Let’s talk about how to price your property for success.
Bob Nelson, Eugene real estate investment broker
Marcia Edwards, Eugene residential real estate broker
Marcia Edwards: This week, we want to talk a little bit about pricing: pricing your property for success in an appreciating market. First, let’s go to investment property, Bob. Is it timeless? Do you always price by the income approach to value and is it insensitive to the marketplace?
Bob Nelson: Well, okay. Now you’re asking a question, how do I do things and how do some of the other brokers do things? It is a little bit of the Wild West. We see properties offered for sale with no income information being made available, et cetera, and a claim that you have to sign a confidentiality agreement when, in fact, there’s nothing confidential about it. I do understand what they’re saying. They don’t want you to disclose a bunch of stuff. But typically, the individuals that do that sort of thing are overpricing their property relative to its income generating capacity.
Marcia Edwards: So they’re using confidentiality as an excuse not to share the numbers that may be inadequate?
Bob Nelson: There’s a reason for a confidentiality and a nondisclosure agreement. But also, I think there are a number that are taking advantage of some of the people that don’t really know what they should be looking for, or asking for, when they get excited about buying an income property.
Marcia Edwards: So in a market like this, where it’s in flux, and you’re trying to understand where the next opportunity is, do you solely look at the books to price the property? Or is there something that you need to look at in regards to the demand side in the marketplace?
Bob Nelson: Okay. From an income side, I take a look, where are the rents? Where’s the income? Is it being poorly managed? If it’s being poorly managed, I don’t want to pay the price of something that’s already fixed if I have to go in and spend time and effort to fix it.
But at the same time, that has potential as opposed to something that’s already up to speed. The real issue is, can I do as well as the current owner is doing? I like that idea a lot, but for those that like the value add concept, “If I buy it and I can make it better, it becomes more valuable.” They’re looking for something of that nature and frequently will become a bit hoodwinked by non-disclosures, et cetera.
Marcia Edwards: We’ll talk about how to find those opportunities next program.
Join Eugene, Oregon, real estate experts: Bob Nelson, Real Estate Investment Broker with Pacwest Real Estate Investments, and Marcia Edwards, Residential Real Estate Broker with Windermere Real Estate, daily at 5:30pm on KPNW for the “Real Estate Today” radio show.