Hiring the Right Broker to Sell Your Multifamily Property
Whether you’re planning to sell a duplex, small apartment building, or mid-size or larger apartment complex in the Bay Area, one of the most important early decisions you can make is choosing the right multifamily property broker.
Selling an apartment building isn’t like selling a single-family residential property. Their sizable property values attract a different kind of buyer: multifamily buyers are investors. That changes the sales strategy dramatically.
Hiring the right multifamily broker has a huge impact on everything from how the building is marketed to pricing and the success of the transaction.
In the highly competitive Bay Area, the right multifamily brokerage will have more than just in-depth knowledge of the local market and its complex regulations, and access to the right network of buyers.
What Does a Multifamily Property Broker Do?
A multifamily property broker specializes in the sale of apartment buildings and other residential income properties. These include 2-4 units and apartment buildings ranging in size from a handful of units to large complexes with dozens of tenants.
Unlike a typical broker who specializes in selling residential properties to individuals and families, a multifamily broker sells an investment asset. That means there is a long list of additional factors for potential buyers to consider.
A buyer in the market for an apartment building will want to evaluate the potential rental income, the operating expenses, net operating income, the current occupancy, any deferred maintenance projects, and the potential to expand or add value to the property.
Preparing a multifamily property for sale requires a professional who can wear many hats. They must be a valuation expert, a marketing specialist, an expert negotiator, and a transaction manager, all rolled into one.
When you find the right multifamily real estate broker, those skills will help you maximize the sale price and minimize transaction risk.
Why Multifamily Property Sales Require Specialized Knowledge
Single-family homes are typically valued based on the sale prices of comparable properties. Because they are investment properties, apartment buildings are priced based on market and income approaches to value.
A multifamily unit’s value is based on:
- Net Operating Income (NOI): The income remaining after removing operating expenses
- Capitalization Rate: An estimate of the buyer’s expected return on investment. Calculated by dividing the NOI by the property’s purchase price
- Rent Roll Analysis: A breakdown of all tenants, their rents, leases, and overall occupancy
- Upside Potential: Buyers want to know the unit’s potential for renovation, adding ADUs, and increasing rents
- Regulatory Environment: California has heavy regulations to consider, like rent control ordinances, just-cause eviction laws, tenant protections, and seismic requirements
These are all areas where a traditional real estate agent may not have the skills to guide a successful transaction.
In cities like San Francisco and Oakland, buyers are likely to conduct extensive due diligence on a property, including rent control restrictions, tenant protections, and permitting issues. Brokers with a deep understanding of local regulations help sellers identify potential issues before they jeopardize a sale.
Why Sellers Need a Multifamily Broker
Without the right apartment broker, property owners risk underestimating the market and demand, and underpricing their property. Likewise, without someone who understands the local market to guide the sales process, they risk overvaluing their property and delaying the sale.
Pricing mistakes can cost sellers tens or even hundreds of thousands of dollars. An experienced apartment broker leverages their knowledge of the local market, including recent apartment sales, current cap rates, and neighborhood trends, to accurately price a property.
Multifamily brokers also have access to a deeper network of qualified buyers. Agents who regularly sell multifamily property know which private investors and investor groups are actively buying. Many transactions they handle never reach public listing sites because the top multifamily brokers can position properties to the right people. Often, buyers purchase multiple buildings over time and build deep relationships in the market.
Marketing is another area where working with a skilled apartment building broker makes a difference. Professional marketing for multifamily properties focuses on income potential, expenses, and cap rates. That differs significantly from the marketing package of a single-family residence.
The top multifamily brokers are also diligent negotiators. They understand that the highest offer isn’t always the best offer. Experienced multifamily brokers evaluate offers across multiple factors, including the buyer’s experience as an operator, financing strength, closing timelines, and contingencies. That helps sellers avoid deals that can potentially fall through later.
What to Look for in a Multifamily Real Estate Broker
The most effective multifamily real estate brokers will possess a specific skill set.
Market Knowledge
The Bay Area real estate market is complex. Investor demand and cap rates can vary dramatically between neighborhoods. Your broker should understand market trends and the potential for rent growth.
Financial Analysis Skills
Investors purchase multifamily properties for their investment potential. Top multifamily brokers can help maximize a property’s market value by presenting its income performance and future potential. They understand how both buyers and lenders evaluate cash flow, and can position the property accordingly.
Negotiations Experience
Selling an apartment complex involves a substantial sum of money. Buyers will try to negotiate price drops due to inspection findings. Multifamily brokers can negotiate with buyers, often framing deferred maintenance issues as value-add opportunities for the buyer. They can also leverage their buyer networks to field multiple offers, raising the price for the seller.
Regulatory Knowledge
The Bay Area is massive, but regulations can vary widely across regions. A broker should know how rent control laws, tenant protections, and local housing policies differ between San Francisco, Oakland, Berkeley, and other areas.
Industry Relationships
The top multifamily brokers have cultivated industry connections with investors, lenders, attorneys, and property managers over years of experience. That kind of familiarity can help sellers spend less time in negotiations and accelerate transactions.
Why CCIM Designation is a Difference Maker for Multifamily Property Brokers
Many multifamily brokers have training and experience, but few hold the Certified Commercial Investment Member (CCIM) credential.
CCIM is a highly respected professional credential granted by the CCIM Institute. It demonstrates that a broker is a recognized expert in commercial and investment real estate, capable of evaluating properties at the level of institutional buyers or banks.
Holders of this credential have been highly trained to understand the investment side of transactions, not just sales. They receive advanced training in areas like investment analysis, market analysis, financial analysis, commercial valuation, and commercial real estate strategy. Candidates must also submit a portfolio of experience demonstrating they have closed millions of dollars in commercial real estate transactions.
Only a small percentage of brokers ever earn this credential. When you work with a broker who holds a CCIM designation, you gain access to an industry professional with an extensive track record of closing high-value deals.
CCIM holders also have access to an exclusive network of thousands of commercial real estate professionals worldwide, which can create additional opportunities to connect with qualified buyers.
Why Work With Edrington & Associates to Sell Multifamily Property?
When it comes to multifamily brokerage in the Bay Area, few brokers can meet the experience and qualifications of Edrington & Associates.
Led by Steve Edrington, Edrington & Associates has spent decades specializing in the sale and purchase of multifamily properties in San Francisco, Oakland, and the surrounding Bay Area.
Steve’s experience extends beyond basic brokerage. As a CCIM designee, certified property manager (CPM), and licensed contractor, he brings a unique skill set to multifamily transactions that most traditional brokers cannot match.
This rare combination gives Steve the ability to evaluate a property’s income and investment potential as an investor would. His qualifications also enable him to evaluate the operational performance, physical condition, and market value of a multifamily property from an industry professional’s perspective.
In addition, Steve holds a California Class B contractor license. He has personally overseen more than 50 rehabs and can identify renovation and deferred-maintenance opportunities, as well as value-add construction. Those are skills that pay off during buyer negotiations.
Through Edrington & Associates, Steve has served as an expert witness in landlord-tenant disputes, standards of care, habitability issues, and other real estate litigation. That experience gives Steve a unique perspective on the risks and regulatory issues that multifamily property owners face.
When you choose to work with Steve Edrington as your multifamily real estate broker, you get a comprehensive skillset that is unique in the sale of multifamily property in the Bay Area.
Edrington & Associates: Unmatched Experience in California Multifamily Property Sales
Selling a multifamily property in the Bay Area requires a completely different approach than selling a residential home.
To maximize your value and reduce risk, you need an expert who not only understands the complexities of Bay Area markets but also understands how investors evaluate properties.
Contact Edrington & Associates today to discuss your property and sales goals. We can work with you to position your property with the right buyers and provide the comprehensive guidance you need to ensure a smooth, profitable transaction.
Steven Edrington, California Licensed Real Estate Broker #01129470 Equal Housing Opportunity.