Before listing your building, it is vital to assess its current health and physical condition. Perception is everything when touring a building, so you may also consider making repairs to minor flaws that may deter a potential buyer from being interested in making an offer. Surprises kill deals, so it’s in your best interest to present an appealing purchase, which can potentially help maximize the market value of the building. Here are three tips that I’ve found to drive value when bringing a listing to market:
Perception Is Everything
Deferred maintenance inevitably puts a bad taste in a prospective buyer’s mouth, creating a negative first impression. When it appears that you have not cared for your investment property, the buyer becomes increasingly skeptical and curious (rightfully so) about every component in the building. The last thing anyone wants is for a buyer to say, “If I can see this issue, what am I not seeing?” No one is expecting your building to be perfect, but presenting the building in the best light possible drives your listing price and prevents buyers from trying to negotiate for credit after inspection.
Surprises Are The Biggest Deal Killers
Having a contractor assess the physical condition of your building can give you a better idea of what may take away from your listing price. If an inspector finds a foundational issue or if the roof is past its lifespan and causing water issues, a prospective buyer will probably walk away or make a significantly lower offer. For example, California-style, 1960s apartments tend to have more capital expenditures, such as exterior building maintenance, whereas courtyard buildings can have water-damage to the parapets. Know what red flags exist before listing your apartment building. Surprises give the prospective buyers more room for price negotiation and also deter many groups.
Most Valuable Fixes
There are many “easy” fixes that are worth the cost of the repair. Positive first impressions are invaluable and are easily obtained by making the exterior look as nice as possible. Whether it’s brickwork, fresh paint, or landscaping, the exterior of the building will either invite buyers in to see more or tank their impression before even stepping in. Next, prospective buyers will want to see the mechanicals. Make sure the basement is in good shape, remedying any mold or asbestos.
If you are not going to fix certain elements, know how much it actually costs to replace the items so you don’t give up too much money. The prospective buyer may say it costs $5,000 or $10,000 to fix something and expect a credit. Don’t be surprised by this request and know what fair market value is.
Talk with your broker before beginning capital expenditures to see what elements they think will most affect the sale. Give me a call and I would be happy to help.