Why I dislike unpriced deals

Recently, I’ve noticed a lot of unpriced listings coming on the market. By “unpriced”, I mean properties where the Seller is basically saying “I want to sell, but I’m not going to guide you to the price I expect”.

I get why sellers do this… they aren’t sure what their property is worth and they don’t want to accidentally underprice it and leave money on the table.

I think this is a mistake, and here’s why:

  1. As a buyer, particularly of a larger asset, I spend a lot of time building and massaging a pro forma to get to a point where I’m comfortable that a deal works. I’m really not excited to spend a bunch of time doing so, only to find out that the seller wants 2x what the numbers tell me I can pay. So, unless I’ve got nothing better to do, I tend to avoid spending time on these deals. Am sure other buyers do the same.
  2. In a liquid market like Los Angeles, if you underprice, the market will let you know VERY quickly. Your broker will be deluged with phone calls / emails / etc. and offers will come pouring in. Then, you can hold a little auction among the interested parties and get to a “true” price for the building.

So, to me, there’s not much downside in putting a price on your deal.

If you’re unsure what the building is worth, just call a bunch of different brokers who specialize in your property type in your area, provide them with the details, and ask them to give you an opinion of value. You’ll get a decent range from which you can choose a price… and then hire one of those brokers to actually sell your property. Voila.