Another “How to sell your Property” –You don’t want to miss this one!
The property / real estate market is a fascinating place and there is no limit to the variations of how people can get it wrong. In my professional career I have come across unbelievable attempts to sell a property profitably. There are numerous publications about the performance of a due diligence process for buying residential or commercial property / real estate. When it comes to selling most of it is aimed at selling a private home and gives the advice to make fresh coffee before the viewing because it gives a homely feeling. When you are selling an apartment block or a commercial property it would be a tough co-ordination job to get your tenants to do this in time for the viewing and would most likely not make a big difference because whoever is viewing will not move in.
However I would like to use another analogy going forward where most would know what to do: Selling a used car. When people are selling a used car they know to wash it, empty the ash tray (assuming it was used) and get the papers including proof of inspections etc. in order. You just don’t say: “It’s a nice car and when you wash it is actually red”. You make sure it looks red.
Now why don’t people do this when they want to sell their apartment block? Here are some of the answers I’ve heard:
- I don’t want to spend the money; I just want to sell for top dollar!
Really? But you want the best possible price, right? This attitude will cost you because the buyer’s estimate is going to be very cautious and then double to make sure.
- The new owner should do it as he thinks it is best.
So you owned the property for how long and still don’t know what is right for it? Must be a difficult property – why should I buy it then?
- The list is endless – believe me!
No matter at what scale a sale is negotiated; the game plan is always the same: A potential buyer likes a property but not its price tag. So he employs an army of technical, legal and commercial consultants to find “risks” or arguments to reduce the price. The name of the game is “Due Diligence” and believe me, there is a fortune to be made or lost in this game if played right. I am not talking about the consultants who are happy when a deal falls through because there is no risk for them if they missed something. They get paid anyway.
Keeping this in mind, what should you do when you want to sell you property?
Well, many things; first of all, have a close look at the property yourself! Don’t let your property manager tell you that ‘it is just fine’ because he/she is blind after managing the property for some time and might be in trouble if it was not. It is like that letter on your desk that becomes invisible after two or three days, it just becomes part of the landscape. Pretend you are looking at your property for the first time and you are considering buying it (again), or let someone professional do it for you. I am sure you are not surprised, but I am actually offering this service. [link to website]
What in the world is the purpose of due diligence?
Well, to me it’s one of those “Games People Play”. It is all about negotiating the price.
The traditional division of the skills is “legal” (most expensive), “commercial” and “technical”. This is justified when you are buying a shopping centre or a portfolio of 100 apartments or more, but what do you do when you want to buy an apartment block of say 10 apartments?
Here are some of the punches just above the belt I like to place, when I am managing a due diligence on behalf of the potential buyer:
- What are the tenants’ complaints over the last twelve months?
- Which repairs are outstanding?
- Show me your planned maintenance plans.
- Show me your rent-review plan.
- What does the vacancy look like, any contract notices?
SUMMARY:If you or your property are not well prepared for the sale you will suffer totally unnecessary price reductions or even loss of promising sales.
During the next few weeks I would like to take you through the process necessary to achieve the best possible price for your property – not just in Germany. For any questions or suggestions please contact me through the contact facility of our website, it goes directly to my iPhone and computer.