Millridge Real Estate Blog

Published: Sep 22, 2009 03:40 AM in The News & Observer

The auction method has advantages for every party in the event: the buyer, seller, all bidders and spectators.

Buyers often find rare items and can usually take home their purchase right away from an onsite auction, not waiting for shipping or incurring shipping costs after they have already purchased an item.

Sellers at auction can usually be assured that their property will sell on a certain day. Real estate sellers, in particular, like the fact that a sale on a specific day will end their carrying costs and they enjoy being able to set a minimum price they will accept at auction.

Bidders have a great time, even if they don’t always get their chosen item. They eagerly anticipate the item coming up for auction; they think about how high they will bid; they watch the competing bidders and often talk with them afterward.

Spectators at auction enjoy an exciting event and seeing what types of items are offered in auctions these days. Attendees don’t feel pressured to buy, and they can bring the whole family to see and learn about antiques, art, furniture and other items.

Auctions are a community event. People see friends and meet new people. Auctions have been a social gathering for thousands of years and continue to be the best way to determine current market price for items.

Here are a few other facts about auctions.

• A speedy process.
  There’s no doubt that an auction is the fastest sales process around. It’s quick and efficient and that’s what makes it attractive. We sell a multitude of items in a short time.
• You Set Your Own Price and Establish a Value.
  You are in control at an auction. You decide when to bid and how much to bid - how high or low you want to go.
• Certainty of Knowing What You’re Getting.
  Auctioneers deal with a wide range of merchandise. They are educated professionals who know value and price. Many have special certifications in personal property or estate appraisals.
• Fun and Excitement.
  There’s no doubt that an auction is entertainment at its finest. Crowds of people competing for unique property, combined with that lively and rhythmic auction chant make for some great entertainment and fun. It’s an event the whole family can enjoy.
• Honesty of the Transaction.
  Auctions are very organized and the rules are straightforward. Auctioneers who are members of the National Auctioneers Association, as I am, are bound by a code of ethics that protects consumers against unfair auction practices.

www.auctioneers.org

1.     TELL YOURSELF A POSITIVE STORY.

Life is a story.  The story we tell ourselves and the role we play in that story determines the quality and direction of our life.  The best real estate professionals are able to overcome adversity by telling themselves a more positive story that the rest.  Instead of a drama or a horror movie, they define their life as an inspirational tale.  Instead of being the victim, they see themselves as a fighter and overcomer.  You may not be able to control market conditions, but you can influence the outcome of your story.

2.     MODEL YOURSELF AFTER SUCCESS

Are there real estate practitioners succeeding today?  Of course there are.  Seek out those people in your market and ask to meet with them.  Learn from their advice and model their attitudes and actions.  If they can succeed, so can you.

3.     FOCUS ON THE IMPORTANT STUFF.

Tune out the negative voices and start making positive choices.  What are you doing on a daily basis to grow yourself, your team, and your business?  Don’t focus on the negative things other salespeople and the media are saying.  Instead, focus on marketing your business, taking care of clients, and building loyal relationships. 

Every morning ask yourself this question:   

“What are the three (3) most important things I need to do today that will help me create the success I desire?” 

Then take action on those items.

4.     REPLACE “HAVE TO: WITH “GET TO”.

This simple ‘word swap’ can change your mind-set and your approach to work and life.  It turns a complaining voice to an appreciative voice, and acknowledges that life is a gift – not an obligation. So often we grudgingly say things like “I have to go to this meeting,” “I have to meet with this client,” or “I have to sell houses in this market.”  In reality, it’s not about what we have to do.  It’s about what we get to do.  Research shows that when we practice gratitude, we get a measurable boost in happiness that energizes us and enhances our health.  It’s also physiologically impossible to be stressed and thankful at the same time.

5.     REFUSE TO PARTICIPATE IN THE RECESSION.

Professionals who have thrived during past recessions continued to go about business as usual regardless of market conditions.  They worked hard and focused on taking actions to grow their business.  As others are paralyzed by fear, take the opportunity to charge forward!

6.     BOOST YOUR MARKETING AND ADVERTISING.

It may seem counterintuitive to spend more money on advertising and marketing right now.  But with so many of your competitors cutting back in these areas, this is a great opportunity to build your brand and gain market share.  People are still buying and selling, and they will buy from those whom they trust and see in the marketplace.

7.     CREATE A POSITIVE VISION.

Instead of being disappointed about where you are, make the decision to be optimistic about where you are going.  Create a positive vision for your future and the future of your team.  Vision helps you see the road ahead and it gives you something meaningful and valuable to strive towards.

8.     INVITE OTHERS ON YOUR BUS.

Invite colleagues and customers to board your bus for a positive ride.  Send them an e-bus ticket at www.TheEnergyBus.com.  Share your vision with team members and ask them to join you in making this vision a reality.  Be a positive influence..

9.     NO MORE COMPLAINING.

Abide by the “no complaining” rule.  When you realize you are about to complain, replace your thoughts and words with positive actions.  Let your complaints help you identify what you don’t want so that you can focus on what you do want.  The key is to turn complaints into solutions.

From Right Tools, Right Now (Realtor.com) Source: Jon Gordon, speaker/consultant/author of The Energy Bus: 10 Rules to Fuel Your Life, Work, and Team with Positive Energy (Wiley,2007)

There are many issues that can arise with respect to how you take title to property, and especially so in a commercial context. If you take title as an individual, you may be exposing yourself to potential liability exposure that you might want to try to avoid or at least minimize. You take title through a business corporation, but doing this could be disaster from a tax standpoint point. Sometimes, there may be other alternatives such as forming a limited liability company that you would own and control that, in turn, could lease the property to your business entity.

If joint ownership is involved, you should clearly understand the differences between taking title as joint tenants, as tenants in common, as a partnership, or as community property. You should also clearly understand your rights versus the rights of your co-owners. Each and all of these types of ownership have significant ownership implications and rights of survivorship.

It short, there are no universal rules of thumb with respect to how to take title. It’s always advisable to seek professional advice, including your lawyer and CPA, to assist you in making a smart decision.

As the popularity of commercial real estate investing grows in Raleigh, Wake Forest, Durham and the entire U.S., so does the amount of investors who find themselves in the middle of a less than savory deal. As a full service commercial real estate firm, Millridge Real Estate has the combined experience necessary to ensure a smooth acquisition for it’s clients.

From experience, we have noticed some crucial aspects of the acquisition process overlooked by rookie buyers. Here are 5 we find to be common.

1. Ignoring Local Market Conditions

There are two degrees of due diligence called for to evaluate a real estate investment–the market and the property. And of the two, local market conditions top everything else.

A seemingly great property in a poor market can be a big loser to investors. A poor property in a great market can be a gold mine. How can you differentiate?

Analyzing the demographic trends of population growth, income, and employment. This will help you find where the opportunity does or does not lie.. It will also show which property types are in demand, or oversupply. Those conditions will make or break your investment.

2. Detailed evaluation of the property condition

Carefully evaluate physical items such as building systems, environmental matters and structural components. Intangible items, such as title, survey, and zoning and land-use regulations are also very important.

Knowledge of contract law, insurance, finance, accounting, and tax law is also critical to doing things right at the beginning to insure success at the end.

If you’ve never done it before, do not consider something to be a DIY project. The money you think you’ll save by doing it yourself can cost twice as much to fix, and may jeopardize the entire investment. Admit when you don’t know how to do something.

3. Overlooking the numbers

It may not be rocket science, but real estate is a numbers game. Value is dependent on net operating income gross revenue minus operating expenses.

That’s why it is so important to get the real operating numbers, not a projection of potential gross income and estimated expenses.

Confirm and verify every element of income and expense. Value the property based only on present income, not projected income you have to create.

4. Over leveraging yourself

Borrowing too much money in this is fatal. Highly leveraged deals do happen, but unless it’s backed up by a solid plan with sufficient capital, it can be disastrous.

Using 100% financing for entry level deals is like believing gravity doesn’t exist as you jump off a building. You can argue all you want, but you’re going to hit the ground. The only question is how hard.

The proper use of leverage is a function of deal structure and investment strategy. Every investment property should be evaluated in light of the break-even ratio.

5. Lack of multiple exit strategies

An investment plan comprises all of the due diligence determinations and outlines all the possible outcomes of the investment, best to worst case.

Ask yourself why you think you can do a better job running this property than the seller did. If you can’t answer that with specifics, you won’t do better, and probably not as well.

Your plan should answer the questions of how the property will be managed; what improvements are needed and their cost; how much money might be made (or lost); how long it will take; how to get out if things go wrong; and how to access the profits when it goes right.

As you can see, there are multiple ways for a commercial real estate deal to go sour. However, with the right representation and research, you will can hit your investment objectives. Contact Millridge Real Estate today for more insight into this industry.