ONTARIO, CA: Houses line the street in the Inland Empire, the area east of Los Angeles, in … [+]
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If you’re selling a residential or commercial property, getting a top-notch broker’s opinion of value can work in your favor. You’ll want to work with someone who is aware of what has sold in the past in the market, along with the current environment. It will be helpful if the broker has access to additional insight and data, which will make them stand out from others in the region, and ultimately increase your chances of a successful transaction.
Use these guidelines to get a great broker’s opinion of value.
1. Find Someone Who Uses the Right Sales Comps
A broker who is aware of comparable properties in the area will be able to add a layer of context for an opinion of value. It’s important that your broker focus on the right sales comps and data. They should be calculating the price per square foot of similar assets, which will make it easier to see how a property might perform in the market. For multifamily properties, the price per unit typically provides further insight. Your broker should be checking the cap rate and type of tenancy, along with a review of the conditions of the property. They might even speak with the broker involved in past comparable transactions to learn why a property sold for a certain price.
2. Look for a Broker Who Knows Current Sales
While sales comps provide insight that can be applied toward an opinion of value, they also tend to serve as a rearview mirror. They reflect what happened in the market several months or more in the past. The data they provide could be a year old and might not accurately portray recent trends.
For this reason, it’s essential for both residential and commercial brokers to have a grasp of current sales. In fluctuating markets with rising interest rates, the more recent the data, the better. If your broker knows what was signed in the past week, they’ll be able to apply those details to the property you’re currently preparing to sell.
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3. Get a Broker Who Understands the Marketplace
In addition to macro trends, a great broker will be aware of the pulse of the submarket. This could include looking at job data to see if employment rates are increasing, how population demographics are changing, and what amenities residents are interested in.
Knowledge of the potential of a place can help to add depth to an opinion of value. For commercial properties, details on an income approach could be added to the estimate. The information might list what you, as an investor, could look for in a property that is delivered vacant. For instance, is there a premium? Would someone pay to use it? If there are opportunities for development, this could be outlined as well. Taxes will need to be addressed too.
4. Work with a Broker Who Has a Solid Track Record
After breaking into a market, each sale can help to establish a broker’s credibility. A long list of successful transactions and referrals will add relevance to an opinion of value. As I mentioned in an earlier article, I offer to show others my entire sales list and let them contact any owner from it.
Getting an in-depth and accurate broker’s value of opinion can help you differentiate yourself from other sellers in the space. It gives you the chance to leverage data about current market conditions, along with additional insight that can be used later in the deal. Of course, there’s more to the equation when selling than a broker’s opinion of value, and we’ll cover these additional topics in future articles. The best brokers will have a tangible marketing plan for the property, be able to show the place in the best light and be ready to be involved in the negotiation process.