- CASE STUDY -

WHY HIRE AN ADVISOR?

Let's talk about the value of representation

CASE STUDY

WHY HIRE AN ADVISOR

Let’s talk about the value of representation…

The Details

LOCATION

Kansas City, MO

UNIT COUNT

622

year built

1969 - 2003

 

MMG Real Estate Advisors encouraged seller to have a valuation completed on the property, which would help provide a pulse on the current market and a clear picture of how the property would stack up against the competition.

Instead the seller sold the property off market, unknowingly leaving a huge chunk of change on the table, all because he didn’t seek representation.

The Situation

There was a reasonably well-informed, seemingly business-savvy seller who wanted to unload a piece of multi family real estate. MMG Real Estate Advisors encouraged said seller to have a valuation completed on the property, which would at minimum serve to provide a pulse on the current market and a clear picture of how the property would essentially stack up against the competition.

Mistake #1: The seller decided to ‘save’ on fees and ultimately, elected not to move forward with completing an evaluation of the asset and his situation.  This decision is relatively risky for a multitude of reasons that we’ll do a deeper dive into with you a bit later, so just sit tight on that front for now. Now, back to the story.

Around the same time, the seller received an unsolicited offer from a well-qualified buyer who represented having a keen understanding of the competitive landscape. The buyer was a peer and a group with whom he had a longstanding, favorable relationship. Nonetheless, MMG Real Estate Advisors offered to review the bid on behalf of the seller. It was an incredibly polite way of saying: “Let us help you, to help yourself and avoid a robbery.” After all, this is our business.

Mistake #2: The seller declined to engage an advisor on the deal and instead, accepts the buyer’s offer. Together, they close the deal off market. On the surface, the seller saved on the broker fee. But here’s the thing: it ended up costing BIG money, to the tune of tens of millions of dollars.

Feeling successful for doing the deal solo, the seller unknowingly just left a huge chunk of change on the table, all because he didn’t seek representation. The reality is, almost any broker could have helped to avert this crisis. 

Let us further explain …

The Outcome

Behold, the advisor advantage.

Flash forward 12 months later. Over the course of the last year, new ownership completed moderate upgrades on the 600-unit complex. They then decided to sell the property and made the smooth move of engaging MMG Real Estate Advisers to champion the deal through the competitive bidding process, which inevitably proved to be a wise choice.

Here’s the reason why : as the exclusive advisor, MMG took the property to market with a carefully curated, strategic plan that garnered competitive bids from virtually every region of the country and get this, even the lowest bid that came in was still 43% higher than what the property had literally just sold for the year prior.

But here’s the real kicker : the ultimate buyer came in with a bid that was 69% higher, put down $1,000,000 hard at the execution of the offer and completed inspections in just 10 days (not contingent on the loan assumption).

The competitive environment clearly resulted in greater profitability, better terms, and a HUGE return on the investment that was perhaps the biggest deal the notably prolific buyer has done to date.

In a nutshell : Do yourself a favor and hire a broker. Trust us, you’ll thank yourself later.

 

12 months later, new ownership completed moderate upgrades and let MMG take the property to market. As a result, the lowest bid was 43% higher than the previous sale price, with the ultimate buyer coming in 69% higher with $1,000,000 hard at execution.

Key Takeaways

Bite the bullet and hire a broker to ensure you’re not leaving an enormous amount of money on the table. At the end of the day, you need representation. Don’t do a deal without being armed with the right info and most importantly, don’t be the guy who foolishly steps over a dollar to pick up a dime.

Let us help you expand your business and find your next opportunity.

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