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Determine the price range that you are comfortable
with and that is reasonable for you to sell your
income property. For example, if you purchased your
home for $250,000 within the last five years and you
put $25,000 into renovations your equity in your
home is now $275,000. Is this acceptable to you? Or
do you expect to sell your home for over $300,000?
Of course we all want to sell for the highest price
possible but you must be clear in you mind what is
the lowest number you will accept. There are a few
things you should do to determine this number or
range:
The Cost of Selling
Calculate your selling costs (brokers' commissions,
title fees, taxes, etc.) and loan payoffs (mortgage,
termination fees, etc.) to arrive at a net figure.
This figure is the anticipated sum of money that you
will receive at closing.
Your Next
Investment
Establish a plan to put the proceeds from your
income property into another investment vehicle. Try
to keep your money working for you all the time. If
you need periodic access to large sums of capital,
invest in short term guaranteed interest products.
Establish a line of credit if necessary. Do you have
a 1031 Exchange Facilitator identified if you are
doing a 1031?
Your Equity
Spend time with your accountant or financial planner
to determine how to make your money work best for
you. Determine if you are prepared to offer a
owner-carry loan to a buyer or if you will need all
of your available equity in the property. For
example, you may not want to realize all of your
money in one lump sum upon selling to avoid
potential tax implications.
Mortgage Issues
If you have purchased another property investigate
the possibility of transferrring your existing
mortgage to it. Or it may be prudent to blend
mortgage rates (depending on how favorable lending
rates are at the time). Discuss your options with
your lender.
The Financial
Story
Prepare all the appropriate financial statements
that will be requested by potential purchasers. This
information is often more important to a potential
buyer than the property itself. Your Prescott income
property advisor should be able to assist you
in preparing and including proper financial
statements in your feature sheets.
Selling price
Establish a sales price for your property that you
feel is representative of fair market value, but be
aware that overpricing a property often aids in
selling other lower priced ones that are comparable.
How do you determine the
best price obtainable for your property?
Factors that DO NOT affect your property's
value:
-
What you paid when you
bought (or built) your house
-
The cash proceeds you
want or need from the sale
-
What any real estate
professional says your property is worth
Buyers dictate the
best price obtainable for your property by engaging
in comparison-shopping. A buyer will not pay more
for one property than he or she would have to pay
for another similar property.
To best determine your selling price you should have
an experienced income property agent who knows the
market for your property type complete a competitive
market evaluation. This appraisal will show what
buyers are willing to pay in today's market by:
-
Demonstrating what
buyers have actually paid recently for similar
properties
-
Showing what buyers
have not been willing to pay under current market
conditions
-
Focusing on other
properties which are now competing for buyers
attention
A competitive market
analysis gives you a solid foundation for the
realistic pricing of your property.
For Prescott Real Estate,
InvestInPrescott.com is
your best source for up to date market information
on income properties. Call today for a market
evaluation of your property. Patrick Schutte
928-710-1717 |
