Skip the Script — a Great Seller’s Broker Creates a Strategy Based on Market Feedback

One of the biggest mistakes a broker can make when marketing an investment property for sale is prescribing the entire structured marketing process, including bid dates, number of bidding rounds, etc., before the market has had an opportunity to speak. I have seen marketing proposals that lay out a neat sequence: four weeks of marketing, a bid deadline, a second round, a best-and-final round, contract negotiations and a closing. 

It looks organized. It looks professional. It may even give the seller comfort that there is a carefully constructed plan.

After more than four decades of selling investment properties in New York City, I believe that that approach fundamentally misunderstands how a successful competitive process works. A broker representing a seller absolutely needs a strategy, but the strategy should never become a script. 

The objective is not to execute a determined number of rounds. The objective is to maximize the seller’s proceeds while optimizing the probability that the transaction actually closes. Those are very different things.

The first bid deadline is one of the most important moments in a marketing campaign, and even the timing of that deadline requires judgment. Setting it too early can be just as damaging as setting it too late.

A broker may want to create urgency by announcing a quick deadline, but urgency without sufficient market exposure can backfire badly. If the property has not been adequately exposed, buyers have not had enough time to underwrite it, decision-makers have not had time to get comfortable, and the broker has not generated sufficient competitive tension, the deadline may arrive with disappointing participation.

Once that happens, the seller can find himself or herself chasing the market rather than having the market chase him or her. Every sophisticated buyer who enters the process afterward is going to ask some version of the same questions: “What happened with the bid date? How many offers did you get? Where were the bids?” That is not a position anyone wants to be in.

Buyers understand what it means when a bid deadline has come and gone, and the property is still being aggressively marketed. They will naturally assume that the response was weak, and that perception can materially reduce their motivation to stretch. A deadline should therefore be called when you have earned the right to call one. You want sufficient momentum, sufficient engagement and enough credible buyers positioned to bid so that the deadline enhances leverage rather than diminishes it.

The same principle applies after the deadline. What happens next should be dictated by the bidding field, not by something written in a marketing proposal six weeks earlier. 

Suppose we receive 20 offers above $40 million and the pricing guidance is “low to mid-$40s.” That breadth of competition is an extraordinarily valuable asset for the seller. We may conduct a second round, a third round, a final round and perhaps even a “final-final” round or do whatever is necessary to have an eventual “winner” separate themselves from the pack. We might send draft contracts to multiple bidders and ask them to submit contract markups as part of their offers.

There is another critically important element to running this type of process: Every buyer must believe that they are being treated fairly and have a legitimate opportunity to acquire the property. No buyer wants to go through multiple rounds of bidding. If given the choice, almost every buyer would prefer that the broker simply come to them, negotiate a transaction directly and allow them to avoid competition altogether. 

But, because we brokers represent the seller, our objective is exactly the opposite. We want to create as much legitimate competition as possible.

The paradox is that we can create competition only if buyers are willing to participate in the competition. And sophisticated buyers will not continue participating if they believe the process is unfair, that another bidder is receiving preferential treatment, that the rules are constantly changing for particular participants, or that the outcome has already been determined. 

Buyers are investing significant time, money and intellectual capital underwriting a property. If they believe they do not have a legitimate opportunity to win, eventually they will stop playing.

That makes maintaining a level playing field an essential part of maximizing value for the seller. Fairness and transparency are not contrary to aggressive seller representation — they are prerequisites for it. 

The more confidence buyers have that they are being treated consistently and that a superior offer can actually win the deal, the more willing they will be to stay engaged, sharpen their pencils and continue competing. Buyer confidence in the integrity of the process is what allows the seller to extract the maximum benefit from competition.

At that point, price is only one component of the competition. Deposit, financing contingencies, due diligence requirements, the closing period, contract comments, certainty of execution and the buyer’s history of actually closing transactions all become variables that can be used to improve the seller’s outcome and help the seller make a more informed decision about who to go with.

When you have 20 motivated bidders, the competitive environment itself becomes leverage. The broker’s job is to figure out how to use that leverage intelligently.

Now consider the opposite scenario. Suppose the bidding deadline produces one offer at $50 million, while everyone else is clustered around $44 million to $45 million. The $50 million bidder is well capitalized, offers a substantial hard deposit, requires minimal additional diligence and can close quickly. Why would we automatically conduct two or three more rounds simply because the original marketing plan said we would?

Additional rounds may accomplish nothing. Worse, they could create risk. The outlier bidder may begin to question whether it is significantly overpaying. The outlier may lose enthusiasm, reconsider its underwriting, or become frustrated with a process it believes it has already clearly won. In that circumstance, the best strategy may be to immediately focus on that buyer, negotiate every possible improvement in price and terms, get a contract signed, and lock in an extraordinary result for the seller.

This is why running a comprehensive marketing program is much more nuanced than collecting bids and sticking to a script. Every stage of the process produces information, and that information should determine what happens next. We look at the distribution of bids, the gaps between them, the quality and credibility of the bidders, their deposits, financing, contingencies, diligence requirements, closing periods, contract posture and, perhaps most importantly, our assessment of their willingness and ability to improve.

Sometimes the right move is another round. Sometimes it is narrowing the field. Sometimes it is negotiating with two buyers simultaneously. Sometimes it is sending contracts to several parties. And sometimes the best move is to grab the bird in the hand and get a contract signed.

This is also why representing sellers requires a very particular mindset. The process does not exist for the convenience of the broker. It exists exclusively to advance the interests of the seller. 

A rigid process may make the broker’s job easier because everyone knows exactly what comes next. But predictability is not necessarily leverage. In fact, too much predictability can give buyers information that benefits them rather than the seller. If buyers know there will automatically be three rounds, why should they stretch in round one? If they know there will always be another opportunity, urgency diminishes. 

Conversely, if they understand that the seller could choose a buyer at any point, every interaction carries greater consequence.

The best investment sales brokers therefore do not simply run marketing processes. They continually diagnose competitive environments. We create the market, observe how buyers respond, and then determine the next move that is most advantageous to our client. There should always be a plan, but the plan must remain flexible enough to respond to what the market tells us. 

In a sales process, information creates leverage — but only if the broker has the judgment to know what to do with it. 

The best process is not the one you can predict before you begin. It is the one you intelligently design as the market reveals itself.

Robert Knakal is founder, chairman and CEO of BK Real Estate Advisors.