Selling your apartments is a huge decision – make it a success with these simple tips
When you’re finally ready to place your income property on the market for sale you can make it a smooth and successful transaction with some simple preparation. As they used to tell us in the Marines, proper prior planning prevents poor performance. As an apartment broker I’ve learned that there are a few simple things an owner can do in advance to prevent a poor performance and ensure a successful transaction.
Due Diligence Documentation
Due Diligence documentation is first on this list for a reason. When selling income property, the buyer is going to need financial documentation. Most purchase contracts require the seller to provide this documentation within the first seven days after acceptance of the offer. The updated rent roll, profit and loss statements and utility bills are just a few of the must-have items the buyer will need. If you don’t have a professional property manager, it’s your job as the seller to provide this documentation. Since the buyer’s lender will also need these items, there’s nothing that will kill a deal faster than not having your documents in order. For a complete list of what you will need, contact a broker for a Due Diligence Checklist.
Smoke & Carbon Monoxide (CO) Detectors
Just replaced all the smoke detectors, you say? Guess again. Tenants remove or deactivate these items all the time. Having missing or defective smoke and CO detectors is not only dangerous for tenants, it’s also the number one discrepancy that will hold up a sale. If you don’t have adequate safety devices in place, the appraiser will have to come back to re-inspect. Also, laws have recently changed. Check with your local apartment association for guidance on any new smoke and carbon monoxide detector laws to ensure a smooth sale.
Many apartment buildings were built at a time when lead was used in the paint. As a result, municipalities are beginning to enforce strict guidelines involving painted surfaces. Chipped paint – lead-based or not – is being targeted as a potential health and safety hazard and code violation. This will also come up in the appraisal, and many lenders will require it to be remedied before the close of sale. Get ahead of this issue by re-painting the areas around the exterior of the building that have chipped paint. Remember, there are new lead-paint abatement regulations your painter must follow, so be sure to review current laws as well.
Hire A Specialist
Finally, if you want to receive the highest sales price and ensure a smooth close, consider hiring a specialist. An apartment broker’s main job is to implement a marketing plan that will sell your apartment building for the highest price and ensure a successful close. If your broker can’t get the transaction over the finish line, price doesn’t matter. There are many nuances to selling apartment buildings that a residential agent is unaware of. Valuation based on the income, proper notification for inspections, and discretion with tenants are just a few. It’s easy to spot the buildings where the owner hired a residential agent by the For Sale sign in the yard (not cool with income property). Real estate agents all have specialties. Would you hire a knee surgeon to work on your heart?
Making the decision to sell your income property is a huge step in itself. By taking a few simple steps, you will not only receive more money in your pocket, but also have fewer headaches along the way.
Doug Taber, CCIM at ACI Apartments represents investors who build wealth buying and selling apartment buildings. Call (619) 483-1031 or visit www.YourApartmentBroker.com