Ah, yes! The business of Real Estate Investment! AKA: The art of multiplying your money! Also an important part of your bottom line: perfecting your common sense of the business when deciding whether or not to sell.
Maybe you don’t consider yourself a salesperson. That’s ok! For now, knowing the basic principles of the when, why and how, will get you the most profit for your investment.
The When and Why
Let go of trying to determine a ‘hot market’ trend. You must consider the possibility that you could be wrong. Also, for goodness sake, please NEVER EVER sell a property out of desperation. If you do this, you will most certainly lose money. Don’t do it! In this case, try refinancing options and increasing your monthly income. This will sustain your financial health! Usually it’s best to HOLD a property for the long term and watch the equity grow, but in certain circumstances, selling may be your best option. Here’s some really good reasons to sell:
-income from the property is not moving upward
-expenses are about to increase
-return on investment is shrinking
-management is frustrating
-negative infrastructure changes (eg. new railway, or a strip club across the street!) or economy of neighbourhood has declined
-there’s better investments emerging
Real estate cycles every five to eight years so keep this in mind when planning the sales of each property you own so you are able to maximize the financial benefits. There’s nothing much worse in the real estate game than selling at the wrong time and seeing your property you just sold, sell again for an additional six figures. I learned the hard way during my early years of investing. It’s not fun. Become an expert at studying the market and applying this valuable real estate truth. Timing is an important step that cannot be overlooked.
For example, we’ve all witnessed at some point, or read about the real estate booms of the past, where people have made gobs of cash selling their properties at incredibly huge profits that would shock your Great Grandad! But take heed. On the buying end, don’t get tempted to purchase and flip. These booms are short lived and end without warning. Many people lost their shirts with over mortgaged properties doing this in the past. When the crash comes, (and it always does before it stabilizes again) you will be stuck with the losses.
Many people question whether or not a real estate agent is worth the commission they make. It can be painful to watch an agent biting a chunk out of your hard earned equity. In Canada, we ask, does the MLS system really work anyway? And if it does, then why can’t property owners post their own real estate listings on realtor.ca without the realtor? They make too much money anyway!
These are understandable questions and objections, often stemming from a negative past experience with a realtor as the root of these concerns. The real problem, is pre-qualifying a realtor before signing anything! (More on this later) When dealing with an agent, I’ve included the good, bad and ugly of it all, so you can formulate a decision that’s right for you. Top agents can be helpful by saving time and can keep you from ripping your hair out at the complexities of the business. The ‘best of the best’ of agents will have exceptional skill in these areas.
Market Knowledge – They do this for a living, so naturally, they are in the know, on a daily basis: what’s happing, what happened, and what’s coming up.
Professional Advice – It’s a huge advantage to have someone knowledgeable on your team and bounce ideas back and forth. It’s also very helpful when brainstorming real estate strategies, from negotiating to marketing.
Assessing Price – Owners tend to see their properties through rose colored glasses and price with ‘potential’. A professional will set the record straight, which is better than a property sitting on the market for years because it is priced wrong. Price it too high, buyers are scared off, price it too low, buyers are suspicious and wonder what’s wrong with it.
Legal Contracts – Standard real estate contracts are a plus and get you familiar with the sections and subsections, simplifying your life.
Paperwork – Paper trails protect you in this business. With a broker involved, there’s always back-ups: a copy for your agent, your broker, the other party, the lawyers, and you.
Keep in mind it is always acceptable to negotiate your real estate agent’s commission. This is why it’s important to choose an agent that you have a good working relationship with. Most successful investors DO work with an agent. The secret is finding one who is professional, with integrity, and excellent at what they do. A bad realtor can have the opposite effect on your finances, and your stress level, especially if you are locked into a listing contract and are forced to wait it out the end date. A listing contract is legally binding so be careful who you sign with. Choose wisely.
And if you feel that a property is an easy sell, and you’re up for the task, you may opt to sell it on your own. There are several excellent websites online to do this. Find the one that is most popular in your area. Some resources include:
Selling your property is complex and takes a lot of preparation and know-how. You worked for it so make sure to take the necessary steps to plan out a strategy that works best for you and maximize profit.
In the meantime, when you reach for your next goal, remember, do it with GUTS & GRIT!
*Do you have an inspiring experience in your Real Estate investment journey you’d like to share with readers on www.gutsandgrit.com? We’d love to hear it! Please submit your personal written story or a video via email: firstname.lastname@example.org. If we like it, we’ll post it!