contractor if they can do the work? Have they ever said they were not qualified or not the best person for the job? Perhaps that was their response if they were super busy. More often than not, they’ll say they will do it and figure out how to do it after they get the order from you. Many real estate brokerages are the same way.
For real estate owned properties, it’s crucial for Real Estate Owned (REO) Managers to consider five things before hiring a brokerage firm to get the market value and to minimize hassle for their REO properties.
1. Expertise in the Asset Class
There are A LOT of real estate brokerages throughout the Chicagoland area. Many of them will agree to sell anything that comes in the door. From single family homes to condos to retail to multifamily, each asset class has unique aspects that require a broker to navigate the client through valuation, marketing, review and negotiation of offers, escrow, and closing. Make sure the brokerage specializes in the asset class for the property you are taking title on.
2. Local Market Knowledge
Chicagoland is a large market with what sometimes seems like countless submarkets. In each submarket there may be a different set of buyers and local jurisdictional/municipal requirements needed to transact. The brokerage needs to be intimately familiar with these aspects for wherever the particular real estate is located within the submarket.
3. Know the Brokerage’s Culture
Most brokerages are structured to have independent contractors (brokers) that go out and get business on their own. They eat what they kill. You may have developed a good relationship with an individual broker that you know and trust and want them to sell the property for you. A good broker in a firm like Kiser Group will acknowledge any lack of expertise on a deal, whether asset class related or local market knowledge, and bring in another broker that shares his/her commission because it is in the best interest of the client.
4. Network of Buyers
Once your bank has taken title to the asset, you’d like to get it off the books as quickly as possible for close to the appraised value and the Broker Opinion of Value (BOV). Some Brokerages will simply list the property and wait for the phone to ring. However, listing the property for sale with a brokerage that actively exposes the property to the market including their own network of buyers puts you in the most control of selling it.
5. Track Record of Closing within Expectations
When you’ve done deals with brokers in the past, did it turn out differently than you expected? Every deal is different. A good BOV should outline nuances with the individual deal and pitfalls that may arise. Hire a brokerage that sets expectations with you to minimize surprises and prepare you and your bank for potential hiccups in a deal PRIOR to taking the property to market.
If you’re an REO Manager that has a multifamily or mixed-use property coming down your pipeline reach out to me so that I can help you through the process as painlessly as possible.