When it comes to selling your investment property, one of the most crucial decisions you’ll make is setting the right price. Price it too high, and you risk scaring away buyers. Price it too low, and you might leave money on the table.
Step 1: Market Research
Before putting a price tag on your investment property, you need to understand the local real estate market. Research recent sales of similar properties in your area using websites like Zillow, Trulia, and Redfin can be valuable resources for this information. Pay close attention to properties with similar features, such as size, location, and condition. When pricing investment properties, be sure to make your investment attractive to would-be buyers. Run the numbers and be sure the opportunity is there for the next owner.
Step 2: Evaluate Your Property
Take a critical look at your investment property. Consider its unique features, upgrades, and any repairs or improvements you’ve made. Are there any special amenities that make it stand out? Be objective and realistic about its condition and how it compares to other properties in your area. Is there value-add potential? Is it turnkey? View your property from the lens of the buyer, not just as the seller.
Step 3: Consider Your Investment Goals
Think about why you purchased the property in the first place. Are you looking to maximize your profit, sell quickly, or a combination of both? Are you eyeing a 1031 Exchange? Understanding your goals will influence your pricing strategy. It’s no secret that over-priced properties take longer to sell for a variety of reasons, so be sure to think about your strategy prior to posting the home for sale.
Step 4: Calculate Your Costs
Factor in all the costs associated with selling your investment property, including closing costs, any outstanding mortgage balance, and the expenses that you’ll incur during the sales process. These costs are often much easier to stomach when you consider that by selling FSBO you eliminate the standard 6% fee paid out to realtors. You’ll want to ensure that the final sale price covers these costs and leaves you with your desired profit. Oftentimes it’s easiest to start from the price you want to net and add-on the expenses to land on your final price.
Step 5: Be Open to Negotiation
Always be prepared for negotiations. Be flexible and willing to adjust your price slightly if it helps close the deal. This is why it’s vital to establish your bottom line and be prepared to walk away if the negotiations aren’t in your favor.
Pricing your investment property for a successful sale requires research, evaluation, and strategic thinking. By following these steps and staying informed about your local market you can set a competitive price that attracts buyers and all but guarantees a successful sale.
