Provided by: Hilco Real Estate Sales
Having collected your due diligence items in preparation for a potential sale, most owners begin the broker selection process. That process takes many forms, from a sophisticated RFP to asking friends for referrals. Regardless of asset size and value, this is a critical step in maximizing the value and speed to value of the asset. Here are some considerations to keep in mind:
Of all items on this list, this one tends to be the clearest. If your course is valued above $2.5 million, you should choose a national firm. The logic is simple, local brokers specialize in selling to individuals, which lack the capital reserves to purchase a course beyond that valuation. Golf courses are rarely financed the same way as office, retail or multifamily property. National brokers work with these buyers on a regular basis and can quickly determine whether a potential buyer has the capital to execute the transaction.
- Specialist vs. Generalists
When identifying the top commercial real estate firms in the country, the list begins to enter a gray area beyond the top 5. There are many established firms utilizing a franchise model; while offices share the same name, they do not share information, clients, etc. They also tend to have advisors that have a general knowledge of the assets within a given geography. There are pros and cons to this type of entity, but corporate firms have teams that specialize in the sale of specific asset types. This model allows them to draw from the rest of the company nationally, for both potential buyers and sellers, which significantly increases their market knowledge and brings a much larger buyer pool to the transaction, maximizing value.
Reputation is a loaded word in this context and can mean different things to different people. I define it as a firm’s ability to professionally execute a transaction. The objective in choosing a trusted advisor is working with a professional that will achieve your mutually agreed goals. Often those are financially driven, but in some cases greater ideological objectives come in to play such as legacy and community; this can conflict with the financial side of the transaction. A true professional will set aside his own personal gains for the benefit of their client.
Once an advisor is aware of a potential seller’s “number”, it’s easy to make bold statements to secure a listing. A trusted advisor understands that the value of an asset is driven by the market. To understand the range of value, they will conduct their own analysis, underwriting and utilize their expertise to determine if that “number” is achievable. This creates alignment and extends through the transaction, beyond an initial agreement on price. Sellers should expect transparency regarding how the asset is being marketed, to whom, and what the feedback is, good or bad. If you don’t have total transparency throughout the entire process, you should look elsewhere.
Communication goes hand in hand with transparency. Some clients prefer frequent communication, while others prefer to be contacted when there are substantial updates. Regardless of preferences, there needs to be agreement regarding periodic updates, whether via email, call or meeting. During updates, owners should expect explicit details regarding interest in the property, offers that have been made, overall response of the market and what changes in strategy need to occur. Those communications are the true indicator of whether your advisor is moving the transaction forward appropriately.
Trust, like reputation, is an acquired commodity. Unlike reputation, it requires a one-on-one experience. Since many owners are being introduced to potential advisors for the first time it’s imperative that trust be established early. Don’t be afraid to ask tough questions or question an advisor’s strategy. The best advisors will have faced similar questions by other clients and will communicate their thoughts honestly and transparently. This dialogue establishes the foundation that will last throughout the process.
Hilco Real Estate’s Golf Advisory Team is honored to be a trusted advisor to some of the largest owners and investors in the golf, hospitality, private equity and family office sectors. For more information on how we may become one to you please contact:
Ryan J. Rafter
Managing Director
D: 631.514.9963
rrafter@hilcoglobal.com
Andreas Lagercrantz
HGA Strategic Partner, Founder In/Golf
D: +4670774740
andreas.lagercrantz@peoplecanfly.se