The Seven Mistakes that Strip You of Your Apartment Building Equity When Selling

Even though investing in an apartment is becoming more and more commonplace, selling a property correctly is like finding an honest politician.  Plus, when you put a property on the market at a time you think may be “the right time”  you’re still subject to those SURPRISES that can cost thousands and make that “great investment” a real loser.  You can prevent your next sale  from being a loser by avoiding the following mistakes:

1.  Failure to qualify and think like the buyer.

Have you seen the property? Ask yourself: “Based on the future of the location and condition of the property, will a buyer find the property attractive?”  If you hesitate in saying “yes”, you must definitely do more analysis as to the salability of the property and the area. 

 What has the buyer closed on lately? Does the buyer own similar property? Is the deposit check cashable?

 2.  Not  inspecting all units prior to putting the property up for sale. 

Most of you are familiar with your units but what about the ones that you haven’t been  in over a year?  Be sure that prior to selling,  you go through the units again to make sure that you (and the buyers) will not have any surprise repairs, pets or guests.  One bad unit could cost you thousands on the negotiating table. Surprise kills deals.

 3.  Work only with realistic income and expense figures.

Save yourself a ton of time and money by working with realistic figures.  By selling the property based on the rent you think you can get and lower expenses that you think a new manager could get just won’t cut it.  Be realistic – buyers will be more likely to pursue the sale when the figures are “actual”, not “projected”.

 4.  Do not sell without looking into tax deferred exchange or contract sale. 

If you have had your property for a long time it is in your best interest to talk to an expert about a tax deferred exchange or installment sale.  These methods could save you many thousands in taxes.  This should be the very first thing you do before putting your property on the market.

 5.  Work with an experienced broker that will work smart and protect your interests at the same time.

The best brokers specialize in apartments . Do not work with a Realtor that has open houses on Sundays and expect them to know how to assist you in a profitable marketing campaign of a commercial property.  Prior to working with them, be sure to ask how many units they have sold!  Get references, ask how they will market the property and check their track record.  Sellers lose negotiating strength when represented by inexperienced agents and when they deal directly with the buyer.

 6. Rendering the property undeliverable.

With exclusive listings, buyers understand you to be a serious seller, not one “testing the waters” and they are assured of the properties’ deliverability. If you do not spend the money now to maintain your property, the buyer will — In terms of discounting the price for work he will have to perform to bring it up to “par”.

7. Not factoring in enough vacancy and reserves . Remember you may not like it but the buyer, appraiser and banker will factor in vacancy and management fees even if you have no vacancy and if you manage the property yourself.   In putting your numbers together use current rates for vacancy and management.

For more information on how to get top dollar for your property or even to get an estimate of value, feel free to contact our office.