Hire a Broker Who Represents YOU
How to Ensure Your Broker is Representing YOU and Not Just the Deal
When selling an apartment building, the broker you hire will have a significant impact on the success of your sale.
Great brokers will help you position your asset to achieve the best available price and terms.
Unfortunately, many brokers are more interested in closing the deal and collecting their commission than ensuring their client’s interests are fully represented.
This leads to corner-cutting at the client’s expense.
Let’s look at a quick example:
Example:
I once received a call from a fellow broker about a deal listed for nearly 6 months.
He called me to ask if I had any motivated buyers who would be interested in his listing.
I knew the deal and I knew it was overpriced, so I asked him if he had adjusted the asking price.
He said, “Well the seller wants me to keep the asking price at $1,050,000, but he is moving to Arizona in three weeks so I think I can get him to accept an offer at $950,000.”
This is a classic example of the broker representing the deal, not the client.
In an attempt to sell the deal, he broke confidentiality and shared his client’s motivation. On top of that, he planned to negotiate AGAINST his client rather than FOR his client.
Unfortunately, this is incredibly common.
So how can you ensure your broker is committed to their fiduciary duties and won’t act against your interests?
Let’s take a look.
Step 1: Vet the Broker
Proper vetting is crucial. Check their track record and look for reviews and testimonials from previous clients.
Why is this important? Proper vetting helps you identify brokers who have consistently acted in their client's best interests.
Make sure to ask about any potential conflicts of interest that may stand in the way of representing your interests in a sale. Find out if they have allegiance to any specific buyers that might supersede their duty to you.
Finally, interview the broker by asking detailed questions about their specialty, and marketing approach. Make sure you understand their process for engaging investors and know exactly how they will pitch your asset to buyers.
We offer an interview guide to help sellers vet brokerage candidates. This checklist has 44 questions for you to ask during the interview stage. Use this checklist so you don’t forget to ask important questions about the broker’s background and marketing strategy.
Step 2: Evaluate Their Communication Skills
Pay attention to how the broker communicates with you. Are they clear, transparent, and responsive? Communication is crucial to ensure your interests are represented in a transaction.
For instance, a broker who promptly returns calls and provides detailed feedback demonstrates their commitment to keeping you informed and involved. This level of communication will help you feel more confident and secure throughout the sale process.
And it will help you assess if they are working for you, or just working to get the deal closed regardless of your interests.
Step 3: Assess How They Use Market Knowledge
A broker with deep knowledge of the local market can provide valuable advice tailored to your situation. This expertise can help you make informed decisions that align with your interests.
For example, a broker who understands the local market dynamics can give you insightful feedback from buyers and provide you with guidance on how to maximize the value of your investment.
Experienced brokers will know if a property is sale-ready. Sometimes the best advice is to give you instructions on how to improve the property before going to market.
So ask yourself: is this broker acting as an advisor to help me sell my property for its highest potential? Or will they always push for a sale right now, regardless of whether or not my property is ready for the market?
In short, will the broker use their knowledge of the market to provide you with valuable advice? Or will they use that knowledge to chase a commission regardless of your situation?
Step 4: Understand Their Negotiation Style
Discuss the broker’s approach to negotiation. A broker committed to executing their fiduciary duty to you should have a clearly defined negotiation strategy.
Find out if they will push you to take the first offer that comes along, or if they have a strategy for negotiating on your behalf and fostering competition between buyers.
Ask about how and when they expect to receive offers, how they will present offers to you, and how they will advise you to counter those offers to increase the price or improve the terms.
You want a broker who helps you negotiate the best offer, not just the fastest offer.
They should advocate for your interests and be prepared to handle challenging negotiations to ensure you get the best possible outcome.
Ensuring your broker represents you and not just the deal is vital for achieving the best outcome in a sale.
By properly vetting brokers, evaluating their communication skills, assessing their market knowledge, and understanding their negotiation style, you can determine if the broker is working for you, or just interested in a commission check.
Remember, a broker must act in your best interests, and with the right approach, you can ensure they do just that.
If you haven’t already downloaded the full eBook detailing every step of our sale prep strategy, you can get your free copy by clicking below.
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