The next podcast in our current market buying and selling series is out!
Marcia and I are going to point out a few things about selling in the current market using a real world example from one of René’s clients.
René Nelson, Eugene commercial real estate broker
Marcia Edwards, Eugene residential real estate broker
Buying & Selling in the Current Market – Part 5
Marcia Edwards: We’ve been talking about competing offers, and it’s interesting. It’s not just in residential. In your industry, in your corner of our industry, I should say, there’s a lot of multiple offer situations. And you saw one recently, didn’t you?
René Nelson: I did. I rolled out an 18-unit apartment complex on a Thursday, last Thursday, for sale, and I had 32 brokers, or buyers, express an interest and indicate they were going to bring an offer. I had nine written offers. Four, that we’re over asking price, and two were all cash, close in 14 days.
Marcia Edwards: Isn’t that fascinating?
René Nelson: It is.
Marcia Edwards: And how do you break that down? What do you do to say who the best opportunity is? Fourteen days has gotta be appealing.
René Nelson: It is appealing. Well, there were a couple of interesting facts, too, in that, there was only one of the buyers was from California, everybody else was local. They were all local investors.
Marcia Edwards: Local money and cash. There is some cash in there locally.
René Nelson: Lots of cash.
Marcia Edwards: That’s interesting. Isn’t it?
René Nelson: Lot’s of cash. And a lot of people, especially the seller, said, “Well, I don’t understand. I want out of the market. Why do these local investors want to stay in?” And I said, “Well, because they have professional management and they already own things and it’s creating net income for them, and it’s a positive situation, and they see the opportunity, here, because you’ve done really well to maintain the building.” But for this particular property, there was some upside potential in the rent, so he was under rented on the two-bedroom units and the next rent increase of 9.2% will be available November 1st. So if you put out your rent increases July 1st so you have your 90-day notice, then you could raise rents the 9.2%.
Marcia Edwards: So having you represent them, you could help communicate that message to the potential buyers and probably bring the heat for the competition situation.
René Nelson: Absolutely. And we really… I had two buyers that were interested, but in an effort to really serve the seller, I put it out to the open market to create a competition and an auction-like atmosphere, and we got exactly what we wanted with all those multiple competing offers.
Marcia Edwards: And you can burn yourself, if you don’t manage those multiple offers well, respectfully, in a timely manner and really have a system set up to run through those and put a lens up to them whether one makes sense more than the other.
René Nelson: Absolutely. Especially, because with the cash versus the financing, somebody could over-bid for the property, but if it will not qualify for financing, it’s not going to do you any good to take some top bid.
Marcia Edwards: It’s tempting, but it may not be real.
René Nelson: That’s true.
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