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Ready To List With A Real Estate Broker? 13 Things Your Agent Must Do To Maximize Your Profits!

Ready to place your home on the market? Do you understand the process and details of selling a home or commercial property? Before you list with an broker, educate yourself on all the factors that will affect your profit. Be as informed as possible so you can make the absolute best business decisions. After all, the sale of your home is a business decision!

Most of us are not tuned into the trends and fluctuations of the real estate market. Likewise, we are not aware of the necessary steps to maximize profits on the sale of our investment. Typically we rely heavily upon an agent to lead us down the most profitable path. When considering the sale of any investment property it is usually the most valuable asset we own, doesn’t it make sense to list with someone who will maximize our profits? But how do we find that agent?

Start by doing some research. Find out who are the most active agents in your market. Look at advertising to see how professional it is. Do they specialize in the buying and selling of investment property not just home sales? Do they understand ROI and ROE?

1. The Phone Interview
Place a call to each of the agents on your list. Document how quickly they returned your call. Remember: they will be returning calls to your prospective home buyers. Do an initial ‘feel out’ interview over the phone so when you meet you will both be prepared.

2. Request a Complete Plan
From title to escrow; request a complete plan as to the services they can provide for you.

3. Evaluate Their Team
Top producers will have established relationships with lenders, title reps, inspectors… everything. They are there for your benefit and if they are ill-prepared to handle all the steps, you are being short changed.

4. Detailed Report of your Investment Property
Request a complete report of your property with ideas for improvements, cosmetic changes, structural repairs or anything that could add value to your property. Remember a small investment up front will pay higher dividends at the time of sale.

5. Alternative Report
Request a complete report of alternatives to the sale. What would current market leases generate? Rentals? Responsibilities attached with leasing? Have your agent educate you as to all your options.

6. Insist on Pre-qualification
Don’t waste valuable time negotiating or showing your property to unqualified prospects. Insist your agent prequalifies candidates to screen out all unwanted prospects.

7. A Net Sheet
Request a complete net sheet, minus commissions and fees, showing your exact proceeds at the time of sale.

8. A Marketing Plan
Insist on a step-by-step marketing plan of how your property is going to be sold and marketed. Look for innovative ways to attract home buyers. Demand 24-hour advertising, lead accountability and tracking services. These services exist and you should insist upon them.

9. Telemarketing Efforts
Investigate the agent’s telemarketing team. Do they just cold call or do they have a mechanism to create proactive leads and call on those prospects?

10. Direct Mail
Investigate the agent’s capacity to send direct mail. How often do prospects receive mail? Is it professional? Does the mail piece motivate prospects to respond?

11. Advertising
Is it well written and professional? How many ad mediums do they utilize? Newspaper advertising is not as effective as it used to be. The internet is where 87% of people search for a property. What is the brokers web strategy? Remember: the quality of the advertising will directly influence how well your home will be perceived.

12. Negotiation Strategy
Have a written, well conceived, negotiation strategy. The old adage, “You don’t get what you deserve, you get what you negotiate” rings true in real estate. Insist on a sound negotiation strategy before you entertain buyers.

13. Closing Checklist

Be sure to get a written closing checklist. You need to know in detail how you will conclude the sale of your investment. This should provide a step-by-step procedure that will be easy to understand and follow.

An experienced commercial real estate investor knows a good deal when it presents itself.  Sometimes these deals pop up unexpectedly, and sometimes an investor may find a proverbial diamond in the rough.  When a good commercial deal with the potential for excellent financial returns is high and an investor is in need of quick or hard-to-get funds, then private money may be the answer to bridge the financial gap.

Understanding the premise of private money

Private money lenders, also known as “hard money” lenders, provide loans to borrowers with tarnished credit who may not otherwise qualify for traditional commercial mortgages.  Money is also provided for properties that, due to distress or needed repair, may be considered too risky and not be touched by a traditional money lender.

Primarily, private money lenders depend on the commercial property as the collateral for the loan.  In order to protect their interest and to reward them for the extra risk, private money lenders will usually only lend up to 65% of the value of the property, and charge a much higher interest rate to the borrower.

Ideal situations for private money funding

Due to the steeper terms of private money funds, these loans are typically short term, usually only up to one year, but sometimes up to three or even 15 years.  Private money funds can be a good source of funding for an investor who finds a distressed property and needs capital to purchase and renovate the property with the intention of selling or refinancing within a short time.  Or perhaps an investor needs quick funds to close a deal.  Private money lenders can usually close and fund more quickly than traditional mortgages and can provide a temporary financing option, or bridge, until a traditional commercial mortgage with reasonable interest can be obtained.

How to negotiate an optimal private money loan

When negotiating for a short term private money loan, an investor should always ask for the option to prepay the full balance of the loan before the due date without penalty.  Some private money lenders will tack on huge charges for paying in full early.  But if private money funds are meant to be a short term or bridge loan, then an investor will want to option to pay in full early.

Sometimes more time is needed to complete a refinance or obtain traditional funding.  Private money lenders will often add a provision for extra fees and additional interest if the balloon payment is not met on time.  A good investor should anticipate how long it will take to secure other financing and request to waive extra fees if more time is needed.

A usual option for repayment of private money funds is monthly interest only payments, with a balloon payment of the principal balance due at maturity.  With short term loans of up to a year, the interest only payment option is a good deal to keep monthly payments lower.

Private money is ideal for certain investment situations

Private money or hard money lenders are in great demand and offer a beneficial service in providing funds to finance commercial and even residential property.  Though it is easier to obtain private money for an investment, an investor must remember the limitations of private money funds, and the potential extra costs.  But with the right plan and property, private money may be the answer to get a deal going and reap the financial rewards for a great commercial property investment.