Just wondering why only the crappy offerings are on brokerage sites/loopnet while all the primo core stuff is sold by the same firms. Does this have something to do with the way brokerage teams compete with one another? Is it in their best interest to keep the good deals to themselves? Don't see how the industry will become any more transparent even with all the software/data available these days if every decent deal is off-market/hush hush.
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Less to do with brokerage competition and more to do with the process that most investors want to run on their deals, For our shop, it is because I don't want every Tom, Dick, and Harry poking around my $100m deal. I want institutional quality brokers to run an auction process and get me the best price, but I also don't want the fact that I'm selling my building on the front page of the local paper. The broker is the gatekeeper, he/she generally qualifies people and knows who is looking for what and how to make a market. I don't want someone with a Gmail account downloading our financials and what not. If I miss by $100k or whatever because some random yahoo didn't see the deal on loopnet... whatever.
To echo the above comment, our firm would never allow mass distribution or online posting of a listing of an asset we are selling. We hire Easdil/CBRE/Newmark/CW (actually have used all over the years) because they have direct connections to the buyers who can credibly bid on and close on assets have exceeded $500 billion in gross selling price at times. We want a private, well managed auction process where bidders are invited, screened, and then submit initial bids and are then invited into future rounds and eventual negotiation.
Random buyers from Loopnet are not going to be real buyers, so why share info online for competitors and randoms to see? When new buyers emerge (which happens often, especially with foreign buyers), they present themselves to the major IS brokerages and they screen them for us. Part of why 'acquisitions' is a skill, getting qualified to bid on large scale assets is not automatic.
Fair enough, but I know for a fact there is a large pool of qualified buyers/family offices/foreign investors who may not necessarily have relationships with every brokerage but could provide tons of liquidity to the market if the veil was pulled back a little.
I just think that confidentiality is overrated (avg income and expense data are public knowledge) and it would serve the industry well to have a little more more transparency when it comes to listings.
If liquidity becomes an issue for an asset or market, distribution and marketing (including via online means) is always an option. But again from the seller standpoint, price is only one variable in the equation when selecting a bidder to enter contract negotiations with. Certainty of execution, reputation for retrade, reliability, and similar factors play in. The 'highest bidder' isn't always the winner for this reason.
As a seller, we have to organize tours, participate on calls, and respond to questions of buyers during the pre-bid phase. That is time consuming and we wouldn't want to respond to request for unqualified buyers. Brokers will do the first round for sure, but they want to talk to us soon enough. The 'qualified bidder' list that each IS brokerage maintains is purportedly huge, if one of those groups deserves to be on it, the bar isn't that high. Again, I am speaking from the world of assets that price $100 million and above. Beneath that is far more wide open, but even above $20 or even $10 million can benefit from curation of a buyer list. People are not out just buying $20 million dollar properties off loopnet, if that was good place to sell, those assets would all absolutely get listed there.
Another point to consider is that if the property is attractive enough, a top price should be able to be achieved through a competent brokerage run auction process. Most qualified buyers for great properties are already known personally by the brokers, and the property has no real need to be taken to open to expose it to a bunch of looky-loos and tire-kickers.
We typically structure our commissions in a way that we make more and the owner pays less commission if we do it in-house (i.e. 4% total fee co-op 2% buy side/2% sell side, vs 3% total fee to us for in-house where we also bring in the buyer). It's easier to get the deal done in-house, requires less marketing/costs, and so long as the brokerage does it's job correctly, shouldn't be taking any discount on pricing. Given this situation, there is real incentive for both the owner and broker to never take it out to open market. This is all easier to do on larger, institutionalized deals than smaller deals so sometimes decent smaller deals can pass through the cracks, but typically the only deals you see online suck because of these incentives and processes.
What size deals are you charging 4%-3% on? Institutional commissions max at like maybe 50 to 75 bps (and sellers won't pay a co-op fee), larger deals more like 25 - 40 bps.
It’s mainly because the amount of people that can buy a deal that size is small, and we realistically already know a number.
Another thing is that we don’t want to waste our time with unvetted buyers and brokers. My team literally today got notification from one of our clients that a garbage tier broker was advertising a listing of ours saying to reach out to him as he’s “cobrokering” with us. Guys like that can really sideline a deal because they start telling prospective bidders one thing, when it’s totally not true. We stay confidential to control the narrative.
For multifamily, we don’t want our property management team knowing the property is on the market before they have to. Once they do, they start looking for new jobs and care less on keeping residents happy.
If tenants or potential renters learn the property is on the market because some idiot from LoopNet starts calling the property or worse going on site and asking questions, leasing will be hurt and that could spiral.
Idiots from LoopNet: Not REPE
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