The other day I got a call from a local investor who was trying to sell her duplex For Sale By Owner. This person claimed to have once been a realtor who specialized in single family home sales in another state and wanted to know if I could help her as her property wasn’t selling and had been on the market for well over 200 days – WAY longer the local average days on market of < 20.
When I looked at the listing she had created, I noticed a number of mistakes she had made, the most egregious being the way she was pricing her property. When I asked how she came up that price she mentioned that Redfin and Zillow has estimated her property value around that amount, and she felt her property was worth more because it was generating more income from the AirBnB she was running out of one of the units. This had caused her to overprice her property by well over $100K and really highlighted the importance of hiring an agent who specializes in multifamily or small multifamily properties when selling something with multiple rental units.
#1 Pricing: Everyone knows that pricing is important. Overpricing a property could mean that it doesn’t sell while underpricing a property could mean the owner doesn’t net as much from the sale as he or she should. There are two very specific methods of pricing a multifamily property and the correct method is often based on the number of rental units. In my previous story, this owner was trying to price her duplex like you would an 8 unit or 100-unit apartment complex… which one reason her numbers were so far off.
#2 Marketing: Multifamily properties appeal to a different group of buyers than your standard single family home buyer. It’s important to have someone who knows how to communicate important information to your target audience in an easy-to-understand manner. There is a lot of industry-specific terminology with investment properties like “cap rate” or “NOI” and if your agent misuses these terms or worse yet, inputs the wrong information on the listing, a good buyer agent will pick up on these mistakes and capitalize on your agents’ inexperience which could result in you not selling your property for top dollar.
#3 Facilitating the Sale: The buying process for a tenant-occupied multifamily property is very different than that for a normal single-family home. There are different forms, documents and information that need to be shared, and you have other people (ala the tenants and possibly the property manager) who are impacted by the sale process. An agent with experience selling multifamily properties will know the right questions to ask, the right information to gather and how to work with the other people involved to prepare the property for sale and ensure you don’t get caught off-guard or worse yet, fall out of contract because an important step was missed.
Look the bottom line is that single family and multifamily property sales are very different and when there are literally tens of thousands, if not hundreds of thousands of dollars on the line, it’s important to have the right agent on your team.
If you or someone you know is looking to buy or sell a home or investment property in Western WA, please reach out to us at team@WhiteCoatRE.com or you can contact us through our website at www.WhiteCoatRE.com. Thanks for watching I hope to talk with you soon!