The following post is courtesy of Diane Harrison who is principal and owner of Panegyric Marketing, a strategic marketing communications firm founded in 2002 specializing in alternative assets.
Residential real estate is in one of those funny periods where pockets can be red hot while others lay in the permafrost of indecision. Buyers have become both skittish and demanding, while sellers fall into the denial of reality stage facing an iffy buyer pool, or are feeling increasingly frustrated by the fickleness of any potential sales process.
I’ve been hearing some feedback from my local realtor friends about this challenging real estate scenario, and was struck by the similarities the real estate market is experiencing, much like alternative investment funds face on a regular basis. Both markets need to sway reluctant buyers/investors to commit their money to a substantial investment, and both markets could learn a bit from my realtor friends’ observations and suggestions about getting the deal to the closing table.
MAKE SURE THE PRODUCT IS IN GREAT SHAPE.
In the housing market, every homeowner can take a hard look at their home and really see what maintenance or problem sites exist that will certainly catch the eye of a prospective buyer. Addressing these issues BEFORE listing the home, and disclosing the current repair and tune up records as part of the due diligence for buyers can keep your house running ahead of many competitors by reducing the fear of the unknown. This is analogous to alternative funds showing their investment and operational processes to reduce investment risk fears for prospects.
SHOW THE SPEND ON KEEPING THE MAJOR SYSTEMS IN SHAPE AND WHAT UPGRADES HAVE BEEN MADE.
Every buyer wants to know the lifespan of the heating/cooling systems, the roof, and the systems that provide service to the house at a minimum. If substantial monies have also been invested in items such as new windows, the flooring, wet room upgrades, and additional finished living spaces, all of that signifies an overall standard of care that the owner showed over the lifespan of their living there. Similarly, investment funds that have invested in the right partnerships for third party administration, the hiring of appropriate staff to run the business, and the dedicated ability to grow assets are demonstrating the level of commitment to excellence investors want to see.
CLEAN HOUSE…AND I DON’T MEAN WHOLESALE FIRING.
Cleanliness is next to godliness in the eyes of many. Homes that show in pristine shape as far as fresh paint, sparkling tile and fixtures, and a fresh feeling with plenty of natural light will always have an advantage over dingy, tired looking, sloppy properties. If tidying and deep cleaning isn’t your thing, there are plenty of resources your realtor will be happy to suggest that can do the work for you. Whatever it costs, it will be returned with interest in the sales price. In the investment world, the concept of ‘sunlight is the best disinfectant’ refers to having open door disclosure on operations and management so that prospects can more fully evaluate the benefits and the risks inherent in the investment.
In both real estate and investing, the buyers don’t want surprises at the last minute, or after the fact. Sellers and fund managers who can get their physical and financial houses in order are going to be best situated to succeed in these market times.
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