Whether you are listing or selling residential or commercial property knowing your market in great detail will lead to greater success.
In an earlier article titled 10 Tips To Help You get Started in Commercial Real Estate one of the items listed was the importance of knowing your market area. I mentioned that I would do a follow up article. Let me explain in more detail.
Both residential and commercial agents need to know some basic things about their market area like number of sales, sales prices, days on market, average and median prices by area. These are some basic things that will help you in dealing with both buyers and sellers. Some additional items that you might want to look at to help you increase your income might include – the percentage of listing price to sales price as well as the number of new listing to closed transactions. The average age of the homes in that area as well as price per square foot can be helpful. This along with the direction of the sales prices will be helpful when dealing with an owner to secure a listing at a salable list price. Know where the neighborhood breaks are where prices will differ. Make sure that any comparisons take this into consideration.
Commercial agents normally will do a lot fewer transactions but will still need to know most of the items listed above as well as some additional information. There are basically five different types of commercial property – Industrial – Office – Retail – Multifamily – Raw land. While each of these require some knowledge that is the same each will also require specific information for that type of property. While a retail property would like to have traffic counts an industrial building or industrial raw land would not need this information. An industrial property might be more interested in access to both rail service and or freeway accessibility.
All of these property types, except in most cases industrial, would want good demographic information on the area. Things like number of households, average wages, age breakdown. But if you are in retail you might also like to know the buying habits in the area and how it compares with the rest of the country. Using the country as 100% for lets say lawn mowers what is the percentage of dollars that are being spent on average per household on lawn mowers in the area. Anything under 100% might mean that there is leakage – dollars being spent on lawn mowers outside the area. If a person is wanting to open up a lawn mower business this would be important information. For most products this information is available. While zoning issues are always important it will be most important to the raw land buyer. If an investor is looking at a multifamily complex they will want to know how many units are in the area and what is the current rental rates and vacancy percentages. A retailer would like to know what other business are in the area that might be a helpful draw or might be direct competition.
All property types, except raw land, will want to look at cash flow and potential return on the money they invest. This can be a very involved process and it requires a lot of time gathering information that generally comes from the seller. Information on currant expected returns both locally and nationally need to be researched in an effort to help both the seller and buyer. Some buyers that will be occupying a building my not be interested in cash flow or the short term return on their investment. They may, instead, want to know what comparable rents are in the area. This will allow them the opportunity to evaluate whether to buy or rent space. Being able to supply the answers to these and other questions will make a difference in your income.
Whether you are in residential or commercial real estate this is a great business and has a lot of challenges but with a little extra effort can be very rewarding.
If you are a residential agent that would like to expand your business into your local Commercial Real Estate market, with NO UPFRONT COST, than call