There are two basic strategies for selling property:
- Price it high and wait; or
- Price it low and have a bidding war
1. Price it high and wait
The theory behind price is high and wait is that, eventually, someone will come along and pay your price or something to it. Under this theory, there’s no sense in negotiating with yourself (by lowering the price too soon). Just let the property sit out there and a buyer will turn up.
There are a few problems with this strategy. First, your listing will get stale. Most brokers and buyers looking at property check to see what new listings have come on the market. If they see yours sitting around, day after day, they begin to get the sense there’s something wrong with it.
Second, your broker will start caring less and less about your listing. He’s in business to make a buck. If he can see there’s no action on the property, he’s not going to give it his full attention.
Third, you can have an appraisal problem. Even if you get someone to come along and pay your price, the fact it was your only offer may give the appraiser for the buyer’s bank pause.
2. Price it low and have a bidding war
The theory behind pricing it low is the following: You’re going to attract a LOT of interest. Every broker and buyer in the market will notice your property. Seeing a good deal, they will rush to get you offers. Now you’ve got some hot leads.
Assuming you get a bunch of offers, you’re now in the driver seat. What I like to do next is to counter everyone who is in the ballpark on price with the following: I’ll let you do your inspections now, before we go under contract. Then, you give me a non-contingent offer to buy my property for a set price.
The advantage of conducting a sale this way is that you will scare off the tire-kickers and re-traders. Serious buyers will take the risk of spending a few bucks to do their diligence up front. Then they will come back with hard, non-contingent offers. This spares you the haggling that sometimes goes on during the due diligence / contingency period.
Finally, this approach solves your appraisal problem. If an appraiser for the buyer’s bank doubts the value of the property, you can show him that you got a bazillion offers right around the final price. This goes a long way towards making the appraiser comfortable that the bank isn’t getting screwed.
And now, a final note: If you’re interested in selling your apartment building… don’t do it. Seriously. Hold on to your assets if at all possible. But if you really have to sell, give me a call. I’ll either sell it for you or, if I’m not the right person to do it, point you towards someone who is.