Are You Ready to Sell Some Rental Income Property!
By: James Kobzeff
Posted: 2007-05-05 10:16:32
You may not have noticed, but as an active real estate agent you are given at least one opportunity a year to sell real estate investment property.Whether by a walk-in, up-call, previous customer, relative, friend, neighbor, or some aggressive cold calling chances are good that every real estate professional over a twelve month period is given the opportunity to work with one real estate investor.The question for you is, How did you do in that encounter? Did you win over the investor? Were you able to convert to a listing or sale?Not surprisingly, most real estate agents miss the chance. Not for a lack of intention--most real estate agents simply misunderstand how to prepare themselves to engage real estate investors. Let's begin at the top.Making the Right First ImpressionAll salespeople understand the value of the first impression--that winning or losing a sale often rests solely on the perception a customer develops within seconds during the first encounter.Of course real estate agents understand the value of the first impression.Real estate agents service customers who make buying decisions based on curb appeal (the first impression) of properties all the time. Agents also wash their socks, hair, and cars to impress their customers--before the meeting, not afterward.Ironically, however, given that agents know the importance of the first encounter, it is often their inability to make a good impression on investors where most agents lose an excellent opportunity to gain a rental property sale. Why?Most agents fail to recognize what generates a good first impression on investors.What Do Real Estate Investors Look for in an Agent?Winning over an investor is more than style and panache.Real estate investors are less impressed with the agent's Armani and Mercedes then they are with the priority the agent places on real estate investment property.The reputation of a residential agent with the grandest record for selling houses means little to an investor without some evidence that the agent also cares something about investment property.Above all else, investors want to feel confident that the agent cares about how they invest their money and will assist them in making a sound buying decision.Rate Your Last Encounter With an InvestorOkay, now remember back and consider your last encounter with a real estate investor.How did you respond when asked about the value, profitability, and rates of return? What reaction did you give when the investor requested an APOD or proforma? Were you clueless?If you stood there like a deer staring into the headlights of a car at the mere mention of capitalization rate, experience dictates one of several outcomes.
You got lucky and made a sale, regardless
You referred the business away and lost 75% on potential commissions
You scrambled around trying to learn about cap rates and APODs and finally referred it away, only to discover that the investor went to your competitor
In other words, given a perfect opportunity to convert a real estate investor into a commission, you either had to rely on pure luck, settle for 25%, or in the end didn't make a penny. Why?You failed to recognize that you were being interviewed for a job by the investor and didn't prepare yourself beforehand.Keep in mind that unless you are a relative, the investor does not know you from Adam and has no special incentive to work with you. You are undoubtedly just one of many the investor plans to call, and short of a miracle will probably not be called back unless you make an impression.How to Prepare Yourself to Impress an InvestorForemost, dismiss the idea that you need to become a real estate investment expert. Hundreds of deals are closed every year by residential agents that know little about rental income property. How did they do it?They understood beforehand the importance of numbers to a real estate investor and made the conscious effort to be able to discuss and, if need be, create those numbers in reports for the investor. At the very least, they understood the difference between capitalization rate and gross rent multiplier and were able to create an APOD.The good news for you is that you can do it, too--very easily!
Search online for real estate investing resources where you can become acquainted with and learn the formulas for key terms and returns
Use your Excel program to design an APOD and other reports that integrate the calculations for those returns
If you prefer not to design your own, purchase real estate investment software already developed with the formulas and reports Is it worth your effort, time, and expense? If it results in just one sale, absolutely!The untold secret about real estate investment property, however, is that agents generally wind up mushrooming one sale into repetitive sales. Unlike home buyers, real estate investors often purchase more than one property.ConclusionPutting your best foot forward in preparation for a customer is simply a truism of successful selling.Real estate agents who truly understand that and prepare themselves to meet with real estate investors beforehand--on the investor's terms--are cashing in on it.Other agents who decide not to do anything until an income property listing or buyer presents itself are more likely to squander the opportunity.Given the reward, and little required, why procrastinate? You can certainly learn the terms easily, and can procure real estate investment software very inexpensively. Why would you dare to wait?
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