*Unpriced Listings
One of KJF Partners’ Core Values is:
“We are driven by our personal commitment to create value for our investors, tenants, teammates and brokers.”
To serve our broker partners, we send occasional emails that focus on things that I have learned through my brokerage history or that I notice from my current role on the principal side of the business.
Brokerage is a very challenging business and helping clients understand pricing expectations for your listings significantly increases the likelihood of getting buyers involved.
We have been noticing an increase in properties being presented to us as potential acquisitions, without pricing guidance or a list price. For us -and likely for other Buyers who want to maximize the efficiency and effectiveness of their time spent analyzing deals- this practice discourages engagement. A few of my thoughts follow:
Time Required to Make Qualified Offers:
For us to make a thoughtful, qualified offer, we spend hours verifying: demographics traffic counts, running financial models, analyzing the local market, locating and speaking with qualified leasing brokers to understand market rents, and assessing the property condition, i.e. the roof, HVAC systems, parking lot etc., etc. We are reluctant to spend time underwriting a deal when we don’t understand the Seller price expectations.
Too Risky for Exchanges:
If we are in an exchange, time is everything. We can’t afford to chase properties without understanding price expectations. We focus on deals that we feel could be deliverable within our pricing range and can’t afford to spend precious designation-period time pursuing properties when Sellers can’t (or won’t) clarify their pricing requirements.
We Question Seller Motivation:
Our typical view of unpriced listings is that the Seller’s expectations are so high that the broker (or Seller) is afraid to reveal them up front. In most cases, I believe that if Seller expectations are over-market and the Seller isn’t motivated enough to meet the market, it may not be worth spending time on the deal. Also, if buyers in 1031 exchanges avoid offering on unpriced deals, your seller is missing out on the most motivated and premium buyers in the market.
A Common Broker Response:
It seems that a common response from brokers, when we ask for price expectations, is “just make an offer.” For us, we don’t make offers unless we’ve done our pre-offer due diligence (described above) to ensure we can live with the offer we make. We never want to re-trade or blow out of deal because we failed to do our job up front. We can’t invest the time it takes to get comfortable with a deal unless we feel like making one is possible. Without understanding price expectations, we can’t spend hours on your listing, and we are reluctant to “just make an offer” which is likely to result in a failed transaction.
Final Thoughts:
There are more properties on the market today than there are active buyers willing to transact at offered prices. Many of those listings are sitting, without offers, because they are not priced at levels that attract buyers’ attention today. Others lack a list price entirely and don’t show up for buyers searches that are filtered by pricing.
As buyers, we hope the trend of unpriced listings fades quickly. If your seller won’t commit to feasible price in today’s market, they may not be a seller at all….at least not yet.
Good luck in all you do and…
Happy Hunting!
Joe and Nikki
Joe Faris
KJF Partners Inc.
Cell Phone: 949-275-5038
Email: [email protected]
Website: www.kjfpartners.com