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Writing tips for real estate professionals

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Author: Karen Stefano, Esq. and Penny Nathan

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Publisher: Dearborn; 2012; 258 pages; $26.95.

Despite the rise of text messaging, Facebook and Twitter, good writing still matters. But a glance at the emails and blog posts authored by real estate agents suggests some could benefit from a writing primer.

"Either your writing says you are a sharp communicator, or it says you are awkward and ineffective," co-authors Karen Stefano and Penny Nathan say in the preface to "Before Hitting Send," a 258-page writing primer for real estate professionals.

Applying some simple rules and strategies can help take your writing to the next level.

Stefano, a lawyer by trade, got the idea for the book from her husband, a real estate agent. Because of her legal training and the precise, effective written communication it requires, Stefano’s husband would come to her and ask things like, "How do I put nicely, ‘I’m sick of you not returning my phone calls’?"

One time, Stefano said, she took a piece of his writing and showed him how to improve it by taking out passive forms of the verb "to be." He was amazed by the trick, she said.

As Stefano’s husband learned more about the power of writing and the skills involved, he wanted to explore the nuances, such as how "to sound authoritative when he wanted to sound authoritative, and soft when he wanted to sound soft," Stefano said.

Writing isn’t the simplest endeavor, even if you take out the complications inherent in communication. First, there’s grammar. Is that comma in the right place? Is that colon used correctly? And what in the world do you use a semicolon for?

Then there’s clarity. Are the right modifiers next to the words they modify? What is a modifier?

If you’re not a professional writer — and even if you are — the craft of shaping ideas into words and words into purposeful coherence can be difficult.

That’s the gist of "Before Hitting Send." It acknowledges the difficulty of writing and provides some simple guidelines, using language and examples that real estate professionals can relate to.

Numerous before-and-after examples can help you become a better, more thoughtful writer. Many of the book’s 17 chapter titles summarize the concepts addressed: "Use Transition Words to Signal Where Your Message is Going," "Be Specific and Precise in Your Writing," "Proper Word Usage and Three Simple Grammar Rules."

Each chapter — some are very short — contains several exercises (with keys) that emphasize the development of that particular chapter’s focus. The book also provides an extensive appendix with writing samples tailored to the real estate professional that can be slightly modified and used as form letters.

Consider the audience

Tailoring a written message to a specific person is a powerful practice, write Stefano and Nathan. Keeping the recipients’ level of knowledge and the relationship you want to establish with them in mind should help you determine what you write, and the tone to take. For example, there are ways to express frustration while being constructive.

Just as listings in a multiple listing service website require organization, so, too, writing needs structure to be useful — one of the analogies Stefano and Nathan use in "Before Hitting Send."

Organizing your writing — using an intro-body-conclusion, pro-versus-con or step-by-step chronology structure, for example — helps facilitate meaning.

Eliminating the passive voice makes words flow more smoothly and powerfully. Eliminating passive forms of the verb "to be" — such as "I am," "you are," and "he is" — is one easy way to inject energy and clarity into your writing.

Getting rid of extraneous words — replacing "in the event of" with "if," for example — can produce the same effect.

Recognizing muddling words like "slightly," "pretty," "totally," and taking them out, makes writing clearer and stronger.

Although it’s easy to overlook, the proximity of a modifier — a word that adds a description to a noun, like "small" in the phrase "small boy" — is another important structural component worth paying close attention to.

Grammar and punctuation get less attention in "Before Hitting Send," but the basics are covered, including subject-verb agreement and correct verb tense.

Commas, an ever-present punctuation dilemma, take up a healthy section of the book. Different uses — for lists, for bracketing, and for joining — are outlined.

There is no breakdown for semicolons, which can be used to separate items in a list. When not used in a list, each side of the semicolon must be a complete sentence.

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Real Estate Agent Reviews: 19 Tips to Get More, Premier Agent Resources

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Trends & Data

I speak to successful real estate agents who use Zillow Group’s Premier Agent program on an almost daily basis. (Side note: To be perfectly clear, I’m defining “success” in this case as converting contacts to closings.)

Invariably, these agents will tell me that a key component to their success is getting reviews from clients. Which leads, of course, to a natural follow-up question: “How do you get more reviews?”

Here are 19 tips from real estate agents who have dozens — if not hundreds — of reviews:

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Be upfront with your clients

1. Ask for reviews. Very few people will just write a real estate agent review on their own. You have to ask them to do it. If you’re just starting out, aim to get at least five reviews.

“A big change we made — one that changes the ball game and one I highly recommend every team makes — is to use the team review system,” remarked Robert Trefethren, director of strategy and development for Fargo, ND-based Hatch Realty, which has more than 400 reviews. “We were doing them all under individual profiles, but if people expect their agents to go out and get reviews, they’re kidding themselves.”

1. Start talking about reviews from day one. If the first time a client hears how much you value a review is at closing, how likely are they to believe that it’s important at all? Don’t make closing time the first time you mention reviews: Let people know you’ll be requesting a review, then bring them up early on when meeting a client or potential client.


2. Drop a hint. In your day-to-day dealings with a client, they will often say things like, “Wow, thanks for pointing out that stain in the ceiling. Not sure I would have noticed that.” What a great opportunity to say, “That would be a perfect statement to put in a review!” Even if they don’t use that specific example in the review, dropping those hints helps reinforce the importance of reviews. One Premier Agent I talked to is VERY straightforward when it comes to this and he will often say, “Here’s a pen and some paper, write that down because it’s going in my five-star review you’re writing later.”


3. Don’t wait until closing. Ideally, you’ve been mentioning reviews from the get-go. Still, lots of real estate agents say they wait until closing to ask for a review, as that’s when the clients are happiest. True, but it’s also when they are the busiest. Closing is a stressful time; if your client hasn’t yet submitted a review, wait until a couple of weeks after closing to ask again — but no longer than that. Here’s where that drip email campaign can come in handy.


4. Make a personal call. It’s even harder to ignore a personal phone call. Yes, it takes a little more effort, but even if you don’t get the review, you’ve made contact with a past client — and that’s never a bad idea.

Make getting reviews a regular habit

1. Make reviews part of your daily business. Real estate agents who have the most success getting reviews consider them integral to their business marketing. They mention reviews (and the process for writing them) to every client.

“About a year ago, we started putting a focus on getting reviews,” recalled Joe Garcia, director of marketing and innovation for Mark Spain Real Estate in Alpharetta, GA, a team that has more than 1,000 reviews. “We saw stats from Zillow showing that people reach out to three, four, five agents at a time, and when consumers see someone with 100 reviews versus someone with five reviews, it’s an overwhelming indicator to choose the one with more reviews.”

1. Incorporate “the ask” into your process. It never ceases to amaze me how often I hear a real estate agent say, “Oh, I just forget to ask for reviews.” Don’t forget. Make it a part of your process. Enter it as a calendar reminder and add it to your buyer and seller checklists. You can even include it in the material you hand out to clients: “Don’t open a credit card account. Read all documents. Leave me a five-star review!”

“We have two strategies for requesting reviews: We cast a wide net to people who are older in our system — who bought a while ago — and we send a more personal message to people who closed in the last month or so,” Trefethren explained. “You have to do both: Casting a wide net gets a rapid response while personal messages get a higher response.”

1. Don’t rely only on closed transactions for the opportunity to get a review. Many agents seem to feel that the only people they should ask for reviews are clients who closed a transaction with them. Not so. On Zillow, there are several types of client relationships that don’t include a finalized transaction for which you can get real estate agent reviews. There’s no reason you can’t get a great review from a buyer who didn’t close the transaction.


2. Use a drip email campaign. People tend to need reminding more than once to write a review. It’s hard to keep bugging people to do it. If you use a drip email system, set up a “request review” campaign and send monthly emails requesting reviews from those who haven’t left them.

“It’s important to have a system to track who you’ve done business with and do gentle follow up later,” Garcia pointed out. “It’s never too late to share your experience about your home buying or selling experience.”

1. Personalize the language in the standard review invitation. Most review systems use canned language in their review requests. Delete it and write a personal message instead. Remind clients of what you did and how important reviews are to your real estate business.

“We’ve found that the most effective method is sending a personal text message, dropping in personal language, and making the client understand the purpose behind getting a review,” Trefethren explained. “Don’t be afraid to tell them, ‘This helps me earn future business.’”

Make it easy to review you

1. Explain the importance of real estate agent reviews in your business. Yes, asking for a review is a very “me” thing. But sometimes that’s what you have to do. Explaining WHY you’d like an honest review helps people understand the importance of them. “Reviews are an integral part of my business. You saw my reviews and they helped you make a decision to hire me. I’d appreciate it greatly if you would help others do the same by leaving me an honest review.”


2. Offer examples. For many people, looking at a blank screen and trying to come up with words is extremely difficult. Make it as easy as possible for your clients. While you want the review to reflect the reviewer’s voice and not yours — in other words, don’t write the review for them — you can provide lots of examples of previously written real estate agent reviews, and even include a few sentences that clients can copy and modify. Also, don’t strive to get only five-star reviews: you don’t want any potential clients to question your authenticity. Let your clients know you want their honest and fair opinion about their satisfaction with you and the services you provided, and that it’s OK to give you fewer than five stars.


3. Mine your database of past clients for those who haven’t written a review. Remember the client you sold a home to three years ago whom you haven’t reached out to in forever? Here’s your chance. Forget the awkward, “If you know anyone in the market, I’d appreciate a referral” notice and instead hit them up with a friendly request for a review. “Hey, Jim and Sally! Long time no talk! Hope you are doing well. I’ve started a new thing in my real estate business — client reviews — and would really appreciate it if you would consider writing one for me.”

“In the Zillow dashboard for real estate agents, you can literally go in there, type in the 25 emails you want to send and it tracks them for you,” Trefethren remarked. “If a review gets rejected, a client submits a review or if the client does nothing, it tells you and you can resend the email if you want. Our agents use the dashboard quite effectively in conjunction with text messages.”

1. Send a video email. It’s easy to ignore an email, even if it’s personalized. It’s much harder to ignore your smiling face in a short video requesting a review.


2. Post a “review of the week” on your Facebook business page. This appeals to the ego. People like to be recognized and see their “name in lights” so be sure to tag the person who gave you the review in your post. It’s simple to do and helps remind others to write a review for you.

Thank your clients for their time

1. Offer a reward for completing a review. I know what some of you are thinking right now, but this is not “buying” a review. Let’s face it, leaving a review is a bit of a hassle. It takes time. A small token of appreciation — a VISA gift card, a Starbucks card — is not buying a review; it’s thanking someone for their time.


2. Have a review party. Throw an end-of-the-year “client appreciation party,” but make it selective and only invite those who have left reviews. Actually, throw two client appreciation parties, one for reviewers, and one for those who have yet to leave a review. For the second party, bake some cookies with icing that says, “Review me today!”


3. Hold a monthly drawing for a simple prize. Once a month (or once a quarter), enter everyone who has left you a review into a prize drawing. Again, it doesn’t have to be an elaborate or expensive gift. It’s just an opportunity to remind clients that you’re seeking reviews and offering a reward for their time. Offer something simple that everyone needs — a free carpet cleaning, fruit basket or bottle of wine.

“We might do a monthly or quarterly drawing for everyone who gives us a review to win a really nice gift, and that seems to be enough for most clients,” Garcia acknowledged. “But they’re really doing a review for the relationship or experience, and most say they’d do it for us anyway.”

1. Invite reviewers to a special “only-for-reviewers” event. Another way to reward those leaving real estate agent reviews (and encourage others to do so) is to hold a private event just for reviewers; people will come. Take them out to a ball game, treat them to a movie, even just spring for pizza. You can also use this as an incentive in your follow-up emails when requesting reviews: “Hey! The only-for-reviewers ballgame is coming up next month. Get that review in now so you don’t miss the game!”

Respond to negative reviews right away. Nobody’s perfect and with the best intentions and professionalism, you might receive a less-than-stellar review from a dissatisfied client. Present your side of the story professionally and tactfully, and don’t come off as criticizing or deriding the unhappy client. If possible, offer a solution to the problem or make some other goodwill gesture to the client.

Do you have a great idea for getting more reviews? Share it in the comments below!

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Leave a Reply

Kim is the most responsible Realtor that I’ve ever met. She knows lenders, buyers, sellers and is considered top draw.

Great read, thanks! Nice to see the strategy put together in a single list. Here’s also a related post:

These are great best practices for getting more client reviews. We wrote a recent blog discussing the 3 main elements of a successful review strategy. http://content.eendorsements.com/blog/2016/10/12/reviews-really-count/

Great timing as I just recently decided it would be wise to start focusing on Zillow…and of course reviews are a BIG priority.

several of my clients try to leave reviews and don’t have any luck…..don’t know if it’s trouble with their zillow account or not.

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Is Spring Really, Truly the Best Time to Sell a House, ®

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It's the Time of the Season for Selling a House—or Is It?

When it’s time to sell your house, conventional wisdom says selling in the prime season, which begins in spring and lasts through summer, is the best way to go. But what if you wanted to wait until the off-season—is that a savvy move, or would you be leaving money on the table?

Spring marks the beginning of the busiest home-selling and home-buying season in most areas. With the warmer weather, more daylight, and the impetus to get a new house in order before the next school calendar begins, buyers are more likely to shop during this time of year, with home buying peaking in June.

In some parts of the country, the buying seasons are different or less pronounced, as areas with more temperate weather and fewer buyers with children can have more balanced buying seasons.

In other words, the on- and off-seasons can change—both in timing and overall demand for houses on the market—depending on where you live. If you're not sure of what it's like in your area, check with a real estate agent; that's what they're there for.

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OK, let’s get to it—is it really that much better to sell in the prime season?

The on-season: Spring and summer

Unlike other markets, where more inventory means lower prices, the housing market works the opposite way: Prices are highest in the prime season, when the most homes are listed.

"It sounds counterintuitive, but it’s a function of demand being very seasonal, driven by weather and school year," said our chief economist, Jonathan Smoke. There are also more buyers in spring and summer, as this is the most convenient time for most people to move. So relative to demand, the supply of homes is actually tighter in spring and summer than in fall and winter.

When your house is being valued, the appraiser will look into data for comparable homes sold in your neighborhood. But if the most recent data is from a home that sold for cheap in the winter, it can hurt your valuation. Having only bits of comparable housing data “kind of holds you hostage,” said Dana Hill, vice president of Buyer’s Edge Realty in Bethesda, MD.

With more homes selling in the on-season, the comparable data (or "comps") are more accurate. Hill recommends waiting to be the second or third person in your neighborhood to put your house up for sale to take advantage of those comparable sales. While you're at it, be sure your appraiser knows your neighborhood. If a home recently sold for $600,000 but it was a tear-down, while normally prices are $1.2 million, you'll want an appraiser who understands that, said Hill.

Either way, the more data the better—and the prime season is when the data are most robust.

Pro: Homes look better, days are longer

There’s no doubt spring is when properties shine. The flowers are in bloom and buyers are out. Daylight saving time also gives buyers more time to look at houses, which means your property can be seen by more buyers during the day, said Hill. That means a bigger chance for more interested buyers.

With more houses on the market, buyers can afford a bigger wish list. If your home needs repairs, buyers might simply pass. Add in the fact most buyers aren’t shopping under pressure (as they might be during the off-season), and you have a pool of selective shoppers.

“Buyers aren’t as pressured [during the on-season], so there’s no reason they would take a house that takes $15,000 to $20,000 worth of work. I think the time factor plays a big role in necessity,” said Gregory Gronbacher, a Realtor® with Keller Williams Realty in the Grand Rapids, MI, area.

Pro: Sellers can be picky, too

With more buyers come more options for potential new owners. Don’t want your childhood home razed to the ground for a new McMansion? You have a better chance of finding a loving couple looking to start a family during the on-season.

Bidding wars are a headache for buyers but a big plus for sellers. Smoke said you want to “put your home on the market pretty near when inventory is at a high. There’s more chance for bidders and multiple offers.”

Bidding wars mean more money in your pocket. They also usually mean buyers are less likely to make repair requests or other demands. Additionally, cash buyers are some of the more aggressive bidders, so you might find a buyer with a fistful of dollars with a fast lane to closing day.

The off-season: Fall and winter

If you have to put your home up for sale in the off-season, it’s probably because of an extraneous factor—such as a death in the family, layoff, or short sale—and you can get buyers looking for a good deal above all else.

“You get a different sort of buyer, someone who is more sensitive to price, who is intentionally buying at that time of the year,” said Smoke. Investors looking to buy property at a discount do so around this time, he notes.

You may have to accommodate buyers’ wants, like making certain repairs or eating some closing costs in order to sell your home quickly, if that’s a motivating factor.

While you may have to field lowball offers from thrifty home shoppers, that doesn’t mean the motivated buyer is an endangered species in the off-season.

Gronbacher has found that “off-season buyers are more focused and serious about finding the right home in a short amount of time. In many cases, they are involved in a relocation or facing a situation that is requiring them to move.”

Adam Kruse, a Realtor with the Hermann London Real Estate Group in St. Louis, MO, agrees.

“If a buyer is out looking at houses the day before Thanksgiving in six inches of snow, you know they are serious,” he said.

If you’re selling in winter, especially in snowy areas, your house will have less of that colorful "pop" it might have in spring.

“There is no real curb appeal as there is in the spring. We miss the beauty of green lawns, flowers, and in-ground pools,” said Linda Mossman, a Realtor with Realty Executives Boston West in Boston.

To offset the blandness of winter, Mossman said to keep the driveways and sidewalks as clear as possible, and provide your agent with pictures of your home in the spring for reference.

When there are fewer houses on the market, it means homes will sell for less.

You may, however, be able to negate this con by raising your price. It’s a common tactic, said Hill. She calls it “winter pricing,” which makes it easier for the seller to accommodate a lower offer.

Verdict: The on-season is better

OK, so conventional wisdom does get it right, according to our experts: Sellers who have a choice in the matter wait until the prime season starts so they can reap the benefits.

“If you’re a seller,” said Smoke, "this is the optimal time."

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Look before you leap into a cheap Spanish property deal, The Independent

Look before you leap into a cheap Spanish property deal

The Independent Online

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Spain is relying on a €100bn (£81bn) bailout to keep the economy afloat but the banks are still desperate to offload the glut of new and repossessed homes from their books. Spanish banks are now the country's biggest but most reluctant estate agents and although investing in the the property market today may seem foolhardy, with a backlog to shift, prices have crashed.

The Spanish know we're suckers for a bargain and with grey skies all around the UK, you'd be forgiven for jumping in head first. Discounts are impressive on the banks' dedicated real estate websites, which have been translated into English to entice foreign buyers. On Santander's Altamira website, for example, prices are as low as €15,000 for a three-bed flat in Calahorra, La Rioja, and €10,000 for a three-bed in La Trinidad, Valencia, although both are in dire need of attention. La Caixa bank is also selling properties on Servihabitat, Banco Sabadell is selling via Solvia, Banco Popular has Gesa Aliseda and you can find Bankia's repossessed property at BankiaHabitat.

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With bargain basement prices on offer, heads will turn, but is it really a good time to buy in España?

According to Madrid-based property consultants Acuña & Asociados, there are around two million re-sale, ready-built and partially complete properties on the market, of which an estimated 11 to 17 per cent is owned by the banks. With such an oversupply of property, prices could still have some way to go, so you may want to bide your time for even bigger discounts but either way, don't expect to uncover high-end homes going for a song.

"Prices have come down a lot and they are probably going to come down even more for some types of property but this could be a false economy as they are quite often cheap for a very good reason," says Mark Stucklin from Spanish Property Insight. "Great property is always in short supply but if you want something simple, in a nice enough part of Spain which is reasonably inexpensive to buy and maintain, there are plenty of reasonable, functional properties that fit the bill. Just don't be too fussy."

Many of the homes that the banks want off their books at any price are the cheap-but-not-so-cheerful properties built up during the real-estate boom. Poor-quality developments, built in bulk and often in breach of planning rules and building licences have been a huge concern for ex-pats, so proceed with caution. It is likely that repossessions are a much better bet for first-time buyers in the Spanish market in urban areas, rather than Brits looking for a home by the sea.

It also pays to keep in mind that, as in the UK, there is some degree of separation when looking at the Spanish property market as a whole.

"If I was in a buyer's position, I would look at the market very carefully. It is location, location and location," says Marc Pritchard, a sales manager of housebuilder Taylor Wimpey España. "The vast majority of the bank-repossessed properties are inland up to 40km away from the coast, don't have sea views, no infrastructure around them at all and in some cases a golf course which cannot be maintained as they are not getting golf players – that is why they have not sold in the first place."

If you buy in an unfinished, empty development there may be no maintenance at all, no after-sales service because the main or sub-contractors no longer exist and no guarantees in place (excluding the structural guarantee which is covered by Spanish law). An unfinished or shoddy site is a big problem but if you buy into a ghost development at any price, it is likely to be money down the drain.

The Balearics could be a different kettle of fish; Mallorca has benefited from stricter local government regulations to keep development in check. An oversupply in low-grade destinations around large Spanish cities and inland from the costas presents a far riskier investment.

Louise Reynolds, of independent European property agent Property Venture, says while price declines have been more accentuated on the coast, inland prices have held up and are likely to be less volatile.

"If you are buying in a decent area, on a decent development, which is not flooded with other 'me-too' properties nearby, then the price is likely to be more resilient," she says. "Places to look for property that will hold its value are near new infrastructure improvements."

No matter where you buy, due diligence is paramount, so steer clear of off-plan and make sure you see any potential purchase. Ideally, rent first in the area you're interested in to get a feel for whether you would be happy living there. This will also give you time to secure a reputable lawyer independent of estate agents who can investigate if the property has any debts and to obtain a valuation to highlight potential problems such as damp or subsidence. you also need to see a copy of the property's "cdula de habitabilidad" (certificate of occupancy). Spanish purchase fees are fairly high at around 10 per cent, so do factor these in too.

Despite setting up their own real estate arms the banks are not necessarily equipped to deal with foreign buyers effectively so you may still have to go through agents. Finance is generally very difficult to obtain in Spain but should be much easier on bank-owned property. Mortgages for repossessions are typically available at up to 80 per cent of the purchase price, compared with the 40 to 50 per cent deposits required for standard resales and some are even offering 100 per cent finance deals. But beware, property taxes could soar. One-off charges are being levied in Greece and France, with foreign buyers affected.

the wider question of Spain leaving the euro is looming. If you buy now at a low price you could end up with an asset in a devalued currency. Spain could increase or introduce new property taxes, particularly for foreigners. And if capital controls are introduced to restrict movement of money within the eurozone, you could find that even if you can sell up, you won't be able to get your money out of the country.

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How to value an apartment building - Moses Kagan on Real Estate

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How to value an apartment building

If you’re reading this, I assume you’re more-than-a-little-bit interested in buying apartment buildings. But what to buy? Put another way: Of all the buildings on the market, which are the “good deals”?

What’s a “good deal”? Apartment buildings aren’t like houses. You don’t buy them for the feng shui. You buy them because you place a certain value on the cash flow they produce or for the cash flow you can imagine them producing with some additional investment from you.

“OK,” you say, “but that doesn’t help me very much. I’m looking for a good deal on a building and I have no idea what a good deal looks like.”

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Here’s an idea: Take the facts about the building (the number of apartments, the total rent, the square footage, etc.), apply the tools below, and process those facts into an educated opinion about its value. Then, if you can negotiate a price that’s less than the building’s value, BAM! You buy. Simple, right?

Here are the tools:

Tool 1: Gross rent multiple (GRM)

Intuitively, the more rent the building commands, the more valuable it should be. So we can look at the rents and use them to get at an approximation of its value. The simplest way to do this is called the “gross rent multiple” approach.

To get a rough estimate of a building’s value, start by adding up all the rent a building takes in in one month. So, if you have eight units each renting for $1,000 per month, the total “gross” rent is 8 x $1,000 = $8,000. Next, multiply the monthly figure by 12 months to get the annual gross rent. For our example, multiply $8,000 x 12 = $96,000 annual gross rent.

As I write this in late 2011, in Los Angeles, a reasonable range for the value of an apartment building is between 9-11 times gross rents. This is called the GRM: “Gross Rent Multiple”. So, to value our sample building above, I would multiply $96,000 x 9 = $864,000 to get the bottom of the valuation range and $96,000 x 11 = $1,056,000 to get the top end of the range. “But,” you ask, “how do I decide whether to use ‘9’ or ’11’ or some other number?”

In general, the more desirable (and, therefore, less risky) an area, the higher the GRM. So a building in the best part of Beverly Hills might go for 12-13 GRM. A run-down building in Compton might go for 7 GRM.

Ideally, you want to review the data on recent sales of comparable buildings in the target area to get a sense for the rent multiples they have sold for. To get the GRM for a given comparable building, check the price it sold for and the rents it was getting at the time. Divide the price by the gross annual rent and that’s your GRM. For example, if a similar building was getting $100,000 in annual gross rent and sold for $1,000,000 recently, divide $1,000,000 / $100,000 = 10 GRM. Then, multiply the rents on your target building by ten to get your value.

GRM is a quick and dirty way to get a valuation range for a building. But it leaves out something very important: costs! To get a more accurate sense for the value of a building, we should look to the CAP rate method, which takes costs into account.

The idea behind the CAP rate method is also pretty simple. We want to compare the actual profitability of a building to its value. To do this, we need to start by figuring out what the “net operating income” or NOI is.

You calculate NOI by taking the total annual rent and subtracting all of the costs of running the building, including property tax but NOT any mortgage payments. For example: Take your building above, the one bringing in $96,000 per year. Subtract 3% of the rents for a vacancy reserve. Then subtract the utilities, gardening, cleaning, maintenance, management, repair reserve and property taxes. Let’s say we estimate all of the following at around $33,600 per year. To get the NOI, we’d calculate $96,000 – $33,600 = $62,400. That’s the amount of net operating income the building generates.

To go from the NOI to an estimate of value, you need what’s called a capitalization rate, or a “CAP rate”. This is a ratio between the price similar buildings have sold for and the NOI they were generating. To calculate a CAP rate, you divide the price of the building by its NOI NOI by the price of the building. So if a comparable building sold around the corner for $1,000,000 and it was generating $75,000 in NOI, the CAP rate can be calculated like this: $1,000,000 / $75,000 $75,000/$1,000,000 = .075, or 7.5%. Another way to think about this is: If you bought that building for $1,000,000, you would be earning $75,000 per year in profits, or 7.5% return on your money. Beats a bank account, huh?

In general, CAP rates in LA range from 4.5%, for great buildings in the absolute best areas, to around 9% for bad buildings in crappy areas. Let’s take our $62,400 Net Operating Income building from above. If it’s in a great area, we’d use a 4.5% cap rate on it. We would divide the NOI by the CAP rate. So, $62,400 / 0.045 = $1,386,667(!!) On the other hand, if it were in a bad area, we might put a 9% CAP rate on it, making its value $62,400 / 0.09 = $693,333. That’s a big, big difference in value… note the importance of choosing the right CAP rate!

Some buyers ignore the cash flow entirely. Maybe they’re already rich and figure they’ll buy in a good area and hope for appreciation over time. Or maybe (like me!) they’re going to totally change the building anyway, so the existing rents and expenses are irrelevant. These buyers buy “in bulk” or “by the pound”. The two ways of doing this are by looking at the value per square foot of building and the value per unit.

Let’s look at value per square foot first. Here the buyer is saying: “I don’t really care about the rents. I figure those might change. I just want to know whether it’s cheaper to buy this existing building or go build a new one like it.” So they use a rule of thumb, like $100 per square foot. They take the square footage of the existing building and multiply it by their rule of thumb to get an approximation of value. Let’s imagine our sample building (the one generating $96,000 in rents and $62,400 in NOI) is 8,800 sq ft (including eight 1,000 sq. ft. apartments plus 800 sq. ft. of hallway, etc.). Our bulk buyer might just go: $100 x 8,800 = $880,000. Generally, in LA, the best areas can support $300-400 per square foot, while the worst areas might only support $80 per square foot.

Finally, there’s value per unit (or “per apartment” or “per door”). This is exactly what it sounds like. You take a rule of thumb for the value of each apartment and you multiply it by the number of apartments in the building. Your rule of thumb might say you won’t value any unit at more than $100,000. So your eight unit building is worth: 8 x $100,000 = $800,000. This is a very blunt tool: It doesn’t distinguish between tiny studio apartments and glorious, sprawling three bedroom units with parking. That said, some people use it. In LA, you will see some newer buildings in great areas going for more than $300,000 per unit, while in bad areas I’ve seen deals close at prices equating to $45,000 per unit.

As you can see, the different tools for valuing apartment buildings can lead to vastly different estimates of value. Unfortunately, there’s no clean way to combine them all to get at one “true” estimate. As always, value ends up being mostly in the eyes of the beholder: Are you a cash flow player? Then the CAP rate value is most important to you. A re-habber? You probably buy in bulk.

If you’re smart, though, whichever kind of buyer you are, you’ll evaluate potential acquisitions with all of the tools available. What you’ll get, in the end, is a range. And somewhere in that range is a fair value for the building.

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How to get the best price for your house this spring - NZ Herald

How to get the best price for your house this spring

In four weeks the spring real estate market will take off, so it’s time to get ready. Rachel Grunwell finds out how to get the best price for your property.

Appearance matters when selling your home. This is according to Paul McKenzie, marketing manager for Realestate.co.nz, which lists most of the houses for sale nationwide.

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He says getting your house ready for sale should start with a big clean up and clear out. Don't even think about calling an agent before you've got rid of your junk and de-cluttered.

And if you think you can skip scrubbing inside cupboards, think again - some people peer into every space to judge if a home is well kept. Get rid of mould and musty smells, wash windows, clean the inside the fridge and tidy that overflowing wardrobe.

"Getting it perfect is key," says Paul, "because people want to be able to envisage your home as theirs."

Aim to have your house as immaculate as a hotel with the emphasis on luxury and comfort. Become a neat freak.

He advises "de-personalising" your house by storing away family photos, but a top-selling agent for Barfoot and Thompson, Ketiesha Elliott, adds that you should pull back from making your house too sterile. "It's worth keeping a few personal touches because people like buying a home that has heart and soul," says Elliott.

The good thing about these first steps is they cost nothing.

Where you should spend money is on fixing things, such as leaky taps, creaky doors or drawers that won't open. Buyers note everything that could cost them; little glitches are viewed as flaws.

Paul says space matters too and there are tricks to opening up rooms. One tip is to give away, store, or sell some furniture that hogs space and makes the place "cluttered". Keep only the most essential pieces of furniture in any room.

An extra step is to paint the walls a light colour, and add light-coloured curtains to create a sense of more space.

Related articles:

Be wary of the hard sell

Property Report: What the industry says

Sellers hold the power as house shortage bites

Auckland house prices could double by 2022 - experts

Go the extra mile and get your timber floors re-polished - they will look stunning and you'll get your money back come sale time.

Come open home day, display flowers and candles, and exchange your workaday towels in the bathrooms for fluffy new ones. Ketiesha advises to heat your home in winter, and leave it cool in summer. Turn on lights in hallways and shady rooms. Take one last spin around the house to gather up family clutter, then leave the agent to show off the house so buyers have a free reign to look around.

If you have the cash, Paul says consider "dressing" your lounge, dining room and the master bedroom in particular. It may cost about $2500 to stage a three-bedroom home with artwork and furniture, but you are likely to recoup the costs when you sell because your home will be more appealing.

Street appeal will also get buyers through the door, and when they reach the back yard they want to see that the section is low-maintenance.

Paul encourages sellers to clean the outside of the house, mow lawns, trim trees, weed and even plant flowers to make the place pretty. Waterblast paths, decks and outdoor furniture. Light is a big "want" on buyers' lists, so if there's a hedge or tree shading a window, cut it back.

Next, think about energy efficient features such as insulation. It's one of the top things house-hunters look for, according to a survey undertaken by Realestate.co.nz in association with the Green Building Council for the Sustainable Housing Summit.

According to Albrecht Stoecklein, technical manager at Right House Ltd (which offers energy efficiency products), it costs about $3000 to insulate a three-bedroom home. This isn't a huge investment when Stoecklein says overseas studies reckon houses can sell for up to 6 per cent more if they're energy efficient.

"Years ago buyers were all about the Italian bench-tops, but now they look closely at energy efficiency," he says.

When you think you've done all you can to get your place ready for market, Paul suggests getting a mate to walk around and spot things you might have missed. After that, it's a matter of keeping it clean and tidy throughout the marketing campaign.

Paul advises finding a good agent by looking at their online profile and homes they are selling on Realestate.co.nz.

Philip Macalister, who publishes NZ Property Investor Magazine and runs Landlords.co.nz, recommends finding an experienced agent who is a "best seller".

"If they're good, they'll tell you," he says, adding that good agents don't tend to negotiate on their rates or marketing packages, but tend to have options for the latter.

Don't worry about dodgy agents too much, he says, as the industry is now well policed. However, people can check that an agent is licensed and whether they have had claims brought against them on the Real Estate Agents' Authority website.

Macalister cautions sellers against being too lean with their advertising budget, saying "you have to market it", especially if your property is in a high value bracket for which there might not be a big pool of buyers. Clever marketing can make the difference between getting a small audience, or filling an auction room with bidders.

Ketiesha also believes good marketing matters, and great photography is part of that. Most agents will have a professional house photographer they recommend and the results will be well worth the extra cost.

So should you sell by auction, negotiation or fixed price? Macalister says a skilled agent can advise on the best method of sale for your type of home and your area. Where demand is high, auctions can work well in driving up the price. More unusual houses, or those in less desirable areas, sell better through negotiation.

Ultimately, Macalister advises shopping around for an agent and getting them to make a pitch on what they think your house is worth and how they would market and sell it. Seek recommendations from other homeowners in your area, and ask local real estate offices who their most successful agents are. Agents with plenty of experience in your patch will have a database of potential buyers, know what they want, and know how to market your place to them.

Lick of paint earns big bucks

Penny and Scott Bower recently paid $918,000 for a two-bedroom 1940s brick bungalow in Mt Eden. That's $200,000 above its CV, and they're thrilled.

The original home was cleaned and de-cluttered, so bidders could visualise living there, and there was fierce competition at the auction.

The Bowers say they are rapt to have secured the well-loved and well-looked-after home in a spectacular spot.

Ray White agent Robyn Hoonhout says two parties asked post-auction if the Bowers would on-sell it, such was their "devastation" at "letting it go" at auction.

"But we said we'll never leave," says Penny, "only in a pine box!"

The home is in their dream location: a sun-drenched position in the heart of the double grammar zone, walking distance to Mt Eden Village (they have views of the mountain too) and it's in a quiet cul-de-sac that's "a real community" for their children Oscar, 5, and Alexi, 2, to grow up in.

The couple have already renovated by painting inside, lifting worn flowery carpets, polishing wooden floors, installing a heat pump and making a third bedroom out of part of the old laundry and some cupboard space, so the kids have a room each. They'll renovate the large storage area downstairs in the future.

Penny says after they finished the $80,000 renovation, friends who initially "looked horrified, bless them" at the house when they first bought it, have since said "wow!"

The couple say they could afford to buy in Mt Eden after selling their 1920s ex-state house in Orakei.

Initially they couldn't sell their old house because buyers were put off by the work that it needed, says Penny. So they sought advice from a real estate agent and a professional building inspector on what to do and then "listened to every instruction" about renovating it properly. They painted, stripped door handles back by hand, insulated and landscaped.

The top class renovation cost about $100,000 but resulted in the house selling for $780,000, $230,000 above CV.

Penny says their Barfoot & Thompson agent, Bruce Christian, was great during the process, advising them to not take pre-auction offers that were $100,000 less than the eventual sale price.

"People think real estate agents do not earn their money, but this is a case in point where one totally did," she says.

Penny says renovating the Orakei house was good for their confidence as homeowners, because it meant "we were not afraid to renovate" the Mt Eden pad they went on to buy.

New Zealand is supposed to be in a recession but the real estate market is running hot in some spots, particularly Auckland and Christchurch.

It's a sellers' market due to factors such as lack of supply and relatively little building going on to meet demand. This has created a build-up in buyer numbers. Meanwhile, low interest rates are enticing and banks are competing for clients.

This is according to QV.co.nz research director Jonno Ingerson, who forecasts home values will continue to grow, particularly in Auckland.

"What would cause them to drop is a massive over-supply and it's unlikely that the balance is going to swing around anytime soon," he says.

Ingerson says family homes in good school zones are in demand, first-home buyers are hunting and investors are also wanting to get back into the market. Other factors include people leaving Christchurch for Auckland after the earthquakes, and there's a limited stock in Christchurch due to earthquake-damaged homes.

However, Ingerson says Kiwis remain fairly cautious about taking on too much debt: they're watching Europe and there's a general feeling we're not out of the woods yet with the recession.

According to QV data on sales that occurred in the three months to the end of June, Auckland City suburbs are selling on average 10 per cent above CV, while on the North Shore, Waitakere and Manukau the average is about 8 per cent above CV. The top performer was North Shore's Stanley Point, selling on average 18.4 per cent above CV.

Ingerson says nationwide property values had risen in June. Values are up 1.8 per cent over the past three months, 4.2 per cent over the past year and are now only 1.3 per cent below the previous market peak of late 2007.

Across the wider Auckland region, values are now 4.8 per cent higher than the 2007 market peak, and in the old Auckland City Council area values are 7.6 per cent higher than the peak.

In Christchurch, values now sit 1.5 per cent above the previous market peak.

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Sell My Apartment

Sell My Apartment/Condo Fast

Do you have an apartment or condo that you would like to sell? The good news is that we don’t just buy houses in Houston and surrounding areas, we also buy a lot of apartments and condos as well. Most apartment or condo owners decide to sell their property for these reasons:

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• Maintenance Fees – most condos or apartments have high maintenance fees that cover various expenses accrued by the property management staff to maintain the premises. This sometimes may include insurance, water or even utilities depending on the complex. The problem with most fees are when a complex gets hit really hard with non paying members, the money has to come from somewhere so the property management company has to raise the maintenance fees to make up for the delinquencies.

• Privacy – most apartments or condos don’t offer a lot of privacy because you live either above or below someone and even right next door to an adjacent property. So if you’re looking for privacy this type of property is not for you.

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• Hard to sell – let’s be honest most apartments or condos are a very hard sell. Almost all of them are the same floor plan or they look similar to the next door unit so there is no uniqueness to yours to make it stand out. Most importantly, if there are a lot of vacancies in the complex those units are going to sell first over yours in most cases and are very bad for resale value.

• Freedom – you’re very limited to what you are allowed to do when you live in an apartment or condo. You simply have to live by the management staff’s rules so your freedom to do as you please is very limited. As an investor some complexes will not even allow you to rent to a tenant because they only allow owner occupant owners, so make sure you check this out before purchasing.

These are the most common reasons we get apartment or condo sellers calling us to sell their properties fast. The good news is if you have an apartment or condo you would like to sell fast we still want to buy it! We are one of the most active apartment or condo buyers in the Houston area and would love to hear about yours today. We can come view your condo or apartment today and give you an option to sell yours fast after our FREE evaluation. So don’t wait, give us a call right now or submit our online seller form to have one or our acquisitions associates schedule a time to take a look today.

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How to Sell a Condo Fast

To sell any piece of real estate quickly the seller needs to ensure that the property is brought to the attention of willing buyers who are in the market to buy now. Whether the condo is listed with a real estate broker or you are selling it yourself, if you want it sold quickly you need to take an active role in the process.

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Visit other available condos in your complex. Compare the condition and location of these to yours. This information will help you determine a list price for your condo.

Price your condo five percent less than the condo most comparable to yours both in condition and location within the complex.

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Make any needed repairs and cosmetic fixes prior to placing the condo on the market. If you lack the time for such work, price the home accordingly and make it known to agents and buyers that you have done so. Be aware that some work, such as termite damage, is required by law to be performed prior to the home closing escrow. Laws vary by state, so check with your state board of real estate to learn the requirements.

Market the condo. Take clear photos of the condo's best features and post them online at various for-sale-by-owner websites. Create flyers that feature these photos as well as several photos of the complex and leave them with your neighbors. Often, neighbors know someone who wants to live in their building.

Deliver flyers to real estate offices in your area. Offer a bonus to the real estate agent that brings in the buyer. Sometimes an extra one or two thousand dollars can be incentive enough for the agents to keep your condo on the top of the list to show to prospective buyers.

Be ready to make concessions to the buyer to sweeten the deal. Offer to pay her closing costs or pay for any needed repairs or desired upgrades.

Order copies of the required Homeowner's Association (HOA) documents. The requirements vary by state but generally include copies of the CC&Rs (Covenants, Conditions and Restrictions), minutes of association meetings for the past two years, association budget, notices of assessments, and any litigation-related paperwork. Your HOA can provide you with a list of which documents are required and the fee for obtaining copies.

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If I buy a home at a foreclosure sale in Washington DC, can its owners later "redeem" the house?

Find out how secure you'll be from former homeowners if you buy a foreclosure property in D.C.

I’m currently renting an apartment in Washington, DC, but am thinking about buying a condominium. There is a great condo in the building next to mine that is being foreclosed and I would like to purchase it at the foreclosure sale. I'm hesitant, though, because someone told me that the owners could get the condo back after the foreclosure sale by “redeeming” the property, which I think means reimbursing me for the amount I paid at the sale. Is that true?

No. You don’t have to worry about the homeowners getting the condo (or any other type of residential property) back after the foreclosure sale. The District of Columbia does not provide foreclosed homeowners with the right to redeem after the sale.

However, the IRS could potentially take the condo away from you by redeeming it (that is, reimbursing you for the full purchase price, plus various other amounts) after the foreclosure sale if there was a federal tax lien on the property. We’ll describe below how this might affect your ability to settle into your new condo without having to worry that you’ll eventually lose it.

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If There’s a Federal Tax Lien on the Property, the IRS Can Redeem

It's possible, but not common, for the IRS to redeem a house or condo after a foreclosure sale if there was a federal tax lien on the property. The IRS gets a 120-day redemption period. The right to redeem automatically expires if the IRS does not take action within this time frame. (If you request it, the IRS may agree to release the right to redeem before the redemption period expires.)

In order to redeem the property, the IRS would have to pay you the amount you paid at the foreclosure sale, plus:

• 6% interest from the date of sale


• all amounts you paid to senior lienholders, and


• the amounts you paid for necessary expenses, such as for repairs or insurance. (The IRS would charge you the fair market rental value for your use of the condo during the redemption period and deduct this amount from the total that it pays you to redeem.)

If the IRS considers redeeming the property it would send you a notice beforehand, letting you know. The IRS would redeem only if it believes that it could later sell the property for more than you bought it for at the foreclosure sale.

Other Things to Think About When Buying a Foreclosed Home

Besides the possibility of an IRS redemption, there are other issues to think about if you’re considering buying a condo or other property at a foreclosure sale. An important one is that you won’t receive any seller disclosures regarding the condition of the property before the sale.

Also, you’ll have to purchase the property “as is,” without negotiating over repairs. Since the owner was in financial distress, this means the condo could need a significant amount of maintenance. (Learn more in Nolo’s Buying Foreclosed Properties area.)

Finding the District of Columbia’s Foreclosure Laws

To find the statutes that discuss foreclosure sales in Washington, DC, go to Title 42, Subtitle I, Chapter 8 of the District of Columbia Code.

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