Many people come up with the idea of investing in a condo in the course of their lives. Especially as a layman questions arise again and again. We have interviewed an expert in this field for you. Here you can find out everything you need to know about condominiums as a capital investment.
Interview with real estate expert Jan Rickel from IHV – Die Immobilien Makler.
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Condominium apartment as investment
FIV: You have been a successful real estate agent in the Rhine-Main region and beyond for more than 15 years. What are the five most important qualities that you think a real estate agent should have when it comes to selling a property?
Basically the same applies here as for the real estate agent who is to become active with the purchase of a real estate. I’ll start by saying it in a few words:
- A good broker has proven experience.
- A good real estate agent knows the local real estate market.
- Good knowledge in the building industry distinguishes the good broker.
- he has provided all relevant documents without being asked or has compiled them correctly.
- A good broker accompanies the sales process at least until the conclusion of the notarial contract and accompanies the contract date.
FIV: But how can anyone who sells an apartment or a house for the first time know that?
You may find it a little strange, but here too – as in life in general – the first impression is very important. Nobody lets themselves be blinded anymore by big cars, suits and ties. A good real estate agent first takes a close look at the property and talks to the seller about his wishes and goals. Listen and watch: this is the start of a successful business relationship with the broker.
Rating for real estate portals
FIV: What do you think of the ratings on the various Internet portals?
This is really a very good first opportunity to find out about the quality of a broker. However, one should not only superficially rely on the rating stars, but also read the individual reviews. At least the more up-to-date ones, because they give you a good overview of the broker’s work quality and his effect on the customer. The number of evaluations received also plays an important role. Here the motto “a lot helps a lot” applies, in order to get a really representative impression of the quality of the broker.
Whether the real estate agent knows the real estate market in which the property is to be sold is also easily verifiable. He should know which prices are currently paid for houses of different quality levels; he should be able to assign the so-called “microlocations” by means of quarter or street names – preferably even without being asked.
I also recommend that the seller, before choosing a real estate agent, asks around in the city or region what the reputation of the real estate agency is. Especially if you are working with a broker for the first time, you will get a lot of useful first information and impressions.
FIV: What should I look out for in an initial consultation in order to distinguish serious brokers from dubious ones? Are there three concrete tips that you should take into account during the conversation or even during the first conversation on the phone?
During the first telephone call, there is usually nothing more happening than exchanging information on the modalities of cooperation and then, if necessary, arranging a viewing appointment on site.
During the first consultation it is important that the real estate agent explains to you what information he needs about your property and how he is going to market it. Also the selling price is discussed in the first appointment. Conversely, the seller should name his own wishes and goals in the sales process.
Otherwise, let the real estate agent look into every corner at his first viewing appointment! When he visits the traditional “weak points” of real estate on his own initiative, you know: the man is from the (construction) trade. Because even if you as a seller want to hide or conceal possible problem areas of the property: the experienced buyer will discover them and, in the worst case, refrain from the purchase.
The good broker looks into the cellar, under the roof, evaluates the condition of masonry, windows, heating, etc. and gives you recommendations as to whether and to what extent damage must be repaired before the sale. This is often a tricky subject. Very few sellers are interested in investing in the property to be sold. However, we recommend that you at least invest in basic maintenance in order to prevent possible damage to the property. So the roof should be really tight so that no serious moisture damage occurs.
The planning of a broker
FIV: Is there something like a checklist that I can expect from real estate agents?
No, we don’t work with a list to check off. An experienced real estate agent knows from his professional qualifications what is necessary and important for the successful sale of real estate. He will ask the salesperson about the basis of the sale in a consultation. These include floor plans, details of living space, year of construction, dates of renovation work and much more.
Finally, a good real estate agent will show you all the steps that are necessary and important from the valuation to the coordination and execution of viewing appointments to the notary appointment. He will also show you which services he provides as part of this process.
FIV: That is already a considerable effort up to here. Does the seller have to pay for this advice? What exactly does the real estate agent have to do afterwards and how much time does it take until the sale is completed?
In fact, the real estate agent is not paid until the property is sold. He shall offer all services rendered up to this point in time as advance performance. We’ll see how much work is done later.
At this point, let me say something about the keyword “sole mandate”. If you want to sell your property successfully in the foreseeable future, you should give the estate agent this exclusive contract, ideally for a period of half a year. This “exclusiveness” is important if only because the broker also sets about the sales process with the necessary intensity. When I know that many “cooks” stir in the proverbial porridge, then much less commitment of the individual becomes necessary and possible. The commissioning of several brokers is also problematic in other areas. Several brokers often lead to different selling prices. If they all appear on the market at the same time, this throws a dubious light on the seller and his property.
However, the sales process is certainly not accelerated by hiring several brokers. The sale of a house often takes up to half a year or longer. Very rarely it takes only a few weeks.
And that doesn’t always have anything to do with the quality of the property! Just the preparation of the exposé by the real estate agent, the placement of the property with the appropriate customer group, in the corresponding portals takes some time. Above all, however, the broker’s mediation work comes into play here. His job is to mediate between seller and buyer. For example, with regard to the sales price, the planned handover date, etc.
On the part of the seller, the period depends, for example, on whether all important documents are already available or have to be obtained first. The location of the house is also very important. In sought-after residential areas it is often much quicker to sell a house. Even if it’s not in the best condition.
Development of selling prices
FIV: A few words at the selling price. Do brokers screw up selling prices artificially along with sellers? The broker for the commission, the seller for the proceeds?
I don’t think so. In addition to the general market situation of supply and demand, the price of a property is primarily determined by tangible factors. This includes the location, the state of construction, the age of the house and, in individual cases, the circumstances of the seller, i.e. whether he may have to sell the house out of a predicament.
Otherwise, it is a sign of a quality broker that he is not simply earning the highest price and entering the market. There are indeed brokers who try to secure the sole contract for the property with high entry prices. According to the motto: go down with the price I can still later. The selling price as a tactical tool of the broker… That’s clearly to the seller’s disadvantage! We, on the other hand, determine an optimal price for your property that takes the above-mentioned aspects into account. By the way, this also creates trust on the buyer’s side! Most buyers are well informed about the property prices and expose the tactical high price offers.
FIV: What influence does the issue of “financing the purchase of real estate” have on the duration of the sales process?
That puts us back on the buyer’s side. In fact, the financing of the purchase price on the part of the interested party is often a brake on the sales process. There are always buyers who do not enter the bank discussion until they have visited the property. In the worst case, they then realize very late that their own financial leeway is not sufficient to acquire the offered property. From the salesperson’s point of view it is therefore important to work with several interested parties. Attracting these interested parties and inspiring them at the viewing appointment is then also one of the important and labour-intensive further tasks of the broker.
Tasks of a broker
FIV: This is a good introduction to the next question: What do you do besides receiving interested parties at the viewing appointment?
An estate agent does not only receive the prospective customers at the inspection date simply! Even the appointment arrangements cost – as already mentioned – a lot of time… A viewing appointment is a difficult matter. This isn’t just a house tour! It’s about feeling what the prospective buyers are like. What do they value about the house? Where might it be necessary to mediate between seller and buyer? What do the interested parties say to me between the lines regarding their needs in living and living? We also try to determine whether the buyer’s financial strength is sufficient for the project at the inspection date. After all, we are the seller’s representative first and foremost and want to protect him from unpleasant surprises. Nothing is worse than when the sale bursts shortly before the agreed notary’s appointment, because there is no money at the buyer’s…
We have already mentioned the creation of a meaningful exposé above. Usually we do not only make appealing texts, but also the photos for the exposé. This also takes time and requires a lot of experience. The exposé is usually also the basis for financing the buyer. Therefore, it should be as meaningful as possible.
The sales process does not end until all sides are happy. Until then, as brokers we also accompany the preparation of the purchase contracts, the notary appointments and contact buyers and sellers. Depending on the size of the property, personalities of sellers and buyers, or even detailed questions regarding the purchase price payment, the moving out date, etc., this is a tedious and lengthy brokerage work of the broker. And he doesn’t get paid until the sales contract is signed. A lot of upfront work, then.
Costs around real estate
FIV: What kind of property do you spend the most time on when it comes to mediation?
If all requirements are met, it does not matter whether I sell a single-family house or an apartment building. However, multi-family houses do not always tend to sell rapidly. But that is not because such objects are not in demand. On the contrary: the apartment building is usually a capital investment project for the buyer. This is why the buyer puts his investment through its paces, and vice versa, the broker should have all the necessary information ready.
In the case of a single-family house, too high a price expectation on the part of the seller is often the hurdle to rapid sales success. Here a broker must proceed very cautiously in order to create a realistic view of the seller.
FIV: If I want to buy a property, be it a condominium, a single-family house or an apartment building, what do I have to do or what can I do to have an advantage over other interested parties? So how can we score with the owner or broker?
Quite simple: Be honest to yourself and to the seller or his representative the broker! Don’t fool around with false truths about your financial possibilities. Because that happens more often than you think. Many buyers believe that they only have to put on enough weight in terms of their financial means to win. However, the experienced broker knows how to uncover this mask with specific questions.
As a potential buyer, find out what your bank will give you before the viewing date. If you then enter into a conversation with a concrete and current financing commitment from a bank, this underlines both your serious intention and your seriousness.
Finally, it is also very important to clearly express one’s own wishes and dislikes with regard to the property. This helps both sides to save time and ensures tailor-made offers from the broker.
Thank you very much for the interview!
Interview with real estate expert Jan Rickel from IHV – Die Immobilien Makler.