What To Do When Sales Start To Slow

All good real estate investors know the valuation of their deals is key to insuring success and projected profits. Since late 2013 transactions in numerous market areas have seen strong sales activity. But what to do when transactions start to slow? All the market areas covered by REIComps, insure when sales changes happen you are not caught off guard.

Last week, we began seeing a number of Support Tickets asking the question, “My retail sale properties aren’t getting multiple offers any more. What am I doing wrong? Equally, we have seen tickets which ask, “Several of our current units for sale in the same area where they have sold in less than two weeks aren’t getting showings”.

Truly, essentially these are the same question, but we had to dig deeper from a valuation perspective. Remember, when we “buy right” typically we can drive the market selling slightly lower. Or in some cases due to sound acquisition, an investor is able to improve a dwelling insuring that buyers can’t wait to make an offer.

The fact of the matter is there are two driving actions at play. Too high an acquisition makes it challenging to adjust the sales price and earn a sound profit. Second, the failure to review carefully the declining sales activity taking place around a dwelling to be acquired.

In the first case, we have seen investor after investor get so excited about doing their first deal or the next one after a successfully made profit, the individual gets careless and/or anxious to jump in the money pot again. We can never ever do a deal based on emotion. One of my standard phrases is, “we never get emotionally attached to a deal”.

For the latter, all an investor must do is look at the comparable sales data found in a REIAComps Property Report. In response to one of our recent Support Tickets, the answer was clear. The investor reviewed the sales data over looking two facts. First, the recent comparable sales were 36, 67 and 104 days old. Equally, these same sales were newer than the subject property. Even though the investor had recently moved a retail flip, the signs were in the data to not buy the next deal period.

It is very important to be certain we always watch the age and activity of transactions in the market. Also, we can never be certain about a deal because of the last one we did. Always, always use your REIAComps property report as your basis for analyzing each and every deal.

Wrapping up, our experience as investing real estate appraisers can help you stay out of trouble and be tremendously successful. Never let what you think is happening in a market drive you to make a poor acquisition. Just because the market area was sizzling, doesn’t mean it is still smoking.

Of course, use REIAComps to determine the best acquisition and ARV for every deal you look at. Don’t for one moment let someone tell you the value of a deal. Let REIAComps show you for yourself.