Principal to Principal (P2P): Optimizing Off-Market Transactions
Greg Cooper J.D.
Greg and his team have sourced and transacted well over $1.5 Billion in assets, and negotiates deals with extensive analytical and legal skills. He’s a serial entrepreneur: He founded and ran the Austin Java Company early in law school, then co-founded and ran Goldwasser Real Estate (later sold to Bradfield Properties). He’s trained over 1,000 real estate professionals in all aspects of sales and marketing, and has spent the past several years focused on the multifamily acquisitions market. When he has spare time, he is hitting the running trail or gym since he is a fitness fanatic and Greg and his wife Terri also love to travel the world when he’s not sourcing deals.
It’s generally accepted that every year, approximately half of all multifamily property transactions nationwide are considered ‘off market.’ The term is broadly applied, but it typically means the property will undergo a transfer of ownership without an exclusive listing agreement in place.
Despite the growing popularity of this practice, it still surprises many traditionalists. After all, don’t listing brokers have broad networks they can leverage to ensure the broadest possible customer base? Doesn’t the lack of a standard marketing campaign limit the appeal and viability of the asset? Won’t this take a toll on the price?
The answers are: Maybe, in certain cases; not really, no; and no, definitely not. In fact, the seller typically reaps major benefits in this arrangement.
First, understand that a traditional broker listing may bring a larger audience, but it’s not necessarily a better audience. Many in the larger group are ‘tire kickers,’ and some may be seeking confidential information to educate themselves, or help their own efforts elsewhere. It can delay and even impede the transaction process, as well as the closing.
Even the term ‘off-market’ is misleading: In the digital era, most of the information previously available only to a select few is now out there for everyone. That makes a traditional marketing campaign irrelevant.
This is instead a Principal-to-Principal (P2P) arrangement—streamlined, concise and straightforward. It involves only qualified buyers, communications and negotiations through an experienced intermediary or partner, and no listing costs or sell-side fees at all.
We should know. At Offerd, we’ve pioneered the Acquisitions-as-a-Service (AaaS) model, which means we’re retained directly by prospective acquirers to find assets that best suit their specific criteria. We can do this because we track not only listed properties but also 90,000 ‘off-market’ assets around the nation. We also analyze data related to occupancy rates, demographic changes, personal incomes, home values, population growth forecasts , job proximities index, school proficiencies and much more, across various geographic areas from the county, to the zip code and even the census tract or block group.
By using this detailed knowledge, sophisticated technologies and extensive experience, we can identify the best multifamily properties in the best locations at the best price. That’s just what buyers want.
On the flip side, the multifamily property owner sees much less friction—no wasted marketing campaign, no unserious buyers, no visits from strangers seeking to tour the property (potentially upsetting tenants or management), no invasive access to financial records, no extended marketing and sales timeframe of three to six months. In our case, it’s more like two to three months. Every prospect is vetted, approved and engaged, with low overhead and no broker fees. The entire process is undeniably faster and cheaper.
This is Principal-to-Principal transaction, and it’s right on target.