Commercial Real Estate Agents - How to Prepare a Property for Sale at the Best Price

A commercial property should be thoroughly explored and understood when it comes to packaging the property for sale as an investment. You as the real estate agent in marketing the property have to get all the right information into the promotional package.

An investment property is made up of a number of key elements around which you can build the main promotional package. The key elements are:

1. The rent or cash flow
2. The tenant profile
3. The improvements in the property
4. The local area and growth or change coming from it
5. Supply and demand for property and rentable space in the area

Buyers want to know all the facts when it comes to considering the purchase. Importantly you have to give the right facts and tell the story to the market. That is where you prepare an information memorandum for the property and make it available to qualified prospects in the promotion of the property.

Here is a checklist to help you in the process of packaging the property for promotion. Your information memorandum will be built around this material.

1. A tenancy schedule for the property is needed. The tenancy schedule must be accurate in every detail. That means it must be checked against the leases in the property. That means you have to read and interpret the leases yourself. This task is not something that can be passed over lightly or given to someone else.
2. A summary of income and expenditure for the property will be needed. That is both historically over the last 12 months and also the current income and expenditure budget. Property buyers want to know what the property has done financially and what it is doing now in cash flow. This figure must have relativity to the tenancy schedule above.
3. Any vacancies should be identified so the buyers can see the extra rent that can be gained from the promotion and renting of that vacancy.
4. A list of current building outgoings should be provided so that the buyer can see how they impact the expenditure detail provided earlier.
5. A summary of the improvements in the property together with photographs, plans and drawings of the site. Importantly this detail must be accurate in every respect.
6. Details of the demographics of the local area will help the buyer understand the location. Give due regard to access from highways, transport, labour supply, and other businesses.





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Evaluating Commercial Real Estate

So you are new to the world of Commercial Real Estate Investing? Not a problem! The first thing you will understand is the different methods used to evaluate a potential Commercial Real Estate acquisition. It doesn't matter if you are wholesaling or buying to hold, it all starts with the evaluation.

Sounds pretty complicated, Right? Well it really isn't. There are three different ways to evaluate Commercial Real Estate.

Three Methods to Evaluate Commercial Real Estate

1. Sales Comparison method
a. This method is synonymous with residential real estate where they evaluate properties based on comparing like properties. Comparisons and adjustments are made for like and non like features and amenities.

2. Cost of Replacement Method
a. This method is used for non-income producing properties like churches where they value the property based on what it would cost to rebuild today. It is based on the cost of materials, labor and the wear and tear (depreciation) on the structure.

3. Income Capitalization Method
a. This method is the standard for the industry. The future cash flows dictate what the present value should be and what an investor is willing to pay for the property.
Income capitalization converts anticipated cash flows into present value by capitalizing net operating income by a market derived "capitalization rate (CAP)".

We will explain the Income Capitalization Method Below!

Commercial Real Estate Income Capitalization Method

There are three variables that are needed to accurately evaluate a Commercial Property Acquisition using this approach.

1. CAP Rate: Measure of the income produced by a property divided by the cost of the property
2. Net Operating Income (NOI): Gross Rents minus expenses
3. Value of Property: NOI divided by the CAP Rate

With any two of these variables you can obtain the third with some simple multiplication or division.

For example: If a property is purchased for the price of $1,000,000.00 and the property produces an annual net operating income of $100,000.00 then the CAP rate of the property is 10%.

Net Operating Income: $100,000.00
Purchase Price: $1,000,000.00
CAP rate: 10%

So in the scenario above, let's say that I am interested in facilities that need a little work (Class C) in the inner cities. The market CAP in those areas is 12% and that is what I want to buy at. I will take the NOI on the property and divide it by the CAP rate to determine my max buy price.

Net Operating Income: $100,000.00
CAP Rate: 12%
Maximum purchase price: $833,333.00






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Listing Commercial Property - How to Price a Property to Sell

When you list a commercial property as a real estate agent you have to get the price just right. The market buyers know what they want and what they should pay for particular property types. Pricing a property well is part of your selling strategy.

When you make a mistake in the property method of sale and or the price, you can be wasting your time in the marketing of the property. Not a good option when the listing is to make a good impression in the local property market. You need good enquiry from the first release of the marketing campaign.

Obviously the seller wants the highest price, but setting a price that is too high will kill the enquiry on the property in the early stages of the property marketing campaign. So you have to get the price just right.

There are some clear rules when it comes to considering the price you set on a property. Help the client to understand the property market and the recent sales. Here is a checklist of the key issues that will help the listing process and the price setting for the property.

1. What are the comparable properties on the local market now and what are their prices? How are they being marketed? Will they clash with your marketing campaign?
2. What are the sale results in the last 12 months of properties of similar type in the same local area?
3. What interest is there in the relative property type today? Is the property unique or special in any way that can impact the price?
4. How old is the property and has it been well maintained? Given that fact, how suitable is the property for further occupation and performance as a property investment?
5. Where will the buyer come from? Are they likely to be local or from outside the local area?
6. What specifically is the profile of the typical buyer of the property?
7. What is the supply and demand for space to occupy in the local area?
8. How much other space is coming on the market by way of new projects and properties in the next 24 months?
9. What are the services and amenities in and around the subject property and how capable are they of continued performance for the building occupants or owners?
10. What is the best method of sale for the market today given the particular property type?
11. What is the time on market at the moment in the sale of this type of property?

These questions will help you with pricing the property. It pays to discuss these points with the seller of the property so they know the key issues that underpin and support the sales strategy that you choose.

John Highman is an expert real estate speaker and coach that helps Real Estate Agents globally to improve their property business, market share, listings, and commissions. John is a successful real estate agent himself and has been so for over 30+ years.



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Sell More Property Faster - How to Pitch a Commercial Property to a Buyer Article Source: http://EzineArticles.com/6078934

When pitching a sale of a commercial property to a buyer it's the story you make and the information provided that will be critical to the outcome. That's why they call you a salesperson. The better the story and information, the greater the chances of closure.

Practice and experience as a real estate agent will help you build skills in pitching a property. It is better to soft sell a commercial property with a great relevant story, than to hard sell a property with pressure. The buyers in commercial real estate are of a greater intelligence, and experience than other more basic property buyers such as residential.

To be successful in commercial real estate sales and leasing, you should seek to become the master negotiator. That means refine and control what you say, think, and do. The property market has to see you as the best.

There are some essential rules to use when pitching a commercial property for sale. Every property promotion and inspection should be built around them. So here are the main ones.

1. Be interested in the buyer and their needs. Ask more questions than you answer until you really know what they want by way of property.
2. Position the property in the mind of the buyer with a series of stories of relevance. That helps them listen to what you say, and remember it well after the inspection. The best salespeople tell the best stories.
3. Have all the property details at hand so you can be specific in your answers. That includes tenancy, rents, leases, plans, improvements, titles, and local demographics.
4. Show the buyer only a small number of properties in any inspection and take reasonable time in walking through those properties that match their needs. Don't confuse the buyer, but help them to see benefit.
5. Information regards the local area. Some buyers will come from outside the region, so local maps, population detail, and business sentiment will be relevant.

When pitching a property to a buyer you really want to be mentally alert and focused on what you say and convey. As a general rule buyers are attracted to the purchase when they are working with an agent that is knowledgeable, committed to helping them, and who communicates convincingly.

This may sound fundamental and obvious, but it is remarkable how many salespeople show a property but do not really connect with the buyer. The best salespeople really do connect well and sustain it to the end of the inspection. It makes the follow up and ongoing contact all that more effective.

John Highman is an expert real estate speaker and coach that helps Real Estate Agents globally to improve their property business, market share, listings, and commissions. John is a successful real estate agent himself and has been so for over 30+ years.



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How to Calculate Your Real Estate Value

Calculating the value of any real estate is both an art and science. It is am art because a systematic manner of calculation is adopted and being a science, it involves various mathematical formulas. Real estate may include any property that cannot be moved such as buildings, wells, land, fence and apartments. Everything in this world owes a value and its estimation becomes a requirement at the time of buying and selling. The calculation of worth cannot be done without the help of expertise and experienced agents because even a minor mistake may lead to heavy financial losses.

The cost of property can be determined in several ways such as-

Market assessment- This includes the amount paid by buyer and amount of other neighborhood to compare the prices of same type of possession.

Appraisal assessment- A licensed and trained professional will compute the worth depending upon comps, inspection and thorough analysis.

Replacement assessment- An appraiser estimate the cost of real estate based on construction and size of similar property. Depreciation and deterioration is taken in to account to compute accurate value of land or building.

Whatever is the reason behind computation of real worth of nay property, the results must be accurate and reliable. By following simple, three steps, and one can easily figure out the exact assessment of any property, such as-

STEP 1:- Online Valuation- Using online services is a great idea because internet is the heart of every kind of information. There are many websites providing free computation services to their clients and offer targeted results in most efficient ways. One can easily find various methods and expertise advice in order to assess the proper value of property.

STEP 2:- Investor's Network- This includes various real estate companies, brokers and agents providing their services to clients. One can take necessary help form them by providing all details and they charge a small fee against their services rendered. There are many methods to evaluate the worth of anything but choosing the right plays an important role. It is the responsibility of these agents to advise right method depending upon the details provided and personal inspection.

STEP 3:- Realtor- Meet some good realtors and ask them to provide their opinion on the worth of any particular property. This will help in right projection based on expertise knowledge and proper research work.

People may find certain options confusing but a little knowledge of basic things can solve the problem. Hiring an expert to valuate any property is the best option because many things have to be considered. After assessment, one must comply with all legal formalities and should maintain a hard as well as soft copy of assessment. This will act as a proof but always remember that value of money does not remain same all the time. The real worth of money may increase or decrease during a course of time. Try to avoid large financial adjustments and stick to the original value of the property.




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Considering Farm or Ranch Properties For Sale? Two Components To Evaluate Article Source: http://EzineArticles.com/6080840

Buying a farm or ranch properties for sale includes several things to consider. Just like purchasing other real estate properties, a ranch or farm land needs a thorough assessment in order to ensure the success of your investment in the future. When you plan to utilize the property for income generating purposes such as cattle raising and crop farming. These components in certain ranch and farm properties must be taken into consideration and thought through thoroughly. Let us divide these topics and discuss how it should be handled.

Land:

It would be foolish to buy a huge piece of land and do nothing with it, most people buy these properties because they can get a great deal on it, some plan to rent the land out to farmers and sit back and receive rental income. Leaving it open, undeveloped is truly a waste. In many countries including the US, the Government pays property owners thousands of dollars annually NOT to plant or make the ground yield crops. This is perhaps the biggest issue to consideration when purchasing acres of property. Are we going to buy the farm or ranch to let it sit or be fruitful with it.

Consider how you will be utilizing the land and how you could reap benefits from it with respect to your financial capabilities and the jobs that it would produce for others.

Many people purchase property without really assessing their financial status for the next 10 years. Forecasting the future based on trends and economics with respect to your financial capabilities, means that you should only consider those options that are attainable by your current financial standing. Purchasing real-estate that is too expensive can complicate or jeopardize your financial future.

Since there are many options in utilizing a farm or ranch property, each option has different things to consider as well. Since farming and ranching use different methods and equipment, these are other factors you'll need to consider regarding the property. One of the most complicated factors to consider perhaps is the quality and attributes of the soil. From soil composition to the slope of the land, these things need to be considered and evaluated in order to identify how these factors will affect the result of your production. This is a vital undertaking in order to minimize the costs and maximize the benefits in the long-run. Be sure to find an expert real-estate agent or broker in that area that understands the industry and can provide you with sound advice.

Building:

A ranch or farm property for sale normally doesn't have a building or structure on the property, especially when it is far from town. Farms and ranches would still require houses built on the property for the tenants and farmers. Unless the land wasn't utilized by someone before, don't expect any form of housing on the property. Usually, building houses throughout these kind of properties are just humble homesteads where they are simple unlike modern houses in cities. Old buildings on these kind of properties for sale need to have a thorough evaluation in terms of cost for repairing to achieve something more desirable. If your desire is to make the farm or ranch your retirement haven of some sort or a vacation house or hunting lodge where it is nearer to the forests and wildlife, expect more wear-and-tear to occur in areas like these since their will be more species, involving bugs really does extra damages to structures compared to buildings in the city.

Presently there are only two major things to consider when it comes to farm or ranch properties for sale, however, evaluating both aren't simple and prove to be challenging. Hiring experts to help you do the assessment is a good choice. Evaluate the estimated cost of renovating both these components plus your working capital versus your estimated benefits for long-term financial stability in order to know if the farm or ranch property you desire is worthy of your investments.




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