Once you decide to sell your apartment building, the next big question is how. Most owners have two main choices: list the building with a commercial broker, or sell it directly to a buyer.
I’m a direct buyer myself, so you might expect me to say a direct sale is always best. It isn’t. Both approaches work, and the right one depends on your building, your timeline and what matters most to you. Here’s an honest look at each.
How listing with a broker works
A commercial broker markets your building to as many qualified buyers as possible. A good one will:
- Help you set an asking price based on your income, expenses and recent sales
- Prepare an offering package with photos, your rent roll and financials
- Market the building to their buyer list and on listing sites
- Arrange tours and handle questions from buyers
- Negotiate offers and manage the deal through closing
In exchange, the broker is paid a commission at closing, usually a percentage of the sale price.
The advantages of a broker
More buyers competing. When several buyers bid on the same building, the price can go up. That’s the biggest reason to list.
Expert pricing. An experienced multi-family broker knows what similar buildings in your market are selling for.
Less of your time. The broker handles the marketing, showings and much of the back-and-forth.
The drawbacks of a broker
It takes longer. Preparing the listing, marketing it, collecting offers and getting through a buyer’s financing usually takes months.
Deals can fall through. Many buyers need a loan. If their financing or appraisal comes up short, the deal can collapse late in the process, and you start over.
Commissions and costs. You pay the commission, and often some closing costs too.
Tours and disruption. Multiple buyers walking units can unsettle tenants and take your time or your manager’s.
Less privacy. A listed building is public. Tenants, employees and competitors may hear about it.
How selling to a direct buyer works
A direct buyer is someone who buys buildings for their own portfolio. Instead of marketing the property, you talk to the buyer, share your information, and get an offer.
When I buy a building, the process is simple. The owner tells me about the property. I review the rent roll and financials, ask some questions and visit the building. Then I make a written cash offer, and if it works for the owner, they pick the closing date.
The advantages of a direct buyer
Speed. With no listing period and no loan approval to wait on, a cash sale can close much faster.
Certainty. A cash buyer doesn’t need a lender’s approval or appraisal, so fewer deals fall apart at the last minute.
Lower costs. There’s no listing to pay for. Some direct buyers, including me, also cover closing costs.
Any condition. A direct buyer who buys as-is will price in needed repairs, so you don’t have to fix the building first.
Privacy and less disruption. One buyer, one visit, and no public listing.
The drawbacks of a direct buyer
Fewer competing offers. If you only talk to one buyer, you don’t see what the wider market might pay. That’s the honest trade-off.
Buyers vary. Some direct buyers are experienced and fair. Others make low offers hoping a tired owner will accept. Check a buyer’s track record and ask how they arrived at their number.
Which is right for you?
A broker often makes sense when:
- Your building is in good shape and fully leased
- You aren’t in a hurry
- Getting the highest possible price matters more than speed or certainty
A direct buyer often makes sense when:
- You want to sell quickly or on a specific date
- The building needs work, has vacancies or has tenant problems
- You want privacy and as little disruption as possible
- You’ve had a deal fall through and want certainty this time
You don’t have to choose just one
Many owners do both. You can ask a direct buyer for an offer before you list, so you know your floor. If you already work with a broker, you can also have them bring offers from direct buyers. I welcome brokers, and I’m happy to work with yours.
Questions to ask any buyer
Whichever way you go, ask every buyer:
- How will you pay? Cash, or a loan that still needs approval?
- What contingencies are in your offer? Fewer contingencies mean more certainty.
- How long until closing? Get a date in writing.
- Who pays closing costs?
- Have you closed on buildings like mine? Ask for examples.
Get a cash offer on your building
I buy apartment buildings of 5 to 100 units across the Southeast, in any condition. I pay cash, close fast and cover closing costs. Brokers are welcome.
Not ready to sell yet? Download my free guide, Selling Your Apartment Building. It shows you how to put together the rent roll and T-12 every buyer asks for. Get the free seller’s guide →
Ready to talk? Tell me about your building →