Why Use a Broker?
Why should you use a broker when you decide to sell your marina? We are a nation of do-it-yourselfers. Nowhere is the do-it-yourself (“DIY”) phenomenon more evident than in the home improvement market where Joe Homeowner decides to tile his bathroom, build a deck, or install new fixtures without a contractor. Whole television shows have been built around the DIY movement. While self-satisfaction of a job done right is one of the driving forces, the real key motivators for many homeowners is saving money and maintaining control of the remodeling process.
Marina owners as a rule are a self-reliant, entrepreneurial bunch. So, it is no surprise that some owners take a DIY approach to selling their property rather than retaining a marina broker to market it for them and represent them in the process. In general, the DIY approach means selling the marina to someone who has approached them with what they think is a good price. The motivations are very similar to that of the DIY homeowner. Unfortunately, based on conversations that we have had with marina owners who have tried to sell their marina by themselves, the result is often money left on the table or, just as bad, transaction that does not close at all. Many express regret not having used a marina broker.
When a marina owner tries to sell his marina directly to one buyer he ignores the fact that buyers have an opposing interest in purchasing the marina at a favorable price to them and under their terms. Most significantly, a direct sale removes an important element of the process; the threat of losing the marina to competition.
So, why use a broker?
When we market a marina for sale it is a signal to prospective buyers that they are in a competitive situation and need to put their best foot forward when making an offer. This reflects the fact that when we take on an assignment to sell a marina on behalf of an owner, several important results occur that answer the question, “Why use a broker?”:
- We become a promoter of the property to buyers highlighting the positives of ownership and the potential upside. Just as important, we try to anticipate and mitigate the ways that buyers can diminish value.
- We underwrite a seller-favorable NOI that is credible and can be defended in the marketplace resulting in a higher sales price and net proceeds to your, the seller. Because of our expertise in evaluating marinas we have developed a keen sense of what is a reasonable expense and often uncover charges that can be adjusted in the seller’s favor.
- We get buyers excited about the opportunity by developing a credible pro forma business plan and five-year projection to shows the future cash flow of from the marina. This allows us to push value and also helps us maintain the price during the due diligence process if an issue comes up.
- We exposure your property to the widest possible range of buyers. This is important because not every buyer underwrites the same or has the same return requirements. For example, some buyers underwrite with a management fee in expenses, while others do not. This can have a wide impact on the price the buyer is willing to pay. As an example, we just put a property under contract after a process whereby both national buyers and local buyers competed. The winning buyer, a local owner, offered significantly more than the national buyers due to the difference in underwriting and return requirements.
- We qualify buyers to determine whether or not they have presented an offer that they can actually perform on or are just looking to tie up the property while they raise capital to close.
- We obtain back-up offers to help reinforce the competitive nature of the process and hold buyers to doing what they say they are going to do.
- We use our experience in negotiating the terms of the due diligence process and contingencies so that the transaction has the highest probability of closing.
- We manage the due diligence and closing process constantly reinforcing with the buyer the future opportunity and minimizing any attempts to re-trade the price.
- We act as a buffer between the seller and the buyer so that emotions do not derail the sale.
By creating a competitive marketplace for your marina we are able to deliver the best price, best terms, and certainty of actually closing.
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Published October 19, 2016