Most LA multifamily sales that go sideways go sideways for the same reasons. Not unusual reasons. Not market-driven reasons. The same six mistakes, repeating transaction after transaction, decade after decade.
I'm not writing these to be clever. I'm writing them because the most expensive pattern I see is sellers who don't know they're making these mistakes until after the deal closes and they look at what they left on the table.
The sellers who waited for 2022 to come back are now waiting for 2026 to look like 2022. It won't. The market you sell into is the market you have.
Every market cycle produces sellers who decide to wait. A handful of them get rewarded when conditions improve. Most don't — because the conditions that improve are rarely the specific conditions they were waiting for, and by the time the market they wanted to sell into arrives, the next market they didn't want has already started.
The LA multifamily owners who've transacted best over the last fifteen years are the ones who decided to sell based on their own situation — retirement, portfolio rebalancing, management fatigue, capital deployment — and then found the best exit the market would support. They didn't try to time the peak. They accepted that peaks are knowable only in retrospect.
You list at market rents. The buyer underwrites at in-place rents plus a realistic capture assumption. The deal falls apart at price discovery.
This is the mistake I see most often, and it's almost always seller-unconscious. The seller knows their rent roll is below market. They tell themselves — correctly — that a skilled operator could capture much of that gap. So they price the building as if the capture had already happened.
The buyer, meanwhile, is running their own model. They know how hard capture actually is under the current RSO regime. They know what their cost of capital is. They know how long turnover really takes. They underwrite to realistic capture on a realistic timeline, and they arrive at a price that's 10 to 15 percent below the seller's asking.
The fix: list at a number the buyer can finance on the income the building actually produces today. The capture upside is part of the pitch, not part of the price.
A $50,000 repair the seller skipped often becomes a $200,000 price concession at close. The math is rarely kind on this.
Every buyer has an inspector. Every inspector finds things. Every finding is a negotiation opportunity the buyer didn't have before the inspection report. A seller who skips preventable repairs before listing pays for them three times: once in the original repair cost, once in the concession at close, and once in the implicit credibility hit of "what else didn't they address."
The fix: walk the building with your broker before listing. Identify what a reasonable inspector would flag. Fix the items that can be fixed. Price the ones that can't.
The broker who gives you the highest valuation is not working in your interest. The broker who gives you the valuation that matches what the market will actually pay is.
Broker selection is a weird market. Sellers instinctively want the highest number, and brokers know it. The incentive structure rewards whoever floats the biggest initial estimate. Which means the broker you want to hire is often the broker who will make you the least comfortable in the pitch meeting.
Ask for comparables, not adjectives. Ask for closed sales in your submarket in the last ninety days — cap rate, price per unit, days on market. A broker who can show you those comps is underwriting your building against real market data. A broker who can't is selling you a story.
LA multifamily is a submarket-specific market. A cap rate that applies to Santa Monica doesn't apply to Koreatown. A cap rate that applies to post-1995 inventory doesn't apply to pre-1978. A cap rate that applied in Q2 2024 doesn't apply in Q2 2026.
Sellers who use wrong-cohort comps price their building incorrectly in both directions. Some over-price and sit on the market. Some under-price and leave money at close. Both outcomes come from the same root cause: using comparables that look similar on the surface but trade into a different thesis.
The fix: every comp you use to price should match your building on four dimensions — submarket, building age cohort (pre-1978, 1978-1994, post-1995), rent control regime, and current market conditions at time of close. A comp that missed on any of those four is not a comp; it's noise.
The December 2025 RSO rewrite is the single most consequential event in LA multifamily pricing in the last decade, and most pre-1978 LA City owners have not yet updated their mental valuation to reflect it.
The new 4% rent growth ceiling (down from 8%) compresses the NOI trajectory on every pre-1978 LA City building. Institutional buyers have already adjusted their underwriting 20 to 40 basis points wider on cap rates for this cohort. The repricing is still absorbing — 1031 exchangers, family offices, and local operators are catching up through the rest of 2026.
Sellers who transact in Q2 are closing at pre-rewrite underwriting. Sellers who wait until Q4 are closing against fully repriced buyer models. For pre-1978 LA City inventory, that timing difference translates to 4 to 8 percent of sale price.
Most owners are not tracking this. The ones who are tend to move quickly. The ones who aren't look back in 2027 and wonder why their neighbor's sale cleared 6 percent higher than theirs.
None of these mistakes are rare. Every one of them repeats. Most LA multifamily sellers will make at least one; many will make several. Knowing the pattern doesn't prevent it automatically — but knowing which specific mistake you're about to make, and choosing not to, is the thing that separates the sellers who close at or above their target from the ones who don't.
The sellers who work with me longest are the ones who stopped making these mistakes on their second or third transaction. There's no shortcut around them on the first one — except learning from someone who's watched the pattern play out 254 times.
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What is the biggest mistake LA multifamily sellers make?
Waiting. The sellers who waited for 2022 to come back are now waiting for 2026 to look like 2022. The market you sell into is the market you have.
How do I know if my building is priced correctly?
Compare to closed sales in your specific submarket, matched on building age cohort (pre-1978, 1978-1994, post-1995) and rent control regime, within the last 90 days. If your broker can't produce those comps, interview someone who can.
Should I renovate or raise rents before selling?
Fix visible deferred maintenance that inspectors will flag. Don't spike rents in the last three months to manipulate the rent roll — buyers see through it.
How does the 2026 RSO rewrite affect my sale?
For pre-1978 LA City buildings, cap rates are expanding 20-40 basis points through 2026 as buyers reprice to the new 4% rent growth ceiling. Sellers transacting in Q2 capture pre-rewrite pricing; Q4 sellers close at the new levels.
What if I've already made some of these mistakes?
Most of them are reversible. Over-pricing can be corrected with a repositioning. Deferred maintenance can be addressed. The mistake that's hardest to undo is waiting — and even that one is still undoable if you move now rather than continuing to wait.
Michael Sterman is Senior Managing Director Investments at Marcus & Millichap. $1.41 billion across 254 closed transactions. These six patterns have been the ones repeating for fourteen years.
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