Deal Stories: Pelham – Wellesley

THE SITUATION

After the sudden and unexpected passing of their father, two brothers immediately started receiving unsolicited offers, and calls from local apartment brokers active in the markets surrounding their family’s properties. They were surprised and even amazed at the values being proposed as they were much higher than anything they or their father had ever thought the properties were worth. Once they had a conversation going and had submitted the offers, the various local brokers attempted to gain control of the process through a false sense of urgency, and with little regard for their personal situation. 

The Other Broker’s Value Proposition:

  • I sell the most deals in your neighborhood.
  • Trust me, take this offer, just cut to the chase and save time.
  • This is one of the most active buyers in your area.
  • This buyer is totally overpaying; take the offer before they change their mind.
  • If you don’t take the deal you will be forced to list, waste time and probably sell for less money.

Unaccustomed to dealing with aggressive brokers, and with the nuances of the West Los Angeles apartment market, the beneficiaries were apprehensive and unsure of what the best course of action was.

Assignment

Advisory, Investment Sales

Approach
  1. Arbor performed an extensive valuation of the assets, including discount cash flow analysis, sales comps analysis, development analysis, loan sizing analysis and established current market value (CMV) for the assets. (The value was significantly higher than the “above market” offers they had received.)
  2. Arbor proposed a multi-tiered fee structure that directly aligned to the interests of the beneficiaries and our firm.
  3. Arbor reviewed title, and the due diligence held by the estate highlighting all inconsistencies within the files. With the owner’s investigation, a proper and correct due diligence war room was created that would allow a transaction to consummate with more certainty, fewer surprises, and reduced negotiation.
  4. Arbor executed a broad-based, structured, and accountable marketing campaign to all buyers and brokers in the local market, specifically targeting those parties who were in 1031 exchanges or those who were buying to hold property long term.
  5. Arbor engaged all unsolicited interest or their representation in the process.
Result

The Buyer Who Won the Deal:

  1. Completed all of his due diligence outside of escrow during the marketing process
  2. Opened escrow with no contingencies
  3. Closed without price renegotiation
  4. The beneficiaries NETTED after fees 13% more than the GROSS sales prices offered on an unsolicited basis by the local agents.

Note: Not one of the unsolicited offers ended up in the top 5 bids for the portfolio.

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