small vs big brokerage, maximizing buyer value
I heard a really interesting idea from a bright guy I met today - I was interviewing for a role at his firm.
- From a small acquisitions shop perspective, you might want to buy using the services of a small regional broker, and sell using the services of a dominant/more institutional broker to squeeze out some more value from the transaction
To the RE investors at various shop sizes and sub markets, what do you guys think about this?
I mean in theory this makes sense if you assume a smaller broker will have a limited reach (less buyers to compete with when acquiring) and possibly be unsophisticated enough to make a mistake in pricing (sell at a discount). In reality I don't think it necessarily plays out this way, and is probably pretty rare for a deal large enough for an institutional broker to be sold by a smaller/regional shop. Anecdotally in my market, the dominant small/regional brokerage only gets maybe a couple listings per year in the $20mm+ space which is about the bare minimum starting point for CBRE/JLL/CW, and those deals always get a ton of attention and have very aspirational pricing guidance.
I disagree with that view. There are plenty of local / regional shops that do a lot of volume. JBM in Florida, ABI in Phoenix, the Deaton guys in the Carolinas, Kirkland in Nashville, etc. if you buy a deal from a regional and list it with CBRE, JLL, newmark, etc….good luck getting the first look at any of their future off market deals. You’ll just be another irrelevant acquisitions guy buried on everybody else’s distribution list. Word travels fast if you mistreat a broker. We’re competitors but we all talk
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