Negotiate the Sell & Selling the Property at the Right Time

If you decide to sell a property, whether you’ve held the property for a long time or you’re turning around and selling it quickly after the closing... even flipping it before the closing, you first have to prepare the property for sale.

To get the most out of the property when you sell it – to get close to the actual market value – you need to properly prepare it. How the property appears to potential buyers is what really counts. Keep in mind that while it’s important to have a commercial property appear clean and well maintained, preparing the physical appearance of a property for sale mostly applies to residential real estate.

Often the asking price of the property is a matter of what appeals emotionally to prospective buyers. A study done by the National Association of Realtors has concluded that most buyers make an emotional decision within the first two minutes of seeing a property whether or not they are seriously interested in it. Many buyers make their decision as soon as they enter the front door. Thus, your visual message counts the most when people decide whether or not to believe you that the property is worth what you’re asking.

Increasing the Value

Because appearance is so important to potential buyers, you need to dress up your property, concentrating your efforts on both the exterior and the entryway of the house.

What you should concentrate on most are the high-perceived value items that are particularly helpful in selling a home.

Below is a partial list of high-perceived items you should focus on, such as installing or updating:

·    Ceiling fans
·    Brass kick plates
·    Brass address plates
·    Well-maintained landscaping
·    Flowers in the house
·    Miniblinds
·    New toilet seats
·    Used appliances that look new
·    Alarm system
·    Neutral carpeting and colors
·    Flowers and bushes in the front yard
·    Brass lamps by the front door

These are inexpensive items that will make a property more appealing to potential buyers. It also shows that the property has been properly maintained.

Determining a property’s selling price also depends on your knowledge of what the market can handle. Look at the factors, such as the retail price of other houses in the area. Do a comparison on three to eight properties in the area, either online or using an agent, to see what helps sell homes in that area and how much they’re selling for. This will help you determine how much work needs to be done on the house, as well as what investors typically pay for houses in that area.

Don’t Go Overboard
In physically preparing the property for sale, overspending on renovation gets many sellers into deep water. The problem is that the sellers will put more money into the property than what they’re able to get back out of it when it is sold.

Kitchen and bathroom renovations do help a property sell (in fact, they’re the two most important rooms to update should you choose to remodel), but you don’t need to spend a fortune on cabinets or vanities. In these rooms, simply keep the amenities nice, neat, clean, in working order, and keep the colors neutral so the new occupants can come in and add their own finishing touches.

Spend your money on the things that don’t cost a lot but that add a lot of value and make a room look nice. For instance, install inexpensive miniblinds or window shades. Also, modest landscaping, including some bushes and flowers, is not expensive and will increase the value of a home by 5 to 10 percent.

Do whatever it takes to sell the property, but don’t go crazy. The point is, you have to determine what it will take to motivate someone to buy your property without putting you in a financial bind. Remember, every dollar you spend needs to increase the price of the property... if done correctly, perhaps even increase the price to above the normal market value.

Finding and Working with Contractors
Whether you remodel a property to sell or repair a property to rent, you need to work with responsible contractors and handymen who will do a first-rate job for a fair price. Having said that, it’s not as easy as it seems. If you’re not involved and watching what’s happening closely, you’ll be sorry.

The best way to find good contractors is to ask for referrals from people you know: other investors, members of your real estate association, real estate agents or brokers, or property management companies. The managers of the major home improvement stores may also be able to refer a good contractor.

You’ll want to have several different contractors give you competitive bids on what you want done. Give the contractors the details of the job, and ask them to include in their bids the cost and how long it will take them to get the job done.

And rather than going with the contractor who will get the job done for the least amount of money, go with the contractor who does quality work, and has the references to back it up, but who is still one of the more inexpensive ones. However, it’s better to get the best even if it costs a little more, as it may save you money in the end.

In fact, until you know contractors and their work habits well, you may want to stick to professionals. This way you can be sure their work will meet all codes and regulations.

When you find a contractor, ask him/her for references and then be sure you check those references. You’ll want the contractors you use to be licensed, bonded, and insured.

When hiring, tell contractors that all bids, without exception, must include the following:

·    Start date.
Specifying a start date allows you to charge the contractor a penalty if he/she goes beyond this set date. Time is money... your money, in this case. The faster a contractor finishes, the faster you can sell your property for profits.

·    Estimate of time to complete and finish the job.
The job must be completed on time and in a quality manner. Make sure they know that substandard materials will not be permitted. Disputes over substandard work will be arbitrated by a codes inspector.

·    Restitution for possible damages.
If damage occurs during performance of a job the contractor is doing, repairs will be deducted from the bid price.

Including such discrepancies in the initial contracting bid will protect you and insure you are able to get the most out of your property in a timely manner.

Do not pay the contractor until the work is completely done and has been inspected to make sure the updates meet codes.

Note: Once you find good contractors treat them fairly. Cultivate a long-term working relationship by working with the same responsible people over and over again.

Identifying and Attracting Potential Buyers

Once the property is physically ready to sell, it’s time to attract the buyers. The first question to ask when identifying potential buyers is: Who are you selling to?

There are three types of potential buyers you can sell property to:

1.    Other property investors (wholesale buyers)
2.    Prospective home buyers
3.    Non-profit organizations

To look for other investors who may want to buy the property, the first place to look is within your network of real estate professionals and investors. Sending letters to people within your network can be extremely effective.

To find home buyers who are not already within your network, use the following techniques to find and attract potential buyers:

·    Look in your local newspaper in the “Wanted” section.
·    Take out an ad in the newspaper.
·    Check with local real estate agents.
·    Send a mailing to real estate clubs.
·    Check with prospects you’ve met at auctions.
·    Put up flyers advertising the property.

To find buyers from non-profit organizations that need property for group homes, contact your local United Way, city and state housing authority, religious charities, and any other non-profit organization that houses people.

“For Sale” Signs
The National Association of Realtors has done a study that states over 70 percent of all real estate sales come from signs. So one of the first things you should do is put up a “For Sale” sign in your yard. The sign should include a contact phone number so interested buyers can call to get more information.

You may also want to post “For Sale” signs in the area with the address of the property and pointing the direction to go to see it. Just make sure you have the proper permission you need to do this should you post it in commercial or public areas, or if you decide to put directional signs in the yards of other neighborhood residents.

Also, if you’re using a real estate agent, make sure he/she puts up a “For Sale” sign in your yard with their contact information.

Direct Mail Advertising
When using direct advertising methods of communicating your property (ads, direct mail letters, flyers, postcards, etc.) to attract buyers, you want to grab a prospective buyer’s attention. To do this, use good headlines to grab the buyer’s attention.

A good headline should hit a prospective buyer like lightning; it needs to persuade people. To do this, a good headline will offer an immediate solution to the prospect’s needs and desires, appealing to the reader’s emotions so that he/she is prompted to act... to find out more information about the property and even contact you!

Such headlines could include something like:

·    How would you like a low-risk investment that can give you 15-20% annualized return?
·    Foreclosure property for sale. Comparable houses on the block going for $20,000 more!

The headline is what makes it all happen in direct response advertising. Your headlines need to offer prospective buyers great benefits: a way to save or make money.

Open Houses
Open houses can be a very effective way to generate interest and excitement in a property. What better way to sell property than to let the property sell itself?

Advertise the open house in the newspaper and by putting up flyers throughout the neighborhood, even putting them on the windshield of cars at stores in the vicinity. Many neighbors have family or friends who might be interested in buying in that neighborhood.

On the day of the open house, put up attractive signs near the area that will lead people to the open house.

At the open house, be prepared to answer people’s questions, maybe even having a fact sheet you can hand to them when they first enter the house. This fact sheet should include basic information such as a picture of the house, its address, the asking price, your name and contact information, as well as more detailed information such as:

·    Total square footage
·    The number of rooms and the dimensions of each
·    Special features (swimming pool, fireplace, air conditioning, etc.)
·    The school district
·    How close and easy freeway access is
·    Typical annual taxes and utility costs

An open house is a great way to sell a property. Just remember, never show a house until it’s absolutely ready to be sold and occupied.

Real Estate Agents
If you don’t have a lot of time to spend on selling a property, you can hire a real estate agent to take on the duties of making sure your property sells for the proper price.

First, find an agent who buys and sells a lot of homes in the area. Once you’ve done that, there are just a few guidelines you’ll want to follow when working with real estate agents:

·    Make sure a plan is in place to market, promote, and sell the property.

·    Sign a 90-day listing agreement, which states the agent has 90 days to sell the property before you decide to list it with another agent. This will encourage the agent to get busy selling your property.

·    Include a buyout agreement, so that should you sell the house yourself, you don’t have to pay as large a commission (or none at all) to the agent for having done the work.

Also, if the agent is selling more than one of your properties, try to negotiate a discounted commission.

Follow-up on Prospects
Of course, it’s a given that you should record every name of potential buyers, as well as their address, phone number, and job status. Add these names to your mailing list... even including the names of people who aren’t quite ready to buy but are definitely looking.


When You Find a Buyer...

More than 50 percent of all real estate contracts fail because the buyer cannot get a loan.

Thus, when you talk to anyone who is seriously interested in buying your property, the first thing you’ll want to do is run a credit check on him/her. This will tell you if it is a good, solid potential buyer that will be able to get the financial backing he/she needs, or if there are problems that could arise in the sale due to their credit history. Check with a property manager in your area to find a reliable firm that does credit checks.

Don’t sign a contract or even begin to negotiate to sell the property until you know the buyer can get financing. You may even require that the potential buyer get pre-approved for a loan before you begin negotiations.

Creative Financing for Buyers
You can work with your mortgage broker to offer creative financing alternatives to speed up the sale of the property or to make the offer more alluring to potential buyers.

Some of the different methods of creative financing for retail buyers include:

·    Seller pays all closing costs
·    Lease-to-own option
·    Helping cover the down payment using special government or bank programs (usually for low-income, moderate-income, and first-time home buyers)
·    Special rebate offer, such as a $500 gift certificate or vacation voucher
·    Split the down payment

If you choose to do one of these methods, when you do your advertising, you may want to state such. So instead of saying “Beautiful $120,000 Ranch-style Home For Sale,” put something more enticing, like “Beautiful Ranch-style Home Can Be Yours for Just $1,000 down and $850 a month!”

Some of the different methods of creative financing for other investors (wholesale buyers) include:

·    Low monthly payments with a short-term balloon
·    Easy monthly payments with a lump-sum interval payment
·    Barter or exchange for other real estate