If you own your own home or have multiple properties such as a vacation rental or a few homes just for extra income, there’s a lot to consider in selling in any of these scenarios. If you are looking for help whether now or in the near future, please contact us and we’ll help get you to where you want to be.
As a homeowner you have some pride in your property and that’s to be expected but selling a home is very different than buying one. The criteria for buying a home centers around conveniences whereas selling a home centers purely around profit potential.
There are a few things you absolutely must do prior to putting your home on the market. In order to maximize the profit you can make in selling virtually anything, you have to first understand how it compares to other properties like it. You also want to make it attractive and have the right upgrades in place to show maximum benefit to a potential buyer and for the least in costs to you.
Before you get all caught up in how great “you think” your home is and what it is worth “to you”, take a step back and try to see things objectively and from a “buyers perspective”. The things you loved about your home when you bought it are not necessarily the same things a potential buyer is going to like. That’s a fact. It doesn’t matter that you loved the era of the design with the archways and window treatments. A buyer is going to be looking at some of the same things you were considering when you bought it but will likely have a different set of criteria. For example, a family with small children may see want a location and proximity to the best schools and area conveniences. Perhaps it will be the size of the rooms, layout, number of baths and other things that buyers consider when gauging “livability” that could be different than what you thought to be important.
So pricing your house doesn’t start with you having a number in your head based on what you think are the most valuable attributes of your home. It begins with an assessment of value as compared to other houses in your area that have recently sold. So say your house to you is worth $250K and you made all these “improvements” that you believe add value to the home. It doesn’t really matter what you purchased it for but for example sake, we’ll say $190k and you’ve lived in it for 5-years. So you want to get $325K. A Real Estate agent, any agent, can run what’s colloquially expressed as ‘Comps’ to tell you what other houses have sold for in your area in the last 6-12 months. In these comps you find that most houses similar to yours sold for a high of $235K with an average of $220K. No matter how many improvements you made or how great you think your house is supposed to be will you get $325K for it. It likely wouldn’t even appraise for that much unless there’s something so unique and special that it would be considered a huge value add to your property. An example might be additional rooms, a finished basement, in-law quarters, or a chefs kitchen and extra bathrooms, etc. Adding small things or doing upgrades that should be done anyway does not add anything to the overall value of a home nor does any improvement enjoy more than 25-50% of its investment value. So that outdoor kitchen you spent $30K to build will not get you $25-30K of selling value, no where near that number. Depending on circumstances, you might get $5-10K additional value and this assumes a near perfect situation.
To price your home accurately, the best solution is to get it appraised but this costs money. What an appraisal gives you is an official document of your homes value on the day it was appraised. It provides some credibility to your asking price and potentially limits a buyers negotiating the price. For $500 or so you can have a fairly good idea of what your property is worth. A Home Inspection for another couple hundred could also go far in justifying the asking price. The point is the more you do to let potential buyers know that your price is justified, the more likely you are to get to your price point.
Another is to ask your agent for pricing advise given their experience in the area. The agent wants you to get as much for your home as you do because their commission is dependent on a good, high value sale. Any agent who accepts your number without a conversation justifying what you’re asking is not a good agent.
To price your home at the center of market value isn’t always the best thing to do depending on how quickly homes are selling in your area. You might be able to get a faster sale if you’re just a few thousand under market. In rare cases you can get more than market for your home depending on the area and rate of demand.
At the end of the month, if your property hasn’t sold in 30-days or so, has few to no viewings, and other properties have been sold, you’re too high in your price. You could have a bad agent but its not likely because you fully interviewed them from the start, correct?! Advertising used to be an agents biggest and sometimes toughest job in listing properties but now that’s different with the Internet and centralized databases like the MLS. When lowering your price, doing so in $10K increments usually yields the best results in faster sales. Dropping the price just a couple thousand dollars on a property valued over $200K isn’t moving the needle much.
You want to showcase your home and highlight all the special features. Taking good pictures is a start and not with your phone (unless you know what you’re doing). Hiring a good photographer, preferably one with Real Estate knowledge (like us), is worth the money. In showcasing your home, you want to basically give your online prospect a virtual walk-through. You can also do this with video as well. Where most people fail in showcasing their property is in the pictures. Worse yet is to have no pictures or just one of the front of the house. Seriously?!
You’ll want to have any minor or deferred maintenance taken care of which is something you can usually do yourself. Paint touch-ups and fixing small pieces of trim can make all the difference. Use neutral colors if painting rooms. More than likely, a new buyer will repaint anyway. Likewise, you’ll want to make each room look clean and uncluttered. Furnished rooms are fine so long as their not ‘overly furnished’ with too many accents, extra pieces and wall hangings. Empty rooms do not convey their size well in pictures. If there’s a piece of furniture that can be used to give perspective, it can be better than a totally empty space. Always include room dimensions in your advertisements and not just total square-footage.
Everyone loves cash! Cash simplifies transactions by eliminating lender complexities in Real Estate. It’s just you, your agent, the buyer, their agent, and the Title Co. Cash closings can be in as little as a couple weeks while financed purchases can last typically 45-60 days. The majority of sales are done with financing which can come from a number of sources. With financing, nearly everything is up for negotiation and you want to be flexible in as many aspects of negotiation as possible. As a Seller, you are holding the keys to the deal in how you manage the Buyer. If you just want a straight deal and play no part in the financing, that’s up to you but if you consider other financing options, like ‘Owner Financing’ or ‘Taking a Note’, you might be able to continue making money on the deal after a deal is completed or get a higher price for your property. Don’t be afraid of creative financing as it’s a way to optimize the deal for both parties.
Cash sales make the most sense to investors who can do it. All sellers want a cash transaction. It simplifies the numbers and the closing process. You want to price your property such that a cash transaction is possible and be willing to reasonably discount the price if someone comes offering cash. Think as if you were an investor buying the property and what it would take for you to complete the transaction.
A commercial property for sale is any property that is zoned as commercial or has a residential component exceeding 4-units including mixed-use. Likewise if selling a portfolio (a group of properties), this would be a commercial transaction. If you have a commercial property that is empty or a business that you’re trying to sell, the considerations for selling are more complex than in residential scenarios.
Commercial properties don’t sell as fast as residential and the buyers are usually other investors. We have investors interested in purchasing financially attractive commercial properties. Commercial property not in business or realizing a return are more difficult to sell. If possible, get the property rented before attempting to sell it. Otherwise you’re going to have difficulty selling the “promise” of profits to a worthwhile buyer. Commercial property is often priced per square foot and returns are calculated based on the per square foot value. This will correspond to the specific purpose of the property and whether the square foot numbers can be achieved. If a commercial property has attributes that lend themselves to a specific purpose, such as auto repair, then you can expect that the only people that would be interested in it are people within that trade category and the value per square foot is going to be equal to what one would likely pay for that value.
If, however, the property can be tailored to multiple uses, then your prospect pool increases dramatically. Again, the prospective business owner will be interested in price per square foot and location but not as much in the features because they’ll build it out the way they want it.
Having a business for sale is like trying to sell a career. People in businesses got into those businesses because they saw it as something they would do for a long time. There are any number of reasons why they come up for sale but the sales cycle can be pretty long depending on the type of business. Popular franchises tend to have better chances of getting sold than less known franchises or private entities. Everything about selling a business is not only more intense but more complicated because the numbers aren’t just in the real estate. There are questions as to why, if the business is profitable, it is being sold. This is probably the first question. It could be that the owner has ran it for a while, made their money, lived their life and now want to retire. If it is not profitable, then there’s one reason out of the gate but you still have to ask, why? Regardless, it is important to understand this critical question before going any further.
While we don’t generally offer advice about buying or selling businesses, we can help with straight commercial properties and provide some of the information that you need to make an informed decision with regards to a business that may be included.
If you are looking to sell a home, portfolio, or commercial property in the near future, please complete our Client Contact form and we’ll help get you to where you want to be.
Are you in trouble with your home or portfolio? Do you need to sell quicker than you had planned? Need cash fast? Are you underwater on your mortgage? Whatever is going on we can help!
Nothing is worse than getting into trouble with your mortgage! You paid for all those years on-time and have run into a rough patch and now you need to sell fast. We can buy your house fast and get you on your way with your credit in tact. There are two basic ways this works in the market…