What Is Disposition In Real Estate?
Investment in real estate is always made by acquiring/purchasing a real estate property. This is a general assumption. But are you aware that investment can also be made by disposing of a real estate as well?
In simple words, disposition refers to liquidating a real property. Now you may wonder how disposition can be a part of the investing process?
You may be familiar with the disposition of shares, stocks and other assets. We dispose of shares and stocks of a company for financial gain and reinvest the funds in purchasing shares of another company for more profits. Disposition of real estate is no different.
All you need to know about a deposition in real estate:
In real estate investing, disposition refers to the process of selling a property. Property is sold either to increase the cash flow or re-invest it in other ventures for business expansion.
Though people always consider real estate disposition as the last choice for investment, but a disposition is an inevitable part of the investing process.
Let’s understand how disposition works in real estate and what steps should be followed for quick disposable of real estate property.
Advertising the property for sale:
Advertising the property to attract potential buyers is the first step in the disposition of a real estate. Hiring an experienced Commercial Real Estate agent in Austin is your best option for effective marketing of your commercial property.
They have a detailed knowledge of the local market and can determine the fair market value of the property. A real estate agent will help you to market your property by using marketing strategies such as,
- Listing the property on local MLS and other websites such as Zillow.com, Realtor.com, Redfin.com, Trulia.com, Face book Marketplace, or Craigslist.
- Developing an inventory website and listing the property on it.
- Displaying a “For Sale” sign in front of the property.
- Contacting real estate wholesalers, rehabbers, buy and hold investors or turnkey operators.
Completing prior paperwork:
Keep all transaction documents ready even before marketing the property for sale. Provide a pro forma invoice to any interested buyers. Also, provide lease copy if the property is occupied by a tenant. Similarly, if there is an easement on the property, those papers should also be kept ready.
Generating a potential buyers list:
Maintaining a list of potential buyers is essential for the disposition of property. Send regular email notification with updates on prices and discounts of property to all buyers on the list. Sort out most active buyers on the list. Contact them personally to build a rapport with them. This will help in quick disposing of commercial property.
After sending e-mails to the potential clients, keep a track of all responses received. Communicate with lead clients and respond to their questions or concerns. Also, convince them for property viewing.
Delay in responses in the hope of getting a better offer may result in losing an interested client. Also if the commercial property is jointly owned, all the partners should be readily available for decision making. Your aim should be to make the buying process simple and painless for the buyers.
Facilitate closure of the deal:
Once both the parties agree to the price and the terms and condition are worked out favorable, a sale is said to be generated. This is the last step in the process of real estate disposition. Now the commercial estate agent prepares a sale agreement in coordination with an attorney or transaction coordinator. Further, conduct due diligence on title history to ensure that no concerns remain unresolved. Issue a preliminary title report and insurance policy cover.
Generally, as an investor you have three options for disposing of your property.
- Selling it to a buyer who takes finance from a bank or another financial institution.
- Selling the property using owner financing. Here the investors act as a lender himself and allows the buyer to make payment at regular intervals. In this scenario, a mortgage is essential to legally bind the buyer to pay the dues.
- Doing 1031 exchange. Here the investor uses the sales proceeds for buying another similar investment property. Thus deferring tax liability.
The above guidelines make it clear that disposition is also a part of the investment in commercial property. Sooner or later you may want to sell your real estate property. Thus use the best way of disposition to generate greater revenue.
We have a team of expert professionals who will guide you in the process of acquisition and disposition of commercial properties. We assure in getting the best deal and generating greater revenues.