How to Choose a Broker to Sell Your Apartment Building: 7 Questions to Ask

The broker who quotes you the highest price is very often the one who will sell your building for the least.

It is called buying the listing. It is the oldest move in this business, it still works, and it costs owners months.

And yes, I am a broker telling you how to evaluate brokers. Take that for whatever it is worth, and then use the seven questions anyway. On me included.

The two least predictive variables

Here is how the choice usually gets made. Three brokers come in. Each one gives a price opinion and a commission rate. The owner picks the highest price opinion and the lowest rate.

Those are the two least predictive variables in the entire decision.

A price opinion is a number somebody said out loud in your kitchen. It carries no obligation whatsoever. Commission rate is real money, but it is a small fraction of the money at stake.

What actually determines your outcome is buyer access, marketing depth, and whether the broker can defend your numbers when the buyer’s analyst comes after them.

None of those show up in a listing presentation unless you ask.

Ask each broker to send you the comps behind his number, in writing, within 24 hours. The one who has already done the work sends them the same day. The one who guessed sends you something general, or sends you nothing.

How the market reads a number in the first place is in How to Price an Apartment Building: The 3 Values.

First, decide how you go to market

There are three paths. Pick the path before you pick the broker.

1. Full on-market. Everybody sees it. Maximum price discovery, maximum competition. The trade is exposure. Your tenants may find out. Your staff may find out. And if it does not sell, everybody knows that too.

2. Quiet off-market. A short list of known buyers. Confidential, fast, less competition, and usually a slightly lower price in exchange for that convenience.

3. Limited call for offers. A curated group, a deadline, sealed offers. You get competition without full public exposure. For most small buildings with a clean file, this is the underused option.

Which path is right depends on your motivation, not on what is easiest for the broker.

Second, look at a real marketing package

Ask to see a real package from a recent deal. Not a sample. One that went to buyers.

It should contain seven things:

1. Reconstructed financials, with every add back documented.
2. A current rent roll.
3. Unit mix and floor plans.
4. Capital improvement history, with invoices.
5. Submarket data.
6. A clear value-add thesis.
7. Professional photography.

If what you get back is a one-page flyer and a spreadsheet, expect flyer-level offers. The package is the argument for the price, and a weak argument gets negotiated.

Notice how much of that list is cleanup work you do before the building ever goes out. The cleanup is not separate from the marketing. It is the marketing. That work is laid out in The 90-Day Financial Cleanup That Adds Six Figures to Your Sale Price.

Then ask one more thing: who actually writes the package? And who answers the buyer’s analyst at nine at night in week three? Sometimes that is not the person who pitched you.

Want to see what a buyer will see in your file? The Exit Navigator Scorecard puts the readiness questions on one page before any broker walks in.

Third, the seven questions

Ask all of them. Ask every broker the same seven, in the same order, and write the answers down.

1. How many buildings this size have you closed in this submarket in the last 24 months? Closed, not listed.

2. Who are my five most likely buyers, by name? Closed deals and named buyers are the buyer access test.

3. How will you defend my add backs when the buyer’s analyst challenges them? This is the test of whether the broker can defend your numbers.

4. What is your retrade rate, and what was your last one? This one matters most once you are under contract. Apartment Building Due Diligence: The 45 Days That Decide Your Real Price shows where retrades happen and what they cost.

5. Show me a marketing package from a comparable deal.

6. What do you do when a deal stalls in week five?

7. What happens if we do not sell?

If a number in a listing presentation is not backed by comps the broker will hand you on the spot, it is not a price. It is a bid for your signature.

Commission versus execution

Here is the arithmetic owners get backwards. The figures are illustrative.

• Commission: one point of commission on a $4 million sale is $40,000. Real money, and worth negotiating.
• Execution: a 5 percent difference in execution price on that same building is $200,000.

Owners will spend an hour negotiating the $40,000 and zero minutes measuring the $200,000. The first number is on a piece of paper in front of them. The second one is invisible.

The cheapest broker is not the same thing as the one who costs you the least.

Three price opinions, one outcome

This is a pattern I have watched more times than I would like.

Three brokers. Two come in within about 5 percent of each other. The third comes in 15 percent above both.

The owner takes the third. The building lists high. Two months, no offers. Price reduction. Another two months. Another reduction.

It finally trades below where the first two brokers said it would, five months later, with a stale listing history that every buyer can see. The high number did not cost him 15 percent. It cost him the five months.

Run the interview on your own building

Before any broker sits at your table, write down three things. Which of the three paths fits your motivation. Which of the seven package items your own file could hand a buyer today. And the seven questions, one per line, with space for every broker’s answer.

Then ask each broker for the comps behind his number, in writing, within 24 hours, and see who sends them the same day.

Thinking about a sale in the next year or two? Start with the Exit Navigator Scorecard. Then book a free 15-minute call and use the seven questions on me while you are at it.

Selling in Washington DC, Virginia, or Maryland? Read Selling a DC Apartment Building before you choose a path.

Frequently asked questions

Should I pick the broker with the highest price opinion? Not on that basis alone. A price opinion is a number somebody said out loud in your kitchen, and it carries no obligation whatsoever. If a number in a listing presentation is not backed by comps the broker will hand you on the spot, it is not a price. It is a bid for your signature.

What questions should I ask a broker before I list my apartment building? Ask all seven. How many buildings this size have you closed in this submarket in the last 24 months? Who are my five most likely buyers, by name? How will you defend my add backs when the buyer’s analyst challenges them? What is your retrade rate, and what was your last one? Show me a marketing package from a comparable deal. What do you do when a deal stalls in week five? What happens if we do not sell?

Should I sell on-market, off-market, or through a call for offers? It depends on your motivation, not on what is easiest for the broker. Full on-market gives maximum price discovery and maximum exposure. Quiet off-market is confidential and fast, usually at a slightly lower price. A limited call for offers gives you competition without full public exposure, and for most small buildings with a clean file it is the underused option.

Is a lower commission rate worth chasing? It is worth negotiating, but it is the smaller number. One point of commission on a $4 million sale is $40,000. A 5 percent difference in execution price on that same building is $200,000. The cheapest broker is not the same thing as the one who costs you the least.