Use these guidelines to get a great broker’s opinion of value.
1. Look for a Broker who uses the right sales comps.
An expert broker will have the ability to provide a more accurate opinion of value if they are familiar with comparable properties. Your broker should focus on data and sales comps. The price per square feet of comparable assets will help them to better understand how a particular property may perform on the market. The price per unit is usually a good indicator for multifamily properties. Your broker will check the cap rate, type of tenancy and the condition of the property. The broker may even contact the broker who handled comparable sales in the past to find out why a particular property sold at a specific price. Find a broker who is familiar with current sales.
While comps can provide valuable insight into a property’s value, they are also a kind of rearview mirror. The data they provide could be a year old and might not accurately portray recent trends. They may provide data that is a year or more old, and it might not accurately reflect recent trends. The more recent data is better in markets that are fluctuating and have rising interest rates. Your broker will be able apply the details of the recent transactions to the property that you are preparing to list if they know what has been signed. Get a Broker Who Understands the Marketplace
In addition to macro trends, a great broker will be aware of the pulse of the submarket. It could be looking at employment data to determine if rates are rising, changing demographics, or what amenities are most important to residents. Estimates for commercial properties could include details about an income approach. You might find out what an investor should look for when buying a property delivered vacant. Is there a premium, for example? Someone would pay for it to be used? You could also outline any development opportunities. It is important to consider taxes as well.
4. Choose a Broker with a Proven Track Record.
Each sale helps to establish the credibility of a broker. An opinion of value will be more relevant if the broker has a long list of transactions and referrals. In an earlier article I offered to let others see my entire list of sales and contact any owner on it. This gives you a chance to use data on current market conditions and gain additional insight. There’s much more to selling than just a broker’s opinion on value. We’ll discuss these other topics in future articles. The best brokers have a marketing plan, can present the property in its best light and are ready to participate in negotiations.