What’s behind selling an investment property? As a seller, it benefits you to understand the factors that impact the sale of a property. There’s little mystery, and no magic formula; it’s just seven factors that play into a sale: location, timing, pricing and positioning, the terms in financing, the marketing exposure, the condition of the property, and the expertise in the transaction. Let’s take a quick look at each to empower you in the marketplace:
1. Location
Real estate is cyclical, so there will always be ebb and flow. We’ve had a robust seller’s market, which has not always been fun depending on where you sit in the marketplace. But almost regardless of the ebb and flow, location is a primary influencer, and it has a profound effect on what a buyer is willing to pay.
2. Condition
The condition of your property strongly affects whether buyers want to take the time to see it. If the property is in poor condition, it’s still possible there will be a transaction, but it’s going to be a low-price transaction. That’s the bottom line. The condition of your property has a significant impact on sales
price. Get the help you need to make the most of yours.
“As the seller you probably like the property the way it is, which is why you need help understanding the potential buyer’s point of view.” — Bob Nelson, Eugene Oregon Commercial Real Estate Investment Broker
3. Timing
While residential real estate sales are often dependent on timing, the time can be right at any time for commercial real estates when pricing terms, financing, property condition are in alignment.
4. Terms of Financing
Interest rate influence is a real thing. Obviously interest rates make a substantial impact on what buyers are qualified to borrow. When interest rates go up, their purchasing capacity changes, despite income remaining the same. Depending on the interest rate, as a seller, you may need to adjust your expectations.
5. Pricing
There are two primary strategies when it comes to pricing, and both can be used successfully. One strategy is to overprice a property to allow enough room for a bit of negotiation. You want to create a sense for the buyer that they are bargaining from a position of a bit of advantage on their side of the table. They’ve got to feel good about the transaction. The other strategy is to under-price the property, and expect three, four, or five offers. It depends on the situation of course; however, as the bidding war starts, each buyer outbids the next person and even though you started at a fairly “low” price, you may end at a price that’s higher than even what the list price would have been.
6. Marketing and Exposure
Getting your property in front of its most probable buyers is what helps you get the best price that would come out of the market. Exposure and your marketing plan have to have some finesse dependent on the type of property your are marketing.
“In terms of income properties, you never want to put a for sale sign in front of those properties. The tenants then thinking you’re inviting someone with a long tail and forked tongue who is going to raise the rent. This is generally how tenants think of a new landlord coming in, and it leads tenants to think about moving as soon as possible. You don’t want to clear your rental property with a for sale sign.” — Bob Nelson, Eugene Oregon Commercial Real Estate Investment Broker
7. Expertise
Selling a property requires expertise on a number of levels. You may need the expertise of a landscaper or a painter. You most definitely need the expertise of a real estate broker. That is probably the most critical expertise that you need to obtain. Of course, you hire them on the basis of a contingent fee. If they don’t get the job done, they don’t get paid, bottom line. Pricing and an effective marketing plan are a part of a broker’s necessary expertise. Looking at the title to make sure it’s clear is also vital. Examining an investment property’s profits and losses and knowing how it will look to a buyer is all a part of the expertise a broker brings to the table. Experience with tax-deferred exchanges can also be critical.
“Many factors impact a sale, but the right broker knows how to marshal all of the factors to the seller’s advantage. The broker understands what the perfect picture looks like and what expertise will be required to make that happen. The broker also knows that If this property were presented in this particular way, it would more quickly attract more interested parties. That understanding and expertise is what you need. It will allow you to hit your target and close your deal.” — Bob Nelson, Eugene Oregon Commercial Real Estate Investment Broker
Get the help you need to make the most of a sale. You can reach Bob Nelson directly at 541-485-8100.
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