What is the best List Price for my Seniors Housing Community?– By Jason Punzel
All owners want to maximize sales price, thus, we are asked, “What is the best List Price for my Seniors Housing Community?” Senior Living Investment Brokerage represents many different types of owners; REITS, Private Equity companies, Regional Operators, Non-Profits and small, privately owned operators. With all owners, the list price of their seniors housing community is detailed discussion.
As brokers, owners rely on us to provide them with an accurate valuation of their Seniors Housing Community. From there, we suggest a list price for their seniors housing community to obtain the most interest in the market. As a company, over 95% of the time the final sales price is within the price range from our original market analysis. After determining a market value range, the next step is deciding on a list price. Typically, we suggest a list price of about 5%-10% above the market value range. Thus, if we expect a property to sell between $9,500,000-$10,000,000, an appropriate list price would be approximately $10,500,000.
Often times, sellers believe that by listing the property at a much higher list price, it will result in a higher final sales price because buyers will “meet them in the middle.” From our experience, this is rarely the case and a high list price usually results in a much longer process and sometimes even a lower final sales price.
Buyers who have the capital available to purchase a $10,000,000 or $20+ million property, are very experienced and tend to have tight underwriting guidelines to achieve the returns their investors require. Sophisticated buyers are not going to be “tricked” into paying more for a property because of a high list price.
Common Mistakes:
A high list price usually results in buyers passing over the deal because they don’t want to waste their time. When there is little activity at first, and sellers reduce the price, the community can become stigmatized. Both scenarios can cause delays and decrease interest in the market place.
Conclusion:
It is much more effective to have a list price that is realistic and creates competition among buyers. This has a much greater chance of driving the price up than having a high list price that slowly gets reduced because of inactivity.
If would you like to get an accurate market price analysis, please contact Jason Punzel at punzel@slibinc.com or 630-858-2501.
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