{"id":90779,"date":"2025-02-16T01:59:20","date_gmt":"2025-02-16T01:59:20","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/real-estate\/a-case-study-on-the-sale-of-multifamily-properties\/"},"modified":"2025-02-16T01:59:20","modified_gmt":"2025-02-16T01:59:20","slug":"a-case-study-on-the-sale-of-multifamily-properties","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=90779","title":{"rendered":"A Case Study on the Sale of Multifamily Properties"},"content":{"rendered":"


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Feb. 13, 2025<\/p>\n

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\"How<\/p>\n

Hiring the right real estate broker is important when you are trying to sell a multifamily property. This has been confirmed by recent sales of a 5-unit building and a\u00a0 6-unit building.<\/p>\n

Case Study: The Misclassified 5-Unit Building<\/h2>\n

One of the properties recently purchased was legally defined as a 5-unit building. However, in the MLS the property was shown as a 3-unit building. This led to two significant issues:<\/p>\n

1.\u00a0 Potential low buyer interest<\/strong>\u00a0 \u2013 Due to the property being marketed as a three-unit building instead of five units, the seller limited the number of potential buyers. This is because the property appeared to be overpriced as if it was a three-unit building.<\/p>\n

2.\u00a0 Challenges with Financing for Buyers<\/strong> \u2013 A buyer who had initially applied for a residential mortgage for a 4-unit property was later told that they needed a commercial loan because of the actual 5-unit building. This change in financing needs that was not expected to the buyers created some pressure and lengthened the process of the transaction. If the buyer did not have the capacity to secure a commercial loan then the deal would have fallen through.\u00a0<\/p>\n

Case Study: The\u00a0 6-Unit Building<\/h2>\n

Another recent purchase was a 6-unit building. However, this was not as complicated as the previous one, still there were some issues that required professional solutions. Knowledge of the zoning laws, financing of the project and the rental market trends and rates were some of the factors that helped in achieving a smooth closing. However, when a residential broker and an inexperienced seller expect the process to be similar to a residential transaction, it creates a problem.<\/p>\n

What Sellers Should Ask Their Broker When Selling<\/h2>\n

To avoid costly mistakes, sellers should ask their broker these critical questions:<\/p>\n

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  • How much am I paying the \u201clisting agent\u201d and the \u201cbuyer\u2019s agent\u201d?<\/strong> You need to understand these two different terms because you the seller will most likely have to pay both. As of August 2024 the commission structures have changed for residential<\/a>, before a broker would charge a fee and then split that fee with the buyer’s agent. That’s no longer the case.<\/li>\n

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  • How much commission should I pay the listing agent?<\/strong> The commission is negotiable and will depend on the property value, you should interview a handful of agents to make sure you\u2019re not overpaying.<\/li>\n

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  • What is your experience with multifamily?<\/strong> Avoid engaging a broker based on friendship or family relationship, look for their experience. A professional broker who has a lot of experience in the multifamily market will know how to advertise your property in the right way in order to get the best price for it and make the process of sale as smooth as possible.<\/li>\n

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  • How do you come up with the right categorization and marketing plan for my property?<\/strong> Inaccuracies in classification and marketing can lead to a lower sale price and less buyer interest and vice versa.<\/li>\n

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    Is investing in Chicago multifamily properties a good time to do so?<\/h2>\n

    According to the current market indicators, many Chicago residents are renting because there is low supply of homes and high prices of homes. Multifamily properties are therefore ideal due to the high rental rates. This is because investors can enjoy high returns from rental income as well as meet the increasing needs for good rental homes. We are currently seeing a lot of activity across Chicago and suburbs.<\/p>\n

    The Bottom Line<\/h2>\n

    It is important to have the right real estate broker whether you are a buyer or a seller of a real estate property. A misclassified property can result in thousands of dollars being lost for sellers, problems with financing for buyers, and many other issues. If you are planning to sell your multifamily property then it is important to have a broker who knows the market well and can help you get the best price for your property.<\/p>\n

    In the case of buying or selling multifamily properties in Chicago, please do not hesitate to contact Jose Hernandez<\/a>, a local multifamily expert who will be able to assist you in the process of buying or selling a property in order to generate the best results.<\/p>\n

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