Employment & Marketing Agreement Advice
Don't pay a full-service retail broker for printing fancy brochures, installing signs, and requiring a single or limited agency employment agreement from you, which may or may not work for you. In Florida, a transaction broker state, your real estate salesperson or broker might actually be working for the transaction (if residential.) Brokers have been reducing their duties via legislative action and contracts, while still charging the same amount of commission. Of course, it works for them! Why restrict your marketing efforts to one broker If you are a business? Do you really want a broker as your agent, with all of the vicarious liability that implies? (Consult an attorney about principal-agent liabilities, including vicarious liabilities.)
Consider acquiring an independent opinion before you sign a binding listing agreement with any brokerage. A major brokerage lost a $6.6 million commission in 2014 because some of their employees working on marketing the property were not properly licensed as required. If you only choose Karen as your marketing agent, Karen is properly licensed in Arizona and Florida. Karen is a former Continuing Education instructor who taught contract law in Arizona and knows they lost their fee because they forgot the basics of real estate practice. Make sure the people you hire are qualified by law to assist you when you opt for single agency representation in Florida, Arizona or anywhere else.
Accurate Property Value Determination
Many commercial investment and residential brokers are compiling pro forma offerings for properties they hope to market at valuations which are unsupportable because they contain inaccurate and/or misleading information (called puffery). Expect the proper financial packaging, but don't be blinded by fancy presentations. Of course, all presentations should be attractive, but not just lipstick on a PIG (unless it's a Passive Income Generator.) Avoid being duped by technobabble (real estate babble) that makes you think you are not smart enough to discern inacurracies; a doctors investment group from California who purchased an apartment building based on a fancy pro forma lost the property in foreclosure due to not understanding what they were doing. Ask questions until you are satisfied with the answers.
Consultations are available regarding the actual value you could expect from an investor based on cash flow from a potential investment property. All brokerage CAP rates are not calculated in the same manner, so don't fall into the issue of comparing apples to oranges. Your property is only worth what its current yield says its worth. This is a real-world function of cash flow, expenses, and leases, not a hypothetical pro forma and glossy marketing brochure. High-dollar residential purchases can also benefit from the perspective of a commercial investment broker/investor. Contact Karen to start developing the ideal real estate marketing plan for your investment properties.