New tools give investors and brokers better options
Selling commercial real estate off-market used to mean relying on who you—or your broker—knew. Your best bet to get a great deal from a vetted buyer was working with a seasoned broker whose network was well honed. They could get your off-market listing in front of the right people and play matchmaker for you. And while that’s still an option, it’s no longer your only option.
Just like in the dating world, algorithms have opened the doors to possibilities beyond old-school matchmakers. You’re no longer limited by your network and can reach new buyers through new tools. And with that, you can take advantage of key benefits of selling off-market.
Key Benefit #1: Discretion
For any number of reasons, you might not want to advertise your sale to the world. Angry tenants come to mind. Nosy competitors. Potential effects on other deals you might be working on. Or maybe you just want to discreetly dispose a piece of your portfolio that’s no longer working in your favor.
You might find discretion particularly valuable if the price you’re able to get isn’t where you feel it should be. If you explore an off-market sale, are dissatisfied with your options, and decide not to sell, no one’s the wiser. But if you market publicly, a public record of that listing sticks around, potentially reducing the value of your asset in the long term.
Whatever your reason, selling off-market lets you keep your sale quiet. No one needs to know but you, your buyer, and any brokers involved in the sale. (And, well, eventually you will need to tell those tenants, but there’s avoiding that one.)
Key Benefit #2: Keep More of the Sale Price
While there’s a case to be made for broadly marketing your property to get the best possible deal, there are also costs involved. Not only do you have the cost of managing a public sale, with the risks to your asset’s value we’ve already discussed, but you have fees. These include listing fees and your sell-side brokerage fees.
Now, a broker can be a valuable partner, and only you can decide whether their services will help you get the best deal. But with new technologies on the market, you no longer need a broker to sell your real estate off-market. If you decide to take advantage of these opportunities—say, with Archer, for example—you could potentially keep 1% or more of the sale price (more for smaller deals), which can affect net proceeds by 2-5% or more after debt. (Archer has no fees for sellers, but we’ll get to that.)
Key Benefit #3: Fast, Efficient Process
When you sell off-market, you get to move quickly. Avoid the long, drawn-out processes involved in selling a fully marketed listing, including myriad conversations with prospective buyers who don’t work out and showings that disrupt your (and those tenants’) lives. And to that point…
Key Benefit #4: Avoid Unqualified Offers
Selling off-market means you get the opportunity to vet a prospective buyer before entering any interaction with them. You won’t be subjected to unqualified offers because those would-be buyers won’t have access to your listing. There won’t be a listing for them to access. There will only be you, your qualified prospective buyer, and any brokers involved in the sale.
How to Sell Off-Market Successfully
Not all off-market sales are created equally. For the best chance of success, make sure you do a few key things:
- Get the right buyers from the start.
- Create urgency.
- Remove friction.
Let’s talk more about each of those and how Archer can help you make them happen.
Getting the Right Buyers
Your perfect buyer is out there looking for an asset just like yours—and the capital to close a deal. You just have to find them.
A broker’s network is a great place to find buyers, and as we’ve mentioned, it’s no longer the only option. Technology has opened up the world of buyer and seller matchmaking. With our proprietary algorithm, we’re able to identify potential buyers from our network of more than 40,000 prospects. And not just any potential buyers—those most suited to your specific deal, based on information we know about their needs and your asset. Our technology can reach into this database and pull out a match made in algorithmic heaven. That said, we won’t narrow the field too far because you need urgency.
Creating Urgency
Finding the single, perfect prospective buyer for a property is great. Wonderful. Incredible. Until that buyer feels no urgency, hems and haws, prolongs your process, and eventually backs out of the deal. (Ouch.) That’s why you need competition.
Competition breeds urgency, which moves a sale forward. If someone feels like they might miss out, they’re more likely to close more quickly. So even though Archer could find you the single best perfect investor for your deal, we find you several of the top qualified investors instead. It’s how we make sure there’s a little fire under their bellies.
Removing Friction
Acquisition teams need the right information to pitch to their investment committee. Pulling this information together can be quite time-consuming and laborious, but Archer’s Automated Underwriting, Benchmarking and Comps streamlines that process by aggregating, compiling, and synthesizing all the data acquisition teams need. This helps the team respond quickly and confidently with realistic pricing—and get the deal over the finish line faster.
Try Archer Risk-Free
If you’ve been thinking about potentially selling your commercial real estate—or if you’re a broker with an off-market or pocket listing looking for the right investors—you can try Archer with no risks or obligations. There’s no fee or obligation on the sell-side. All you have to lose is a few minutes of your time.
With our automated underwriting, we’re often able to get a reliable estimate of NOI without any need of financial statements or rent rolls. And with our targeted network of buyers, we match the property to the right buyers and respond with interest in less time than it would take you to put together materials required for an offering memorandum to be produced.
