Posts Tagged ‘transaction’

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Picking Your Real Estate Agent

December 2nd, 2011

A real estate agent is important when you want to sell or buy a house. They can help you with information concerning availability of proprieties, prices, terms and conditions, financing and a lot more. You can get the best price when having a real estate agent on your side when you want to buy or sell property.

If you want things to go smoothly, you should be careful when choosing your real estate agent. Your agent has influence on losing or gaining a significant amount of money on your home transaction. You must be diligent when choosing a real estate agent — first, you have to look for a real estate agent that has experience.

Never go to a novice for advice. Many people simply choose their friends or acquaintences as their realtor, but something as important as buying or selling a home shouldn’t simply be handed over to a friend. Referrals from friends/family are an important consideration, but not the only one.

Choose an agent that has at least two years of experience in both the submarket you’re in, as well as the specific property type you’re dealing with. If you want to buy a home in the suburbs, a realtor that focuses on downtown properties won’t be the best match for you, even if they’re the best realtor downtown. Similarly if you want to sell your single family home, don’t use an apartment broker — there are ins and outs of the home sale that an apartment broker won’t always be familiar with.

Also ensure that your agent is a licensed realtor. Licensing helps weed out some of the people that talk a good game, but can’t back it up with all the appropriate rules and regulations.

You should interview several real estate agents. This is imperative. In the interview, you will be able to discuss things such as fees, how the agent recommend the transaction happen, commissions and much more. Interviewing the agent will help you learn a little bit about their commitment, experience and responsiveness.

There are many horror stories about picking the wrong agent. Agents that did little/no work, yet still expected a big commission. Or worse, agents that made errors that cost people money, and then still expected a big commission check.

Help protect yourself from this type of situation by doing some upfront due diligence in picking your agent, and save yourself some heartache and money. Be patient when choosing and don’t go running to the first real estate agent that comes your way. Good luck in finding the right real estate agent and good luck in getting the best deal you can get!

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Should You Sell or Hold Your Property Development?

November 12th, 2011

For many property investors, the appeal of property development is the promise of creating enormous capital gain in a short space of time. Most people assume that to make money out of property development you need to sell the properties you develop. Is this a common misconception?

The decision of whether you should sell or hold the properties you develop depends on a number of things, including your financial position, the market conditions and the type of development you are undertaking. But primarily it comes down to your objective in doing the development in the first place. Some property developers aim to increase rental returns, while others seek to make a cash profit or simply to increase and unleash their equity. Developing property can also be a way of obtaining new property at wholesale prices. It’s important that you are clear on your objective prior to starting a development as it can influence many aspects of the development.

People often sell properties they have developed because they think they have to sell to make money or “realise the profit”. However, by refinancing you can still access the equity you have created. Why might this be a better option than selling? It comes down to the risks and costs associated with developing to sell. Developing to sell requires expert market timing to get the property cycle right. Plus, if you sell properties that you have developed you will likely have to pay Sales Agents Fees and Marketing (3-4%), GST on the Profit Margin (2% if a 20% margin), and Income Tax (as much as 9% if a 20% profit margin).

It’s clear that if you develop and sell, transaction costs will eat away at your profit. For that reason, I believe developing to sell should not be the first choice in every instance. You could be far better off by hundreds of thousands of dollars by holding the properties. Many of the most successful property developers, such as Frank Lowy (developer worth $6 billion who has built a worldwide shopping centre empire) rarely sell.

So when should you develop and hold? The simple answer is when it is feasible. Depending on the type of development you do, you will generate either additional rental income over and above the interest costs OR you will generate additional equity. But preferably you will do both.

So when is the best time to develop and sell? Being a successful property trader requires focus, commitment and a lot of time. You need to do much more market analysis and it is inherently more risky as you are timing the market. To justify continual buying and selling, you need to generate high returns to warrant the transaction costs (agent fees, stamp duty, income taxes). You also have to be prepared to “landbank”, which is common amongst developer, who may hold land for 10 or more years.

Depending on the project there may be an opportunity to develop and hold some of the project (e.g. 3 units of 6) and sell the rest to pay down some debt. Professional developers can make a lot of money developing and selling, but it is a full time profession. Most developers still hold some part of their portfolios for long term investment.

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Commercial Property Agents – Territory Tactics and KPIs to Build a Better Agency

November 3rd, 2011

When you work in commercial real estate sales and leasing, it is essential to track your numbers and results in the local area. In only that way will you know your challenge and see your success. These numbers will also help you identify the changes in the commercial property industry locally that should be merged into your prospecting and listing program.

Commercial real estate is all about monitoring numbers, trends, and people. Add to that the reason for people to deal with you and you have a formula for building your local market share.

So what numbers should you monitor? Here are a few ideas to help you optimise your local territory property knowledge and understanding.

1. The number of listings available in the local area at any one time will have to be tracked. To achieve those numbers, it is necessary to monitor the signboards placed on properties together with the numbers of listings on the Internet. Add to that the adverts from the local newspaper and you will have some meaningful listing results to monitor. Exactly what is coming on the market now, and what type of property attracts the most enquiries?

2. Every day and every week you should track the number of listings that are being sold or leased and the results they achieved. This is harder to do given that some of those listings are with other agencies. The confidential nature of property transaction makes it difficult to understand the final terms and conditions of the end result sale or lease. Potentially the final details of the property transaction are likely to be known and on that basis they will be comparable evidence for future property listings.

3. The level of commercial real estate enquiry each day and each week will trend into a pattern. You will find that there are busier days during the week for inbound enquiry to you and your property office. Usually that higher level of activity will be the period between Wednesday and Friday. Other patterns will also emerge such as the impact of public holidays. This information allows you to choose the best days to advertise and promote properties for sale or lease.

4. The time on market relating to the lease transaction and the sales transaction will always be relevant. You can also split these numbers into the types of properties and the location. Given that the current property market is generally impacted by the availability of finance and the national economic sentiment, these numbers will be very important when it comes to the ideal listing time and the duration of the average listing.

5. The asking prices and the asking rentals are relative to each listing will give you benchmarks to work within when it comes to property inspections and listing presentations. The owners of properties need to understand what they’re up against.

6. The location of comparable properties in the local area will have implication on the marketing campaign for each property you list. Those comparable properties will have prices, incentives, marketing strategies, improvements, and locations that can be influential in and against the marketing of any other property nearby.

These key numbers will give you evidence and information that helps the listing of a property. The more that you know about these things more attractive the listing can be in its structure and strategy.

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