Updated September 28, 2026
Two offers land at the same price. One is from the acquisition arm of a publicly traded REIT. The other is from a private buyer nobody outside the LA multifamily community has heard of. Most sellers assume the REIT offer is the safer one, purely because the name is recognizable. It isn't automatically true, and the reasons it isn't true are worth understanding before you pick a buyer based on the logo.
A REIT's size and public profile say something about its balance sheet. They say nothing about how its specific acquisition team, at this specific moment, will execute this specific deal. Large institutions have internal processes that can move fast or slow depending on where your building sits in their pipeline priorities, how their investment committee's calendar lines up, and how aggressively their regional team is being pushed to deploy capital this quarter. A REIT with genuine urgency to close can outperform every private buyer in the process. A REIT treating your building as one of forty in a pipeline can be the slowest closer you'll deal with all year.
An institutional buyer's diligence process is built for scale and legal defensibility, which usually means more layers, not fewer. Expect a formal environmental review, an engineering or property condition report commissioned independently rather than relying on yours, a compliance review of leases and RSO registration by outside counsel, and documentation requests that go further than a private buyer typically asks for. This isn't a red flag — it's simply the process a large institution runs on every acquisition, regardless of the specific building. A seller with clean records moves through it without friction. A seller with gaps in documentation will find every one of them.
This is where intuition misleads sellers most. A REIT's capital is real, but the deal still has to clear an internal approval structure — often an investment committee that reviews the deal after the LOI is signed and diligence is well underway. A deal can die at committee even after weeks of diligence, for reasons that have nothing to do with your building — a shift in the REIT's capital allocation strategy, a competing opportunity elsewhere in their pipeline, a change in leadership priorities. A private buyer has no such committee. Their risk is different: personal liquidity, a lender who gets cold feet, a change in circumstances. Comparing cash buyers to financed buyers is really the same underlying exercise — verify the buyer's actual capacity and process, don't assume it from the buyer's category.
A REIT's acquisition team typically operates within a defined underwriting model and has less individual discretion to move off their number for subjective reasons — which means once they've anchored to a price, moving them requires new information, not persuasion. A private buyer is more likely to have genuine personal discretion, which can work for a seller (a private buyer who falls in love with a building will sometimes pay a premium a REIT's model would never support) or against one (a private buyer can also walk for reasons that have nothing to do with the deal's merits).
A REIT is evaluating fit against a specific acquisition thesis — usually scale, stabilized income, clean compliance, and a profile that matches what institutional buyers are prioritizing this year. If your building doesn't fit the thesis cleanly, a REIT's underwriting will show it, and no amount of relationship-building moves that number. A private buyer is often evaluating fit against something less systematic — familiarity with the submarket, a personal read on the building's potential, sometimes simply liking how the deal feels. Knowing which kind of buyer you're negotiating with tells you what actually moves them.
Sellers often assume a large institutional buyer closes faster because of their resources. In practice, a private buyer paying cash with no internal committee can close faster than a REIT working through multiple approval layers on the exact same building. If speed matters to you — a maturing loan, a 1031 deadline — verify the buyer's actual internal approval process before assuming a big name means a fast close.
Whichever buyer type you end up under contract with, the sale itself moves through the same sequence: pricing, marketing, diligence, and escrow to close, the same steps that apply to any LA multifamily sale. What differs is who is asking the questions during diligence, how many people have to sign off before the deal is final, and how much personal discretion sits behind the number on the LOI. A seller who understands those differences going in can prepare the right documentation for the right buyer and set realistic expectations for the timeline — rather than assuming either buyer type guarantees a smooth process just because of the category it falls into.
If your building fits an institutional acquisition thesis cleanly — post-1995, stabilized, clean compliance — it's worth running a marketing process broad enough to surface REIT and institutional interest alongside private buyers, since that thesis fit can produce genuinely competitive bidding. If your building is smaller, more idiosyncratic, or carries deferred maintenance an institution's model would penalize heavily, a private buyer pool may produce a stronger outcome with less diligence friction. Knowing which buyer type your specific building actually appeals to — before you set the marketing strategy — is a broker conversation worth having early, not something to discover after the first round of offers comes back lopsided toward one category.
The same way I run any buyer comparison: never lead with price. First, who is actually approving this deal and at what stage — is the person who signed the LOI the final decision-maker, or does this go to a committee after diligence? Second, what does their diligence timeline actually look like, and does their team have bandwidth right now or is your building competing internally with other pipeline deals? Third, what is their actual track record of closing deals that reach this stage with them specifically, not the parent company's brand generally. Only after those questions are answered does the price comparison mean anything, because a higher offer from a buyer who doesn't close is worth less than a fair offer from one who reliably does.
A REIT is not automatically the safer buyer, and a private buyer is not automatically the riskier one. Both categories contain excellent counterparties and both contain ones that will cost you months. The name on the letterhead tells you almost nothing about which one you're dealing with — the approval structure, the diligence timeline, and the specific team's track record tell you everything.
Do REITs pay more than private buyers for LA multifamily?
Not consistently. REITs pay for what fits their acquisition thesis cleanly; a building outside that thesis often gets a better price from a private buyer with a specific reason to want it.
Is a REIT less likely to back out of a deal?
Not necessarily. A REIT's internal investment committee can kill a deal late in diligence for reasons unrelated to your building. A private buyer with verified funds and no committee can be more reliable in practice.
How do I find out if a REIT's offer still needs internal approval?
Ask directly, before you sign an LOI: who has signed off so far, and what approval steps remain before this is a firm commitment? A credible buyer will answer this plainly.
Michael Sterman is Senior Managing Director Investments at Marcus & Millichap.
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