Selling your property is a large task. Your property is your “Life’s work”, you should understand the steps involved in order to get every dollar of equity that you can.
Here are the key steps for selling your property.
1. Create a timeline and marketing plan with your agent
Two months before listing:
- Evaluate your financial situation and budget
- Determine the bottom dollar you need to net on property after, transaction cost, mortgage, and commissions are paid
- Get the title, survey , and other due diligence items that a prospective buyer will require
- Know your NOI, and cape rate averages for your type of property
Evaluate how quickly you need to move your property. Has situation occurred in your life that the property needs to be sold quickly? Can you afford to hold on to this property until the end of time? Or are you just tired of all the mundane day-to-day operations of managing your property?
This question above determines what price to list your property at. The quicker you need to sell, the LOWER the price.
Either way, you will need to run comparables on your demographic area, and understand (with help of an agent) what price makes good sense for your specific needs.
2. Evaluate the condition and marketability of your property
At least a couple of months before listing:
- Evaluate the condition of your property, How many years are left on your long term ground lease? What is the financial status of your tenants?
- Fix problems or adjust price accordingly
In today’s market, with the entire inventory that is out there, your property needs that “WOW” factor to make more attractive to a potential buyer—especially if you want t o move the property quickly.
Have a professional look at your property and evaluate it with a critical and unbiased eye. Just because someone offered you a trillion dollars 4 years ago, does not mean that is what it is worth now. That was in the past, and we are looking at it today.
Look for three types of problems:
Cosmetic problems that can be fixed relatively quickly at minimal cost. Those tenants that have been with you for 5 years, and have the yard piled up with junk. Have them clean it up. If you drive by the strip center at night, are all lights working properly? Is paint chipping off the side of the building? Any small repairs including wedding the flower beds must be made. GIVE YOUR PROPERTY CURB APPEAL. After all the first impression is always the best.
Repairs and upgrades. Sure, you have had your Handy man go “band aid” that 16 year old hvac unit, and it may still have ten more useful years…maybe. But why would an investor pay top price for an old building with the gutter falling off? Ruthlessly examine the condition of, plumbing, electrical, heating, air conditioning, the roof and structural elements of your property. When you repair and replace fixture and equipment, you remove reasons for investors to discard your property, and go on to the next.
Problems you can do nothing about. The fact that your property is on an on old road that was the main street ten years ago, and is now a ghost town is something you cannot fix. The same can be said for the fact that your ground lease only has three years remaining on it, or that Wal-Mart is moving their location from directly beside you to 10 miles down the road. Be honest that these factors do affect the value of your property. Price and market your property with these aspects in mind.
3. Setting the price for your property
A couple of weeks before listing the property:
- Research the local market
- Have an agent do comparables in the area
- If you would like hire an independent appraiser——–Yes pay the extra money, it will ensure that you do not leave money on the closing table
- Establish your price based on the above criteria
In today’s volatile market, it is easy to not get a true value of your property. Foreclosures, short sales and bank-owned real estate can drag down the value of neighboring parcels.
Here are the essential steps to establishing a fair market value for your house.
- Have an agent research comparables locally, and nationally
- The most in-depth valuation is an appraisal done on-site, in person, by an appraiser who is familiar with your area and trends. At will give you an idea of the worth of the property based on today’s market. An independent appraiser will also confirm that your property is worth what you are asking when negotiating with a prospective buyer. It is a great tool for when negotiating starts.
4. List and Market
One week before listing:
- Get an agent to assemble materials for listing (photos, pricing documentation, room measurements, etc.)
- Sign an exclusive agreement with an agent of your choice. The agent is going to work harder on your property, if they are guaranteed to get paid when the property sells………………….It’s Human Nature!
- Do not beat an agent up on their commission. If two properties are the same price, but one is listed as having a hirer commission, which property do you really think will sell quicker?