Good marketing can’t offset bad value. You can improve the way your property appears to buyers fairly easily. It’s like what you would do to sell a house.
Spruce Up Your Property’s Exterior
A potential buyer will drive by first. They know they’re buying a used apartment building, but it’s wise to maximize your property’s street appeal. Consider these simple things you can do to the exterior of the building.
* Power-wash the building and driveways
* Paint the trim
* Buff the landscaping
* Routinely pick up litter
If there’s grass, make sure it’s green, mowed, and edged. Shrubs and trees should be neatly trimmed. Remove any dead plants, even if you don’t replace them. Consider planting some colorful flowers. Even if they’re dead by the time escrow opens, they will have done their job.
Solve minor problems before the inspection.
Send your handyman through all the units. If there are ceiling stains from a previous roof or toilet leak that has been fixed, use KILZ® to repaint the ceiling. Fix any small problems such as leaky faucets. Ask residents if the appliances, heaters, and air conditioners work. Keep the laundry room tidy.
Every situation is different. Sometimes novel measures are appropriate. One of our listings had unusually bad housekeepers. The seller hired a cleaning service to go in the day before the physical inspection to put away some clutter, vacuum carpets, and clean bathrooms. It worked. We closed.
Dealing with building challenges
No property is perfect. If there are significant problems such as a cracked slab, environmental contamination, a flat roof more than 8 years old, or other costly items, notify your broker as soon as possible. Assume that all secrets will be revealed. It is best to adjust expectations first and not risk having to repair both the building and your relationship with the buyer.
Dealing with an on-site manager
This issue can be sensitive. If you have an on-site manager or contact person at your property, consider how they will learn that the property is on the market. If someone other than you tells them that you are selling, the manager may be hurt and less likely to cooperate further. If you were the on-site manager, how would you want to be treated?
Every choice has risks. In most cases, it is probably best that they are aware of your plans. Your choices may affect them substantially.
An up-front discussion will generally help facilitate the manager’s cooperation, and it gives you an opportunity to clarify what they should and should not do if someone comes looking. For instance, if a possible buyer is on the property and asks to see a vacant unit without an appointment, will you want the manager to comply? This type of issue should be clarified at the beginning of a listing.
Some owners have offered the on-site manager a bonus ranging from $100 to a month’s compensation if the property sells during the listing period. It is cheap insurance, and it generates good will.
When a manager learns that a property is on the market, the manager might leave. Remind the manager that not all listings sell, and that the new owner will need a good manager.
Title
Some investors hold property alone and have never had any unusual activity affecting title. Others have partners, divorce, death, taxes, liens, judgments, or other title complications. If you know anything that might slow the process of obtaining clear title, let your broker know. You can almost always resolve these issues, but some may take time.
Representing your property’s condition
Most smart buyers will ask the seller to warrant that as of the close of escrow, the roof has no known leaks, that the appliances, including heaters, air conditioners, and heat pumps, work and that there are no problems with the electrical or plumbing systems.
If there are not any problems, we’ll negotiate one way. If there are big problems, we’ll negotiate differently. The most important thing is that you and your broker know the actual condition of your building. Otherwise, things become unnecessarily complicated.
More than 90% of our listings receive an offer high enough that the buyer and seller eventually agree on a price. When the buyer and the seller have agreed upon basic price and terms, the due-diligence process begins. Know that the buyer will inspect the entire property.
If we know what the inspector will find before the inspection, there is less chance of losing the deal. The truth is the truth, whether you and your broker know it or not. The sooner you and the buyer know the truth, the better. Learning the truth early in the process equips your broker to market your property more effectively.
What’s your experience?
This post was adapted from my book, Building Legacy Wealth.
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Terry Moore, CCIM, is the author of Building Legacy Wealth: How to Build Wealth and Live a Life Worth Imitating. Read his “Welcome to My Blog.”