Real estate transactions slant in the favor of the seller. The seller pays both agents commissions and both agents are rewarded for transacting at the highest price possible. Given these incentives many sellers select the agent that offers to list their home for the highest price, and then simply waits for the offers to come rolling in. Sellers employing this tactic are making a big mistake, particularly investors looking to sell their investment property.
Sellers should first understand that time is money. Even the best realtor will only dedicate two or three months to actively selling your home. Furthermore, realtors want to get paid. Commission based employees love to see a big check. From a realtors perspective, selling a $100,000 for 6%, nets them a commission of $6,000. Increasing the price by $10,000 only nets them an increase of $600. Given the challenges of getting to the closing table, most realtors value a quick closing more than they value getting the extra $10,000 for their seller that could take months to materialize. What means a lot to you, really only means a little to your real estate agent.
Always remember that you as the investor should drive the process. Hire great professionals and let them work for you. After selecting the best realtor a seller must prepare for the negotiation. Start by understanding your potential pool of buyers. Is your neighborhood an active investor community or should you position your property for new families? By understanding your potential buyer, you can shape your property into a blank slate, with subtle hints of character that might appeal to your audience. If you expect to have a lot of investors coming by, it might be helpful to do some research on rental rates and neighborhood occupancy details. Young families might enjoy a list of local parks and recreation activities gear towards family.
Sophisticated buyers will be armed with facts about the neighborhood and property values. You should know your property and know your competition as well as or better than the buyers. Shop your competition. It’s always helpful if you are able to comparatively list off details that make your investment property unique. These unique items should increase the value proposition of your property. While your house may be the only one on the block with a bird feeder, that will not drive traffic or stop a buyer in his/her tracks. On the other hand, if you can say my house is the only one in the area with newly refurbished hardwood floors, buyers might certainly take notice.
Check your emotions at the door. Creating a value proposition for the buyer means offering a superior product at a competitive price. Don’t be offended by low offers. Even low offers tell you something about the market and potential buyers mind sets. Getting more than one might suggest you are in a buyers market. Take every opportunity to seek to understand the value of your asset.
