Wednesday, December 5, 2018

Racing for Daylight

This is the time of year where you need to make a drop dead decision ASAP, if you plan to close this year.  Although there are only four weeks left as of this writing, it's amazing how much faster something can happen if everyone gets on board to do so early.  Bankers, for instance, often have bonus plans that would give them that extra boost to push a transaction over the finish line.  Realtors certainly do. Owners, of course, have tax consequences that would favor closing in one year over another.

If you think it's too late, it's still worth checking.  People travel less before the holidays, at least for business, so those who are around may be more reachable and available.  It's just true that, when you put a rush on any order, everyone moves it to the top of the list.  So don't despair if you have left a sale for too late--just act quickly!

Monday, November 12, 2018

Got docks?

At almost every commercial meeting in our office, someone has a client with an immediate need for space that has at least one dock and overhead door.  We can usually satisfy the latter request, but are often stumped on the dock issue. For some reason, our area is woefully short on dock space.  It could be because not much has been built recently.  It could also be due to repurposing of commercial space into other types of uses--it's not uncommon to see a brewery with an overhead door used to make outside bar space, for instance.

Whatever the reason or reasons, we urge you to contact us if you've been considering the sale or lease of property that has at least one dock.  There's no time like the present for meeting that need!

Wednesday, October 24, 2018

We're at the Witching Season

It's not only Halloween next week, it's the best time to buy property.  Sellers who are ready to move on, and who may have maintenance costs on empty buildings, or tax consequences if they don't close by the end of the year, are at their most reasonable.  Buyers may have their own deadlines, and the end of the calendar year provides a natural one for most.  With motivated parties on both sides, we often find that sales come together more quickly at this time of year.  Even bankers and other professionals have reasons to want to move the process along without delays. 

Buyers should use this scenario to push for a good result, especially by offering to close quickly.  If you haven't bought or sold real estate recently, you may find the experience more like waterboarding than like waterskiing, so be sure to answer all calls and requests for documents right away.  Don't think that people will back down on requirements--many times they have no control over certain items. 

Sellers need to heed the same advice--you are not in control here, and that may be hard to stomach.  Just gird yourself for some bumps in the road, and think forward to the holiday season, and the nice vacation you'll be able to take when you've gotten through the closing.  Remember that the buyer may not be driving the bus, either, and don't assume that s/he is trying to take advantage of you.  See the above comments and think about your own buying history, especially if you have borrowed money in the past ten years or so. 

I'm presenting the worst case here, and often it can be much smoother.  Whether it is or it isn't, almost everyone is happy in the end that they got through it, and that the property changed hands.  Keep that end goal in mind, and get serious about property transfer in the last quarter of the year.  You'll be glad that you did.

Wednesday, October 3, 2018

The Next Big Thing: Opportunity Zones

As part of last year's Tax Act, there is a new way that investors can use their money to minimize taxes and invest in real estate.  Opportunity zones have been created around the country, and there are 72 of them in Connecticut, with 7 of those in New Haven, 7 in Bridgeport, and 10 in Hartford.  People can substantially rehab or build new structures in those zones--or even invest in operating businesses--and postpone taxes or even have them forgiven, under certain circumstances.  Residential and commercial real estate are both covered.  Much of the program is similar to the 1031 exchange option that has been around for years, but is broader, if the investment is in those particular census tracts.

We've been told that even accountants and lawyers may not be up to speed on this investment potential, because only recently have the zones been finalized.  You can find the Connecticut interactive map on the site.  Because the rules are specific and unforgiving, it's best to check with tax professionals before buying, but looking can start immediately!  It isn't that often that we have something so new to share, and we're glad that real estate is included.

Sunday, September 16, 2018

The First Two Weeks

There seems to be a persistent practice in real estate of "testing the market" with a price higher than what the agent believes that the property will bring at closing.  Sometimes there is an agreement that the price will be lowered after some stated period, often thirty days.  Agents often feel that sellers become wedded, however, to the original listing price, and forget completely that they were told that a lower price would be more in line with market expectations.

While testing the market might seem like a reasonable course of action, especially if there is a clear understanding up front that the price will be lowered in x days if not enough action, or an offer, is generated, those of us in the industry should know better. We now have access to all kinds of information that tells us who looks at a listing, when they search, and how (with what device).  We know popular hours, phrasing that captures attention, and click-through rates by property.  We can see whether they looked at it, saved it, forwarded it, or contacted us about it.  Administrators like me get a copy of every email inquiry sent to an agent on certain search engines and platforms.

And what do we know from all of that?  We know the power of the new.  Overwhelmingly, the greatest interest in a property comes in the first two weeks after it gets listed, whether it is commercial or residential, and no matter the price or location.  Some properties clearly generate more activity than others, but always get the most attention early.  Sometimes that is because prospective buyers have signed up for notification alerts, so that a new listing will show up in their emails.  Many times it is because the buyers themselves look on a regular basis, and click on anything that they haven't seen before.  The end result is the same:  They gravitate toward the newest entries.

So it's easy to see the problem with testing the market.  Your property gets the most exposure and the greatest number of views at the original price, which is higher than the agent, and perhaps even the seller, thinks is the true selling price.  Agents often talk about how much higher the likelihood is of securing a buyer in the first two weeks after the listing comes onto the market, but, in order to secure the listing, they also often sabotage that chance, by using the most useful marketing time to expose the property at the wrong price.

We know that buyers today know a lot, and often as much as agents or sellers, about the value of properties, through comparisons of available inventory, and market knowledge gained online and elsewhere.  They aren't going to overpay, and many aren't going to potentially waste their time making offers that will be refused.  They concentrate instead on properties that are listed at compelling prices, which suggest that they will sell quickly.  That motivates buyers to make speedy offers, at prices near, at, or above the listing price, especially if they see that there is a lot of activity at open houses, or with showings.  It's better to accept the reality that buyers know value, than to think that serving up higher-priced listings will change their minds about the correct price.

If there is one takeaway from this, it should be that sellers need to ask agents this question:  What price do you believe that my property will close for in the end?  Then list as close to that number as possible.  And enjoy the attention your property will receive.