How to Sell Your Investment Property
Sometimes you need to sell your investment property. Perhaps its to pay off debt, to raise cash, or because of some other circumstance. Whatever the case, there are a few things that you should consider when deciding how to sell your property. Here are the most important:
Determine the Value the Investment Property
Depending on what type of investment property you have, you should be able to come up with a valuation fairly easily, or at least come up with a range for the valuation. Assuming you know a little about the real estate market, you’ll know that different properties are valued based on different valuation methods. For example, a single family home is valued by looking at comparable sales and by looking at assessed and appraised values. However, an income property, which is a property that is purchased primarily for its ability to earn money each month, is typically valued based on its cash flows. The more complex your property is, the more ways you can find to value it. Do what you can on your own to get a range of the possible value of your property. If you’re not fully comfortable doing this, you can hire someone to do it for you.
Decide if You Want Help Selling The Invesment Property
Now that you have a valuation in mind you have to decide how to sell your real estate. Do you want a realtor to do all of the work for you? Or do you want to try to sell it yourself by listing it on the MLS for a flat fee? Besides those options you can also try to sell it yourself by FSBO. Sometimes, if you know you are going to buy and sell a lot of properties, you can get your real estate license and then your broker’s license. This can save you several thousand dollars per transaction.
For example, if your investment property is worth $500,000, then the commission you would have to pay to sell it would be somewhere around $30,000. Although you can negotiate the sales commissions, most realtors will not show your property unless they are promised a substantial piece of the pie. That means that you’ll at least have to pay any brokers for bringing a buyer to the table, even if you sell the property yourself.
If you decide to hire a realtor, make sure you do ample screening. Find a realtor that will work for a slightly reduced commission or on a sliding scale and that is well versed in the type of property you are selling. Also, look for someone that is responsive and aggressive and that will work for you to get the best price.
Once you decide how you want to sell it, it’s time to get the property ready for sale.
Get the Property Ready to Sell
Depending on your property, this task could be fairly easy or very difficult. You’ll want to start with the outward appearance of the property and make sure everything is aesthetically pleasing. Make sure the grass is kept up and that there are no visible imperfections. Clean up any of the landscaping that looks outdated or overgrown.
Then, turn your attention to the inside of the building(s). Do whatever you can to make the interior more attractive. If you have tenants, you may not be able to do anything substantial, but you can still call them and ask them (or bribe them) to keep their unit in prime condition. If the unit is empty, you could consider getting a stager but I’m not so sure that it would really make a difference. A fresh coat of paint and new carpet isn’t very expensive but can make the property look much better.
You’ll want to take high quality pictures of each unit, building and room so that you’ll have it ready to show to any prospective buyer. Work out a time with your tenants, if you have them, to enter and take pictures.
Finally, get all of your paperwork in order. Gather all of your rental agreements, tax documents, appraisals and anything else that the propsective buyer would like to know. Have everything ready for when a buyer emerges.
Get Your Property Listed
It’s time to list your property. If you’ve chosen a realtor they will do this for you. If you are using flat fee MLS, craigslist, or doing it yourself with local FSBO sites, you’ll need to get your property listed yourself. Write a thorough description and have at least a hundred pictures ready to go. While you can only post so many on a website, create your own website for the property that has all of the pictures with captions and descriptions. This will save both you and your buyer a lot of time in the long run. It is a fact that the more pictures you have, the more buyer interest you provoke.
Advertise Your Investment Property
Finally, advertise the heck out of your place. Don’t just stick to the MLS service. Look into every classified and online service available, including craigslist, zillow, fsbo and any local or national real estate sites. Run free ads in your local neighborhood and find relocation services that you can work with. You can even use social networking such as facebook so that your friends and colleagues can help you find a buyer.