I’m selling my property and the listing agent won’t negotiate below a 4% commission. My property is going to be listed at 15M, so fee will be 600k. I will 1031 into NNN or DST properties on a all cash offer. 600k is very difficult to give up after a lifetime spent as a LL. Instead, would u advise me to find the buyer myself and do seller carryback with a 10% downpayment? Downside is I’d lose the ability to do 1031 & buyer not wanting to relocate to my boring area of the country.

I sold an apartment complex that was almost paid off. I listed the property for sale by owner on an investor web site. I got lots of calls.

Since there was no broker/agent, I saved myself the 6% commission. Since I was offering financing, i was able to get an over market price. Why? Because the buyer didn't have to pay points and fill out loan docs. I only asked for 4 years tax returns and permission to run their credit. I also got several bank statements. This was an experienced landlord.

I asked for a 15-20% down payment. The loan had a 10 year pre-payment penalty so they wouldn't pay off the loan so fast.

Since I accepted less than a 29% down payment, this was now an installment loan. The monthly payments were 95% interest and a few percent in principal.

I did not have to pay recapture on my depreciation on the entire amount, only on the down payment. I deferred my long term capital gains tax and state tax.

So I saved myself the 6% commission and got 2% over market value. My buyer put down 15%. I had the insurance put in both our names and the insurance company, if the premium wasn't paid by the new owner, I got notified and was covered for 30 days after they gave me notice.

After 10 years the buyer paid off my loan. It was like I got twice the price because the interest rate at that time was 9.5%.

LL.

You are mixing two issues.

1. Commission

2. Financing

Commission: I don't know about high priced properties and commissions. Shop around for brokers.

Sure you can try to sell it yourself but be willing to put in the time and money to advertise it.

$600k is a lot of money BUT you are dealing with $15mill. ONE good prospect can earn this money back for you. A GOOD broker will earn this for you. Buyers look at FSBO and automatically deduct 6%.

How desirable is the property? What type? Existing clients for such a property?

Financing: Offering financing can sweeten the deal but there are tons of laws you must follow. And $15Mill buyers have fancy pants attys who might know how to snatch the propery from you.

Selling on installment CAN bring in more money but you lose the 1031 option which is worth A LOT.

Interested in hearing more!

BRAD

I bought my home for sale by owner, and i bought my first apartment building for sale by owner. both times, i felt since the seller is saving commission, i should get a better deal.

I sold another apartment building for sale by owner, but i stood firm in a tight market and managed to get top dollar for it, with no commission.

6% commission sounds high for a $15M property. shop around. is this a national brokerage company that specializes in commercial properties? there's a few of those around and they too negotiate.

oops. i thought you said 6% commission... not 4%. that sounds a little more reasonable. then again, it depends who the listing agent is.

it’s a classB property, basically a whole subdivision of duplexes, vacancy rate of 2% very steady, wife runs the office, i do maintenance/rehabs with 2FTE, have nice shop,van,pickup,trailer. I bot first rental ‘85 senior in high school, kept trading up, don’t owe bank much. Wife wants 1031, got to convince her to find the right person and do seller financing, save 600K + plus sell at or above asking price. Mrlandlord is probably best place to a find honest, hands on investor that has 1M for downpayment. If the buyer has experience, It would be difficult to screw up.

1. List with a broker or FSBO? - Only you know your capabilities and shortcomings. If you list it with a reliable broker, find one who will take less than 4%. At this price level, 1.5% to the selling broker and 1% to the listing broker make more sense. If you go FSBO, you better know how to do it so you are taken advantage of by some shark. Remember SSS: seller selects services - don't let the buyer take control of your escrow.

2. Are your rents at full market rate or below market rate? Will the buyer be able to jack up the rents without losing tenants?

3. Financing: If you provide financing, know your buyer(s) past well.

4. There is a chance that your buyer(s) will come from out of state. Stay on top of the verification process on every detail. Make sure your buyer(s) are keeping up with providing documents on a timely manner.

5. Let us know how you're doing.

Since this is a group of duplexes in a subdivision can't you parcel them out and sell individually, or in packages of 2, 4, 6, 8, etc. buildings?

Keep in mind that 3% of that 4% is going to the buyer's agent. Even if you weren't using an agent, but the buyer did, you'd be paying that anyway. If that's the market rate, you really don't want to undercut the buyer's rate.

The listing agent will only receive 1%. Granted that's $150,000, but the agent doesn't get all of that. The broker takes their share first so that agent may be getting $75,000 to $125,000. Also keep in mind a $15M property will probably be on the market a longer time than typically priced properties so they're going to have to show and promote it more and that means their expenses may be higher.

Before you decide to reject the agent, ask for a breakdown on their expenses and how the commissions will be split. You might find that it's not that out of line.

Also, if doing it yourself prevents you from doing a 1031, how much would you lose in taxes vs paying the 1%? I bet the difference would be worth paying to sell quicker and have less hassle.

Get a call into your local banker and let him know you are considering selling. He might have someone lined up looking to buy. At that price point, you will be dealing with a seasoned investor.

NNN properties are selling with rather low cap rates. It will be difficult to step down to a 6% rate. If you are considering doing a 1031, now is the time for you to find a replacement property or properties and take control of them via an option.

You might want to consider listing it on loopnet yourself. The problem is for a mere 4% you will be getting a person who can act as a buffer for you. If you sell it yourself, I am not so sure.

Perhaps you can offer 4% if it is sold within the next 4 months and 3 if it takes longer to get an offer. You will want an incentive for proper behavior.

Also offering a seller assist of $$$ with an accepted offer on or before the next 45 days, keeps the offers to you honest.

If I had a 15M property with no mortgage, I would be very tempted to just keep it and have a company manage it for me. Yes, they will not do as good of a job as you would, but the money you stand to lose ($600,000) seems like it would be way more than the losses using a management Co.

Keeping it would also eliminate the higher risk on a NNN commercial property which may not be doing too well right now and in the close future. The internet is killing several sectors of commercial properties (non-residential).

I once had my 12 unit FSBO and I offered something like $10,000 commission to a buyer's agent. I did get as buyer right away and they had an agent who was willing to take the lower commission.