Dealing with multifamily units is way more complicated than selling your average single-family home. For one, you’re working with a lot more people, not just the owner and prospective buyers.
Additionally, you’re showing places that buyers need to consider as an investment, not so much the place where they’ll raise future children.
Whether you’re showing duplexes or an apartment complex with hundreds of units, here are three things to know about selling multifamily units.
It’s about way more than location
Location, location, location, they say. It’s a cliche that stuck around because, well, its true. You’ll want to give the neighborhood a look, ensuring that it’s in a high-growth, high-yield area. Buildings in desirable areas that need a little work are better bets than a pristine property in a less desirable part of town.
But beyond location, more factors enter the fold than whether or not you’re selling in a hip part of town.
What matters in a neighborhood?
- Job growth
- Rent-to-price ratio
- Population growth
- Public transit
- Crime rates
- Walk score
- Condition of streets and nearby properties
- Price of similar properties
- Local businesses
- Vacancy levels
- Employers in the area
- Socio-economic demographics
- Price trends
- Zoning, building and rent codes
- Nearby competition
- Average time on market
- Past sales transactions
- Average rent in the area
- Lenders and appraisers involved
You’ll want to look at unit composition — one and two bedrooms may be easier to move than, say, several studios. It’s also important to look at how many units are on the property.
These elements will factor into how quickly you can sell the property and will serve as a basis for setting seller expectations up front. Additionally, the factors listed above will inform your marketing materials as well.
Multifamily is a completely different game
Unlike residential buyers and sellers, multifamily real estate investing comes with less emotion involved. As such, you’ll need to ensure that you’re working to help your clients get the best possible return on investment (ROI).
Instead of presenting prospective buyers with the house of their dreams, complete with the requisite batch of cookies in the oven, it’s all about the facts and figures. As such, you’ll need to be prepared with information about existing tenants, expenses, upgrades and the local real estate market.
Another critical difference is that multifamily listings have a longer transaction cycle than their single-family counterparts. So, there’s a longer turnaround time between the initial showing and cashing that commission check.
Make sure property is looking its best
Sellers need to understand that the property will sell better when they take care of some basic maintenance needs before they start showing the property. When a home hasn’t been prepared for sale, investors will view the property as a money pit situation.
As such, you’ll need to make sure your seller tends to a few critical areas of the property. Here are a few things that can help move things along much faster:
Landscaping must be up to snuff
A little TLC where the landscaping is concerned goes a long way. Make sure the owner trims the bushes and shrubs ahead of showing the property.
Additionally, encourage the owner to update the flower beds and add in some finishing touches like benches and planters, if appropriate.
Common areas should be cleaned
Many multifamily properties come with shared laundry rooms, lounge areas and outdoor spaces. It is vital that these spaces are cleaned and properly maintained. If applicable, be sure to get rid of any old equipment like broken appliances, old furniture or anything else that suggests neglect.
Hardware must be in working condition
Doors, windows and locks for all units should be in working order. If doors seem flimsy or latches are difficult to use, it’s a poor reflection on the property, as well as on the owner.
While the new buyers will likely make some changes on their own, small signs of neglect might make them worry that several expenses are waiting for them after they buy.
In the end, selling a multifamily home presents some challenges you won’t find with a typical single family unit. Here, it’s important to note that sales hinge on your ability to provide clear, accurate information — it’s not the place to spin something that plays into buyers’ emotions.
As an agent, you’ll need to be prepared to field questions about property values, tenant rights and what it takes to close the deal. Oh, and guiding the seller through a few minor upgrades won’t hurt either.