This report is courtesy of: Bob Sheddy www.sheddy.com
Century Power Realty Ltd. Commercial Div. Alberta, Canada
Through these 21 tips you will discover how to protect and capitalize on your investment, reduce stress, be in control of your situation, and make the most profit possible.
1. Understand Why You Are Selling Your Property
Your motivation to sell is the determining factor as to how you will approach the process. It affects everything from what you set your asking price at to how much time, money and effort you're willing to invest in order to prepare your property for sale. For example, if your goal is for a quick sale, this would determine one approach. If you want to maximize your profit, the sales process might take longer thus determining a different approach.
2. Keep the Reason(s) You are Selling to Yourself
The reason(s) you are selling your commercial / investment property will affect the way you negotiate its sale. By keeping this to yourself you don't provide ammunition to your prospective buyers. For example, should they learn that you must move quickly, you could be placed at a disadvantage in the negotiation process. When asked, you can simply say that your investment needs have changed. Discuss with your Commercial REALTOR® how you want to approach this question, but the Real Estate laws allow you to keep this information private if you'd like.
3. Before Setting a Price - Do Your Homework
When you set your price, you make buyers aware of the absolute maximum they have to pay for your property. As a seller, you will want to get a selling price as close to the list price as possible. If you start out by pricing too high you run the risk of not being taken seriously by buyers and their agents. If you are pricing too low it can result in selling for much less than you were hoping for. Our goal is to price your property properly.
Setting Your Sale Price
If you have a property that is very unique, this will be a difficult process. If you have an apartment building, in a community with plenty of apartment buildings, ask your agent to pull all of the recent comparables. Your Commercial REALTOR® can also recommend a Commercial Appraiser in Alberta. The key is to find an appraiser who specializes in the geographic area, and class or real estate that you are trying to sell. An Experienced Commercial REALTOR® will know who is the best appraiser for you to speak with, and will work with the Appraiser to convey all necessary details of your property. Call Bob Sheddy at 40... for more details.
4. Do Some Research Yourself
The best way to learn about your competition and discover what turns buyers off is to check out other other properties for sale, and recent solds. Note the condition, appearance, size of lot, price per sq. ft. including land, price per sq. ft. not including land, access, egress, location and other features. Particularly note, not only the asking prices but what they are actually selling for. Remember, if you're serious about getting your Investment Property sold fast, don't price it higher than your neighbour's.
5. When Getting an Appraisal is a Benefit
Sometimes a good appraisal can be a benefit in marketing your commercial investment property. The buyer will most likely need an appraisal to get financing. If you don't have an appraisal in place, the buyer will try to lock in a low purchase price, to ensure he/she is not paying too much. If they have an appraisal in hand, they'll know they're paying at, or just below the market value of the commercial property they are buying. However, an appraisal does cost money, has a limited life, and there's no guarantee you'll like the figure you hear.
6. Tax Assessments - What They Really Mean
Some people think that tax assessments are a way of evaluating a property. The difficulty here is that assessments are based on a number of criteria that may not be related to property values, so they may not necessarily reflect your property's true value. Keep this information handy, and discuss with your Commercial Realtor why they feel that the Tax Assessor has evaluated they property as they have. There are many examples of Assessments that are higher than market, and many Assessments that are lower than market. A good Commercial REALTOR® can explain why this is.
7. Deciding Upon a Commercial REALTOR®
According to the National Association of REALTORS®, nearly two-thirds of the people surveyed who sell their own property say they wouldn't do it again themselves. Primary reasons included setting a price, marketing handicaps, liability concerns, and time constraints. When deciding upon a REALTOR®, consider a number of factors.
-Experience with Commercial Properties. A residential realtor that sells one or two quasi commercial properties a year may not get you the best price, and can possibly create a huge liability being unfamiliar with Commercial laws.
-Experience in the local market. Some sellers hire a Big City agents for an out of town property incorrectly assuming that they will attract Big City buyers. All buyers view property on the MLS/CLS. What's more important is having an agent that can answer as many of the potential buyer's questions as possible. The agent also needs to be close by to show the listing.
-Associates office in proximity to the property. The closer the associate is, the easier it is for them to show the property to as many prospective buyers as possible.
-Be as wary of property value quotes that are too low as those that are too high. Sometimes Real Estate Associates attempt to 'win' the listing by telling the seller the property is worth more than it is. This just wastes your time, and makes your listing a stale listing after the listing agreement expires, and will take you longer to sell even when you readjust the price with a new REALTOR®.
All Realtors® are not the same! A professional Realtor® knows the market and has information on past sales, current listings, a marketing plan, and will provide their background and references. Evaluate each candidate carefully on the basis of their experience, qualifications, enthusiasm and personality. Be sure you choose someone that you trust and feel confident that they will do a good job on your behalf.
8. Ensure You Have Room to Negotiate
Before settling on your asking price make sure you leave yourself enough room in which to bargain. For example, set your lowest and highest selling price. Then check your priorities to know if you'll price high to maximize your profit or price closer to market value if you want sell quickly.
9. Appearances Do Matter - Make them Count!
Appearance is so critical that it would be unwise to ignore this when selling your investment property. Even with industrial properties, the clean ones sell faster than the dirty ones. The look and "feel" of your property will generate a greater emotional response than any other factor. Prospective buyers react to what they see, hear, feel, and smell even though you may have priced your home to sell.
Scrub, scour, tidy up, straighten, get rid of the clutter, wipe away dust, repair squeaks, the light switch that doesn't work, and pressure wash the exterior because these can be deal-killers and you'll never know what turns buyers off. Remember, you're not just competing with other Commercial Properties, but brand-new ones as well.
10. Invite the Honest Opinions of Others
The biggest mistake you can make at this point is to rely solely on your own judgment. Don't be shy about seeking the honest opinions of others. You need to be objective about your property's good points as well as bad. Fortunately, your REALTOR® will be unabashed about discussing what should be done to make your property more marketable. In the past, I have told sellers to clean up their property after the building has sat on the market for months without any action. Finally when these properties do sell, the new owner has taken my advice, painted the property (12 hours), cleaned the walls and floors (8 hours), replaced the toilet (2 hours), etc, and the property reappraises for an additional $100,000! Not bad for a week's work.
11. Allow Prospective Buyers to Visualize Themselves in Your Property
The last thing you want prospective buyers to feel when viewing your home is that they may be intruding into someone's property. Avoid clutter such as too many file boxes in the hallway, personal storage onsite, etc. Paint in neutral colors, like white or beige and place a few carefully chosen items to add warmth and character. If you are planning on moving once the sale is complete, start the transition now. Box up all of the clutter that you always intended on cleaning up... now! If you are selling an entire business, remove all of your personal items immediately, so they don't get tied up in the negotiations. It's hard for the buyer to fall in love with your antique radio, or shiny new computer if it isn't in the property when he has his viewing appointment.
12. Deal Killer - Odours Must Go!
You may not realize but odd smells like traces of food, pets and smoking odours can kill deals quickly. The buyer is going to be concerned that they may not be able to get the smells out, and sometimes they may be correct about that. Help ease their mind by getting the carpets professionally cleaned, walls painted, and old soft furniture taken away. They absorb odours, and kill deals.
13. Be a Smart Seller - Disclose Everything
Smart sellers are proactive in disclosing all known defects to their buyers in writing. This can reduce liability and prevent lawsuits later on. If you have an environmental issue, or a potential environmental concern, get a professional environmental Phase I, II, or III report from a company that specializes in the concern, and the local area. Your Experienced Commercial REALTOR® will be able to explain the different types of reports, general costs, and recommend the professionals he's worked with in the past.
If you have any pending repairs that are needed on the property that you are not prepared to complete yourself (*I don't recommend this strategy), at the very least, get three current quotes from reputable companies, and provide them to the buyer.
14. It's Better With More Prospects
When you maximize your property's marketability, you will most likely attract more than one prospective buyer. It is much better to have several buyers because they will compete with each other; a single buyer will end up competing with you.
15. Keep Emotions in Check During Negotiations
Let go of the emotion you've invested in your home. Be detached, using a business-like manner in your negotiations. You'll definitely have an advantage over those who get caught up emotionally in the situation.
16. Learn Why Your Buyer is Motivated
The better you know your buyers the better you can use the negotiation process to your advantage. This allows you to control the pace and duration of the process. As a rule, buyers are looking to purchase the best affordable property for the least amount of money. Knowing what motivates them enables you to negotiate more effectively. For example, does your buyer need to move quickly? Armed with this information you are in a better position to bargain.
17. When the Buyer Would Like to Close
Quite often, when buyers would "like" to close is when they need to close. Knowledge of their deadlines for completing negotiations again creates a negotiating advantage for you. Be flexible on the closing, if all other terms are acceptable.
18. Never Sign a Deal on Your Next Property Until You Sell Your Current Property
Beware of closing on your new property while you're still making mortgage payments on the old one or you might end up becoming a seller who is eager (even desperate) for the first deal that comes along. Also, don't try to sell by a certain date. This adds unnecessary pressure and is a serious disadvantage in negotiations. If you nearing the end of your financing, arrange terms of an extension with your bank (extending the existing terms, switch to a variable mortgage, etc).
19. Moving Out Before You Sell Can Put You at a Disadvantage
It has been proven that it's more difficult to sell a property that is vacant because it 'looks' vacant, forgotten, no longer an appealing sight. Buyers start getting the message that the property is distressed and it appears that you are probably motivated to sell. This could cost you tens of thousands of dollars.
If you do have to vacate the property, hire a local handyman/landscaper to take care of the weeds, clean the windows, sweep the sidewalks, etc. Sellers will either see the person working, or notice the upkeep to the property, and drool over the thought of owning it. Otherwise, they'll drool over the opportunity to lower their aquisition price.
20. A Low Offer - Don't Take It Personally
Invariably the initial offer is below what both you and the buyer know he'll pay for your property. Don't be upset, evaluate the offer objectively. Ensure it spells out the offering price, sufficient deposit, amount of down payment, a closing date and any special requests, etc. This can simply provide a starting point from which you can negotiate.
You can counter a low offer or even an offer that's just under your asking price. This lets the buyer know that the first offer isn't seen as being a serious one. Now you'll be negotiating only with buyers with serious offers.
21. Ensure the Contract is Complete
To avoid problems, ensure that all terms, costs and responsibilities are spelled out in the contract of sale. It should include such items as the date it was made, names of parties involved, address of property being sold, purchase price, where deposit monies will be held, date for loan approval, date and place of closing, type of ownership, including any contingencies that remain to be settled and what chattels are included (or not) in the sale. An Experienced Commercial REALTOR® will be able to review the entire Commercial contract (A contract that is specific to Commercial Real Estate deals), and add in many handwritten clauses to protect you. They don't teach these clauses in Real Estate School, so only an experienced Commercial REALTOR® will know how to protect your interests.
Also, resist deviating from the contract. For example, if the buyer requests a move-in prior to closing, this is something that you'll want to weight the consequences of doing. Now is not the time to take any chances of the deal falling through.