October 1, 2016
In this issue:
A walk-through is when a buyer walks through the property either the day prior or on the way to closing to ensure the house is in the same condition as it was before.
- Flooring - before putting your house on the market, check for discolorations on wood or carpet, and check any areas of your home that have had furniture and/or rugs sitting on top of floor surfaces. If there is discoloration, consult
with a wood flooring specialist on how to address it, and call in carpet cleaners or consider possibly replacing/repairing the flooring in question before going on the market. Note any issues upfront to establish condition at the time the home goes on the market to a buyer and on a seller’s disclosure so as to avoid any surprises later on.
- Walls - once the artwork and flat screen TVs comes down, the walls are often left with nail holes, brackets and possibly discoloration where objects were previously hung. Setting realistic expectations at the outset as to what you as a seller will do, such as spackling, will hopefully avoid a buyer’s request for you to repaint walls entirely. It may be that the buyer likes the existing placement for artwork and your television and will want these areas left as you had them.
- Mover Damage - Drywall dings, nicks, scratches or gauges can be left, often not discovered until a buyer does their walkthrough, or of course right after they go to the house after closing. Once the movers are finished, do your own “move-out” walkthrough with them to check for any damage. Discuss with your movers ahead of time the plan for handling any damage and have a trusted repair person on standby to take care of any issues should they occur.
- Leftovers - Moving always brings a “don’t know what to do with pile.” It may be a stray chair, file cabinet, old lawn hose or other various odds and ends. Don’t assume the new owner will be glad to have these items. Check with the buyer first, if they don’t want them, play it safe and have them removed BEFORE the final walkthrough.
- Garbage - Speaking of removal, don’t leave garbage cans full of trash for the new owner to take out. The buyer has enough to deal with as far as coordinating movers, getting utilities turned on, waiting for the cable guy and all that goes along with setting up a new home. This is usually a surprise not discovered until the walkthrough or their first trip to the house as the new owner. A pile of trash either in the garage or on the driveway is not a closing gift that should be left behind.
The commercial property markets saw the highest ever 60-day period of transaction activity from December of 2015 through January of 2016. It is unlikely that we will see the same pace into the end of this year as buyers and sellers move apart on expectations. Still, deals will continue to happen and pricing will continue to remain tight.
Deal volume grew at double-digit rates from 2012 to 2015 as falling cap rates and low interest rates allowed buyers and sellers to see eye-to-eye on asset pricing. In recent months, however, the cap rate declines have stalled and interest rates, while not yet climbing, are expected to rise at some point. Transaction activity is down as potential buyers are underwriting with more caution in the current environment.
Still, current owners of commercial property are not leveraged to extreme levels as was seen before the Global Financial Crisis. Without some outside calamity that undermines the economy, properties will still be cash flowing and owners are not always going to be motivated to sell.
With greater differences on buyer and seller pricing expectations moving forward, the market is likely to be hung for a while, with lower overall volume but prices close to current levels.