Selling an apartment building is a big step and you need to get it right, because every little misstep can cost you millions of crowns.
Let's go over a few key points to think about.
SELLING ALONE OR WITH A REALTOR?
Selling apartment buildings is a specific discipline. If you don't have a database of relevant investors yourself, selling will not be easy for you and the audience of investors you reach is likely to be insufficient.
An experienced seller has a wealth of contacts and knows how to work with them, can push offers against each other to get the best price for you, and can also help you filter out unpleasant pressures from buyers on price and terms.
HOW TO CHOOSE A GOOD SELLER
Ask what commercial real estate sales broker has implemented.
Even a great condo salesperson may have minimal experience selling condominiums.
For large chain real estate, ask about the sales of a particular broker over the past year or two, as that is all that is relevant. A good salesperson will also be happy to let you talk to clients to whom he or she has sold houses and will be happy to boast about how many relevant buyers he or she has and how much he or she has sold.
It's just like a date - chemistry and trust between you and the broker is also important. If there's a red light flashing somewhere in your head and the broker just doesn't fit, keep looking. After all, you're going to be spending a lot of time with this person over the next few months, so don't let it be a hassle...
PUBLIC OR PRIVATE?
So we'll put it on the internets and it will be or not?! Personally, I am involved in the private sale of investment properties and I am convinced that, especially for apartment buildings, hotels and other leased commercial properties, this is the way to go and I will tell you why.
Negatives of public sale:
▪️ Lease relationships are disrupted, tenants become concerned about a place to live or do business and start looking for new premises.
▪️ You start to get bombarded by all the brokers on the market who don't have many offers and need to pull offers from the market, often without your mandate they will start offering the property... I have even experienced comical situations where a broker tried to sell the seller his own house.
▪️ The offer will become "famous", in this segment discretion and exclusivity is of great value, things that everyone already knows are of no interest to anyone.
DETERMINING THE SELLING PRICE
Determining the price is not about feelings and who would want how much, but about accurate calculation and thinking through the potential of the house.
When determining the price, I look at the following angles:
▪️ pricing by square footage and current market prices,
▪️ pricing according to other similar offers on the market (but I don't mean the ones from Srealit 🙂 ),
▪️ valuation according to actual revenues,
▪️ next and absolutely key is to look for other ways to improve the selling price, so you need to know both the property and the economics of the house well.
HOW TO LOOK FOR FURTHER SCOPE TO INCREASE THE PRICE
▪️ rent increases
▪️ splitting the space into smaller ones
▪️ renting to a different segment of clients, e.g. short term stays instead of long term stays, students etc. Each house may 'economically suit a different clientele'.
▪️ completion of a house, courtyard, whether it is an idea, an architectural study or obtaining a building permit
▪️ the potential for selling off units
▪️ sale to a client who has a sentiment for the location or architecture
▪️ relicensing for another purpose
Unfortunately, some brokers in an attempt to please owners will also 'shoot the price' well above reality, with the understanding that they can then go down in price.
I consider this technique to be unfair, the result is that the offer becomes "famous on the market" and no one will buy it at an unrealistic price anyway.
This then leads to another significant price reduction and the effect of old meat on the counter... Nobody wants to buy what everyone already knows and if they do, it's at another discount. The weary owner then often nods at a price tag many percent lower than what he would have gotten at the correct price.
Jan Halíř
Specialist in private sales of commercial real estate in Prague, especially apartment houses, hotels and building plots. He is distinguished by a discreet approach without public advertising and personal negotiations with clients.
With many years of experience in the industry, he has completed deals worth billions of crowns. Unlike large real estate agencies, he deals with each sale personally, which allows him to provide a personalised approach.
Thanks to his excellent knowledge of the Prague market and direct contacts with property owners, he is able to negotiate effectively and maximize prices for sellers.
