Archive for September 2011
Commercial Real Estate – How to Ask Your Discovery Questions
In order to make a successful commercial real estate investment you need to know the right questions to ask and the right way to ask them. Since purchasing commercial real estate is a negotiation between the buyer and the seller (and probably their prospective brokers), it is important that you, as the buyer, are prepared. Asking the right questions could help you avoid owning an underperforming asset.
Remember, both parties are trying their best to get what they want, but their goals are diametrically opposed. The seller is trying his or her best to get the highest possible price, while the buyer is trying just as hard to get the property for the least possible amount of money. There’s an old saying in the business: “All sellers are liars, all buyers are thieves.” While I don’t believe in either scenario as a way to do business, those commercial real estate investors who are able to create a win-win transaction will enjoy huge advantages over their more combative competition. And the key to doing that is in your questioning technique.
Finding and creating these win-win deals isn’t easy, but making them happen is the basis of successful real estate investment. In many ways, finding the best deals boils down to knowing which questions to ask and is one of the most important of all real estate “secrets.”
The key is to ask plenty of open ended questions of either the seller or his agent and to not accept a simple “yes” or “no” answer. If you ask an open ended question and get a yes/no answer, your immediate reaction should be to follow up with additional open ended questions! Obviously, if you keep getting yes/no’s to your questions, it may be time to find a more cooperative and serious seller.
Some of the leading questions smart real estate investors use include:
o What can you tell me about this piece of property?
o What makes this particular property a good investment?
o What is it like dealing with the city?
o Tell me about your tenants … neighbors … city, etc.
o What can you do to help me get into this property?
o What financing are you willing to carry?
o What are your neighbors like? Or “how easy are the adjacent property owners to
deal with?
o How quickly do you need to close? Why?
o Why are you selling the property … now?
o What is the existing financing? How can it be assumed?
o What are the down payment requirements?
While the straightforward approach and strategy generally works the best, many successful real estate investors have also found success at using the “Columbo Technique.” For those of you too young to remember, Columbo was a dumpy-looking fictional detective who always seemed a couple of cents short of a dollar. However, he had this process where he’d get up to leave after seeming to conclude his suspect interviews and would say something like: “Oh, Mr. Jones, one more thing …” And that question would usually catch the perpetrator off guard. I suggest trying it during your discovery process. It can be very enlightening!
You’ll need to develop your own list of questions as you do more transactions and I suggest even rehearsing them or incorporating them into some form of due diligence checklist. The bottom line is that the better you question, the better your deals will be.
A Real Estate Agent’s Obligations
Starting as a real estate agent is easy; it doesn’t require some specific qualification (at least not up till now). Also you don’t need to invest a lot of money. All you need to do is to assist your clients in buying or selling some property (home, shops, villas, and apartments) for a commission. Most of the clients are naive when it comes to dealing with real estate professionals; as a result real estate agents often get away without providing the complete set of services, they’re ought to provide. When you hire a property agent, you must be aware of the basic responsibilities that you should expect from your agent. Some of the standard tasks are …
Knowledge and compliance with Real Estate regulations and policies:
Every country has its own set of laws to regulate real estate sector, your property agent must be aware of these policies. For example, one of these laws is to treat all clients equally without any discrimination. In case a client feels that he/she has been mistreated because of their race, religion, color, gender or nationality, they can contact the concerned department and register a complain. Other important regulations include license, tax, purchase agreement and registration, etc.
Trust & Privacy:
A real estate agent is obliged to protect the privacy of its clients. You cannot disclose any part of the information without their consent; neither can you make use of that information for your own purposes. On the other hand, a property agent must not conceal facts related to a particular property; it is against the professional integrity of this particular business.
Relevant Statistics and Knowledge:
People hire property agents because they feel they are not experienced enough to carry out such deals, therefore a realtor must be an old hand in this industry. He/she should be able to offer ample experience and data for customer’s satisfaction. Their responsibility doesn’t end on showing the property for sale or rent with required specification, they are also responsible for guiding their clients in the best way possible. A property agent is required to help you with negotiations, home inspections, appraisals and agreements.
Difference between a buyer agent & seller agent:
There is not much difference between the basic responsibilities or the nature of the job, when we compare between the buyer’s agent and seller’s agent, except that they are working in different directions. However, the above mentioned obligations such as fair & respectful conduct, privacy, trust, and complete guidance apply on both types.
Tax Lien Homes For Sale
Tax lien homes for sale can mean one of two things. 1) The government has attached a lien (certificate) against a taxpayer’s property due to taxes not being paid on time; meaning the government will sell a certificate to the highest bidder who then will pay the property taxes for the owner who can not or will not. This certificate gives the investor the right to collect total amount owed by the property owner and any penalty interest the property owner must pay for not paying his debt on time. A certificate gives an investor NO property rights what so ever. 2) The government after a predetermined period of time is up waiting to be paid on taxes that are over due; is selling a non-paying owners property to the highest bidder to get the tax money one way or the other. This transaction Is called a deed sale and entitles the winning investor full ownership rights to the property in question.
Basically put the reason this type of investing can be so lucrative and at the same time be so safe is do to the fact that if an owner does not pay taxes on or before a certain deadline, the owner will have his property sold out from beneath him by the government. So over 98% of owners end up paying their taxes. Making this investment one of the safest investments going. If they do not pay, you the investor may be able to take ownership of the property for a fraction of what it is worth. Maybe 25%, or 35% off and in extreme cases you may be able to buy the property for 70% – 80% less than the value it is worth, now that’s a deal.
What if the non-payer ends up paying his bill (remember the 98%+ that do) what happens to the certificate holder then? This investor once the delinquent non-payer settles his late tax bill will return the certificate to the government who has not only collected the back money owed but has collected interest that the late payer had to pay you the investor for originally covering the tax payment due and settles up with you. So you get your initial investment back plus a nice additional interest fee that can be 14%, up to 18% or more of the bill depending on the legal terms predetermined by state government. When done correctly it can seem like taking candy from a baby.