I consider myself lucky.
Sometime back in the 1990s, my hometown of Richmond, Virginia, began to change. The urban core, blighted and ignored for many decades, began to show signs of life. The once-proud and architecturally diverse properties, which had defined Richmond’s early 20th century, were suddenly in vogue again. The development community saw potential in the bricks and beams of yesteryear, and slowly but surely began to resurrect these sleeping giants and return them to their former glory. By the early 2000s, Richmond’s revitalization movement was in full swing.
For whatever reason — call it right place at the right time — I got an opportunity to pitch a development group on representing their century-old warehouse condominium-conversion project. Knowing little about how to pitch developers, and even less about how to pitch 25 “industrial-chic” condos in a revitalization district, I put together the best presentation I could in an attempt to convince guys with two MBAs and a law degree that I was the right person for the job.
Fast-forward to today — our company’s resume now boasts 20 projects represented, approaching 300 units sold, with shapes, sizes, designs and prices as varied as their developers. From newly constructed contemporary townhomes on an infill lot in a historic neighborhood to a triangularly shaped concrete warehouse in a gentrifying neighborhood, we have some pretty awesome successes under our belt.
As one would expect, we learned quite a bit about the art of infill over the past decade. I will share these experiences because I believe we (Realtors, developers, builders, architects, bankers, etc.) have a wonderful opportunity to leverage an abundance of existing but underutilized infrastructure begging to be put back to work.
Instead of widening the interstate or building another overpass to connect the next planned community, we need to look inward toward the city centers to find the next opportunity for smarter growth, and the agent community needs to lead the way.
Selling infill requires different skills, and agents capable of successfully representing infill will be disproportionately rewarded in the coming years.
Here are some tips:
Get theoretical
Valuing a property “to be built” is hard enough, but valuing an entirely new concept in your marketplace is even harder (Remember the concrete warehouse condos mentioned above?). Complicating the issue further is revitalization areas are often void of any sale, which could offer a hint of the new project’s potential value.
Lacking comps, you start with what you know and extrapolate from other submarkets:
- Was a new infill project built in an established neighborhood? If so, what was the premium for the new homes over the old?
- What is the premium for a great view in other vertical properties?
- What is the difference in land value between your submarket and an established one where data points are prevalent?
When “comparable” sales are nonexistent, look for clues elsewhere. MLS is such a phenomenal database and will tell you almost everything you need to know — if you understand what to ask.
Be present for showings
I cannot overstate the importance of this fact. You have to be there. It is not the buyer’s agent’s job to know your project — it is yours.
Know that:
- The buyer’s agent will often not want you there. Go anyway, and win them over.
- The buyer’s agents and clients will be early, late, sometimes stand you up and often waste your time. Be on time, wait for them patiently, and smile when they get there.
- The buyer’s agents will ask you the same question you have already answered four times. Answer it yet again with grace.
The intel you can get from watching buyers go through the building is invaluable and remember to not only pay attention to what a buyer says but also when they say it. Although “lockbox vacant” is convenient, it is far less effective, as the subtleties of feedback cannot be ascertained in a follow-up phone call.
Know mortgage finance
In order to truly represent the developers of the world, you need the equivalent of a master’s degree, if not a Ph.D., in mortgage finance. Although all markets differ, the large majority of agents and loan officers lack specific knowledge about financing outside of conventional single-family lending.
Urban infill not only necessitates understanding conventional mortgage products, but condominium finance, development incentives, tax abatement programs, community grant assistance programs and/or advanced appraisal techniques. Like real estate agents, lenders and appraisers tend to specialize in certain geographic areas or techniques, despite what they say. You will inevitably encounter lenders who are unfamiliar with condo finance or appraisers lacking experience with revitalization — and they can be liabilities. Understand their job better than they do.
Know your rights
Infill is complex.
Oftentimes the legal rights and underlying ownership structures of competing infill projects differ significantly. Unit layouts, finishes, materials and bedroom/bathroom counts are easily understood by the marketplace, and thus are often the primary focus for comparing spaces. Yet the differences in dues, restrictions, voting rights, parking ownership, common-area maintenance and financing all play important role in determining the long-term financial health and marketability of a project.
Learning to be able to point out these differences without coming off as critical is an important skill of a good project rep.
Summary
Infill is complex, risky, political and polarizing. Competing regulatory environments can be maddening, and navigating the multijurisdictional layers of incentives makes you wonder if the potential payoff is worth the brain drain.
But do you know who does infill? Some of your city’s most talented real estate professionals — that’s who. I don’t know about you, but I love the challenge of working with the best and brightest deal-makers in any region.
Know that along with the developer who executes the plan infill involves architects, interior designers, investors, contractors, bankers, engineers, planners and attorneys — and they are all paying attention to your contribution. Get a few successful projects across the goal line, and you will soon find yourself involved at the planning stages of the next one, and that is when it gets super fun.
At the end of the day, developers want someone who takes their projects as seriously as they do. If you make their life easy by being dependable, prepared and transparent, you will find yourself involved in some truly fascinating projects.
Rick Jarvis is a co-founder of the One South Realty Group in Richmond, Virginia.