In today’s environment exiting from an owned multifamily asset can be a tough nut to crack. Why? It would be easy to say ‘its the times we live in”. Well, yes, but that is not actionable or of any value. Selling multifamily today is difficult, primarily, because people fail to recognize the time and complexity of the process. Buyers are there, assets are available… the timeline is the thing.

Exits are hard because even the easy one’s require serious expertise and a serious time commitment. Selling is as common as buying, of course, just recognize the timeline. Market time to a sale in primary markets is six to twelve months, longer in secondary and tertiary markets. Following are five reasons why it can be hard to sell a multifamily asset.

Limited 1031 Exchange Activity. Gone are the days you can wait on a hungry 1031 buyer that must invest NOW, NOW, NOW! They are few and far apart. When volume slows so does 1031 money. There are traders, but at what price glory? The only difference between a 1031 buyer and anyone else is that they have a definitive timeline to meet. Otherwise, they are the same as any other buyer.

Brokers are still the center of attention in buyer identification, but they have competition for product; LinkedIN, Loopnet and a myriad of other on-line resources that will provide multifamily assets with exposure. For those with limited experience in the asset class a broker is still your best bet. There are just too many landmines to guess on matters related to selling a commercial multifamily asset.

Cash Buyers. Cash buyers, fine. But cash at a punishing discount, is this viable? The offer is from a cash buyer with a proof of fund letter in hand; so what. If the price and terms offered is out of bounds for you the seller, then pass. If the offer is within your strike zone, proceed.

People devote way too much time pondering buyer motivations. Assuming your bases are covered, meaning no environmental or structural issues are undisclosed, close the deal. Talk about buyer motivations at dinner with your investors while handing out checks.

CMBS lock-outs. The quantity of CMBS loans with extended lock out periods is huge. These lock-out periods were installed to protect mortgage investors by preserving yield for an extended period. That makes sense. And, borrowers/owners signed up willingly. Now comes the the pain as deal after deal has egregious defeasance that drops a property into years of purgatory, of unsellable stasis.

Make certain to “know your loan”. Can you sell now? Is there an added costs associated with liquidating this asset? What is this costs? Is the loan on your asset beyond the lock-out period? Who is your contact person for obtaining a payoff? Are they picking up the phone and responsive or lost in foreclosure/robo-document land?

Loan Underwriting. The pendulum has swung hard… The stack of paper is thicker than ever at loan closings. And there are more attorneys than iPhones at the table. There is no way out. If you want the loan the required documentation is, required… As a seller, this means being amiable to assisting the buying in filling in their loan package with lender required documentation and updates all along with way.

Time, Patience and Exposure. These are your best friends in the selling process. All are equally important. Patience is the most difficult of all. Patience is hard… Having all three of these in combination will assist any seller in navigating items 1 through 4 above. There is not replacement for time in a transaction. Each has its own cadence.

Reprint from        by John Wilhoit Jr.