Follow Our Comprehensive Guide Below When Selling Multifamily Real Estate. 

For a summarized PDF listing checklist click here. 

Step 1 (Optional): Hire a real estate agent / broker

Experienced real estate agents / brokers complete dozens, if not hundreds, of real estate transactions. This type of experience is vitally important and extremely beneficial to sellers who are looking to sell their property. 

Agents can be specialized in various asset types, so choose carefully.

It’s important to identify an agent that specializes in asset types that are in the category of the property you are selling. Just like you wouldn’t hire a heart surgeon for brain surgery, don’t hire a residential buyer’s agent for listing a multi-family property. 

A good real estate agent can help you understand current market conditions and other factors that will be crucial in properly listing your property. The right agent will help you position your property so that it achieves maximum exposure and a maximum sales price. Some sellers believe in the misconception of saving money by selling their property themselves, for sale by owner. This not only limits exposure, which may limit offers received, it can also cost you in other areas of the negotiating process. 

Pro Tip: Focus on the net sales price, after commissions, rather than the commission % charged. 

A seller that sells their property with an agent for $1,000,000, with a 6% commission, fares better than a seller who sells their property for $900,000, with a 0% commission. 

At Citypoint we understand the benefit of engaging the right professionals for achieving maximum sale prices and reducing overall market listing times. For a list of Citypoint Professionals in your area visit: 

Illinois https://citypoint.com/state/illinois/

Arizona https://citypoint.com/state/arizona/

Continue with the guide below to familiarize yourself with today’s selling processes.

Step 2: Pre-Listing Property Preparation

Site Visit With A Professional

Meet with your agent at your property. Discuss maintenance history, CapX items, property presentation (does it show well?), and more. You and your agent should be candid with each other about the property’s condition and the property’s repair history. Potential buyers will pay close attention to the property condition. It may benefit you to repair deferred maintenance items now. 

A property with minor exterior “issues” may send a signal to prospective buyers that the rest of the property mimics a similar condition. Failing to fix deferred item #1 shows, without exploring further, that you most likely failed to fix deferred item #2, #3, and #4. 

Buyers will pay more for a property that has been well cared for, as they know it will allow them to keep their maintenance expenses at a minimum. 

Pro Tip: $10,000 in repairs can be a catalyst for more offers and a much higher sales price. We have seen as much as 5x returns on repairs completed prior to listing.

Comparables

Review other listings in the market that have sold, canceled, expired, are active and/or are pending. Viewing the full picture of how inventory has moved, or not moved, in your area will help you understand at what price you can expect to sell your property. Don’t hire an agent that will simply tell you what you want to hear. Hire an agent that understands the market and that will know how to position your property. 

Most agents focus exclusively on SOLD comparables. This is a foolish approach as it only provides insight into a sliver of events that have occurred in your marketplace. On average there are 4x – 8x more listings that are Active, Pend, CTG, and that have canceled/expired vs listings that have sold. All of this, usually omitted data, provides deep insight into recent real estate activity surrounding your property. 

Your agent should review ALL property statuses and they should guide you based on all of the data that is accessible to them. 

At Citypoint, we not only analyze the full MLS history but we dive into public records, off-market transactions, and more to obtain important data points surrounding your property. 

Documents

Most prospective buyers will need to conduct pre-emptive due diligence on a property prior to going under contract. These buyers will be expecting to see basic property financials such as gross rents, real estate taxes, vacancy rates and more before deciding to schedule a showing or to spend time diving deeper into details. 

Start gathering important documents such as: 

Current Rent Roll

Be as detailed as possible but exclude any private information such as tenant names and/or contact info. List the unit #, gross monthly rent, lease expiration date (very important for buyers looking to increase rents or complete condo conversions), current balances, gov subsidized Y/N, and more. You don’t need to provide all of this information at this stage as a buyer will review all leases once under contract anyways, but it’s a good idea to be ahead of the game. The more info a buyer can view upfront, the less likely the contract will be from falling out due to buyer cancellation.  

Copy of All Leases

Leases are private and are usually not provided to prospective buyers. However, once a buyer goes under contract to purchase your property, they will expect to see full copies of the leases. It’s good practice to have all of the leases organized ahead of time. Review the leases yourself and look for items that a buyer may see as red flags. 

• • Are the leases expired? If yes, they have automatically converted to a MTM lease. 
  • Is the rental rate the tenant paying properly reflected in the lease? Many landlords increase rents on tenants without proper documentation. A buyer will need to see proof of the rent increase. Options available to the landlord, for documenting lease changes are:

1. 1. 1. Provide a signed new lease with updated terms. 
      2. Provide a signed lease addendum reflecting the new rate. 
      3. Provide a signed tenant acknowledgement letter.

• • Is the lease signed? Surprisingly, many landlords have unsigned leases and landlords present these incomplete leases as valid leases to the buyer. 
  • Is the lease with an agency that provides subsidized rent for the tenant? If yes, pay attention to any restrictions found in the lease that a buyer may have concerns with. 
  • Buyers might pay attention to rental increase provisions, pet stipulations, security deposits, lease violation clauses, and more. 

Copy of Utility Bills

Prepare copies of utility bills showing at least 6 months to a year history of utility costs. Many landlords will fail to produce these bills during a due diligence period. The absence of these documents can cause a buyer to cancel the contract. 

If a buyer can’t understand how much the utility expenses are, they will have a hard time determining potential profitability of your building. We do understand that these bills are private. Therefore, they are usually not provided to a buyer until after a buyer signs a contract. However, we do encourage providing accurate costs of each utility, during the listing process, so that these figures can be shown within the listing marketing materials. 

Utility costs are crucial to calculating a property’s NOI. One of the key metrics a buyer will focus on is the current NOI of the property. If the expenses are unknown, the NOI will be unknown. 

Here are some of the utility expenses a buyer will be looking for:

• • Water/Sewer
  • Gas
  • Electric
  • Garbage
  • Lawn/Snow Care 

Maintenance Records

Provide context and summaries of the maintenance completed on your property. Many buyers will ask for further details and documents to support your summary.

If you completed the building maintenance yourself, that’s ok. 

Many buyers won’t rely on your maintenance expense, they simply want to be aware of details and how much maintenance needs to be completed yearly. Think work load, not work cost. 

Since every owner has different methods of completing maintenance, the actual historical maintenance expense isn’t very useful. If your maintenance tech charges $X/hr and the buyer’s maintenance tech charges $Y/hr the maintenance cost will obviously vary between the different owners. This can further be skewed if you completed your own maintenance, if a tenant completes maintenance in exchange for discount in rent, or if you’ve hired a property management company that completes maintenance items.  

Tax Returns

Not all buyers or lenders ask for these, but if you’re willing to provide, it may make the transaction process move more quickly. It goes without being said that tax returns are extremely private documents. Only provide these to your attorney or agent with strict instructions. It is common practice for landlords to redact certain sections of the tax return or to only provide the sections that are related to the specific property. 

At Citypoint, we will list most of the items above, in a privacy protected / summarized way, so that a prospective buyer can make a quick decision on whether to submit an offer on your property. We value your time and we understand the importance of painting the clearest picture of your property. Our goal is to answer most of the buyer’s questions directly in the property websheet so that we can focus our time on negotiations and moving the property closer to contract.  

Step 3 – Listing

Once you have completed the pre-listing procedures, engage your agent to officiate the listing by signing a listing agreement. Many listing agreements have various clauses that you should fully understand before committing to. Don’t be afraid to ask your agent, or an attorney, about the specifics of each section of the listing agreement. Your agent or attorney will gladly walk you through and explain the language contained within the agreement. 

We frown upon many listing agreements and or brokerages that try and lock a seller in for extended periods of time. We believe the relationship between a seller and an agent should be one built upon a common goal. Selling the property successfully to the benefit of both parties. Therefore, Citypoint’s listing agreement is seller friendly and omits many of the dire clauses found in other 3rd party listing agreements. 

Once a listing is signed, there are other important tasks for a seller to complete. Follow this checklist to help organize the rest of your listing process:

• • Professional Photography – See if your agent includes this at no cost to you. Citypoint agents will often offer free professional photography shoots. 
  • Public Property description. – Your agent can create one for you, or you can participate with your agent in the drafting of the property description.
  • Showing Process – Your list agent will help accommodate property showings to interested buyers. Discuss the showing procedures and restrictions with your agent. 

Citypoint has a quick listing submission form. If a seller has discussed the items listed above, with their Citypoint agent, they can complete the signing of a listing agreement online with ease. Click here for more details. 

Step 4 – Marketing

Listing a property for sale is one thing. Marketing it effectively is another. Make sure your agent is a marketing pro and make sure your listing agent’s process will include the following:

• • MLS Listing – Some agents don’t list commercial properties here. Big mistake on their part. 
  • Crexi Pro – Paid subscription that every multi-family agent should be part of. 
  • Co-Star – Paid subscription that every multi-family agent should be part of. 
  • Other paid subscription sites that reach real estate investors. Currently Citypoint is a paid member on over 7 listing subscription services. Most other agents have only 1, or none.
  • Paid social media advertising.
  • Custom article and media publication about your property (optional)
  • Attractive for sale signage (optional)
  • Custom marketing flyers.
  • Custom property website that is tailored to your specific asset class. Citypoint creates websheets full of tools, custom calculators, and more that allow prospective buyers to analyze your listing quickly and with ease.
  • Investor Open Houses. 

At Citypoint, we have a 18 step listing process for every property we list. We believe maximum exposure is key to any listing. With that being said, we leave no stone unturned when advertising your property for sale. 

Unlike many other agents, we also spend real marketing dollars on every listing we work with. 

Step 5 – Fielding Offers

With an effective listing process and an effective marketing solution, your agent should be receiving offers. Offers come in various shapes and sizes and it’s important to know what to look for. Here are the main items to pay attention to:

• • Price
  • EM amount, be cautious on contracts that show low EM amounts. We like to see buyers putting their money where their mouth is. $1,000 EM on million dollar buildings should not be acceptable. 
  • Financing Details – Lender name, down payment amount, interest rate, and more. Citypoint agents will personally call the buyer’s lender and ask important questions in order to determine if the lender is suitable for financing the subject property.
  • Due Diligence Period – This period is typically 15 – 45 days. You can help speed this process up by having all documents organized and ready, as mentioned in step #2.
  • Additional Contingencies – Watch out for sneaky clauses that allow for the buyer to back out of the contract. Some common ones are but not limited to “Subject to partner approval” and “Subject to Sale Contingency”

Be sure to discuss the offer package with your agent and/or with an attorney. They will guide you through the various contract types, sections, and clauses you might be receiving.

At Citypoint we make the LOI and offer a simple submission process for any prospective buyer. With an auto offer submission form, specific for your listing, a qualified buyer is able to submit an offer on your property within seconds. A copy of the signed contract will be immediately sent to the buyer’s agent and to the buyer. 

Step 6 – Going Under Contract

Now that a contract is signed, the transaction process begins. There will be many timelines to pay attention to. Your agent and/or attorney will track these timeframes to ensure important steps aren’t missed. While these items will usually not concern the seller, it is expected that the buyer will need to complete the following items (unless the contract stated otherwise):

• • Submit EM
  • Conduct a Property Inspection
  • Review Due Diligence Materials
  • Order an Appraisal
  • Order a Survey

The buyer will be working with their lender, and attorney simultaneously, on completing any specific items required for the transaction. This is a process that you usually won’t be involved in but it’s important to ensure that your agent and/or attorney will be checking in with the buyer’s side routinely. This will help the parties on the listing side gauge how the transaction process is moving along.  

Step 7 – Getting Ready For Closing

Once the buyer and/or the buyer’s lender is ready to close, they will coordinate with your agent and/or attorney about scheduling a closing date. Once a closing date is confirmed there will be a few action items for you to complete. These include, but are not limited to:

• • Schedule Utility Turn Off – Notify the buyer’s side of this exact date, as to not allow the building to go without utilities for any period of time. 
  • Schedule the stop of vendor services.
  • Notify tenants (optional), tenants will be notified via mail, by law, by the buyer’s side regardless.
  • Remove personal belongings from the property that were not included in the sale.
  • Notify your insurance company. 

Step 8 – Closing

Congratulations on your sale, hopefully you have been awarded lucrative profits and are ready to move on to your next project. Whether that’s more real estate, business, retirement, or other, we wish you success on your journey, and if ever needed, we are here to help. 

Cheers and happy investing. 

The Citypoint Team