Month: January 2020

How to sell a tenanted property

Selling an investment property while your tenants are still living in there often makes financial sense for investors. Timing your market move to ensure you are selling at the right time is important, but also having the consistency of the rental income right up until you sell the property, can make a big difference to your financial stability, especially if you need to make home loan repayments.

Additionally, other investors often prefer to purchase a property that has reliable tenants in situ and in some cases can help push the sale over the line.

However, having tenants in your property adds a level of complication. In many cases tenants facing the sale of their ‘home’ are likely to not be very happy. They have to find and move into a new place which is both time consuming and costly. They need to search for a new property – and this can take ages, pay for removalists, cleaners, utility connections and find the bond for their new place. Tenants can expect to pay $2000 – $3000 which is a lot of money! And a lot of reason not to be very happy.

How can you keep your tenants happy and sell your property at the same time?

Open Communication with your tenants

Open and early communication is key. It’s important that you let you tenants know you are going to sell the property before you put the property on the market. Many tenants love their ‘home’ and in many cases if they are in a financial position to do so, may like to buy your property. So ring the tenants first and offer them the opportunity to purchase it. Keep in mind if the first time they hear about the sale is when the signboard is going up, you’ll find they may not be that willing to work with you to help you sell your property – and you need them on side.

Additionally, in many states and territories you need to abide by legislative requirements and notice periods and be reasonable about the number of inspections that are held each week. In some states such as NSW, if you don’t let your tenants know that you are planning on selling your property when they sign the lease, if you go to sell they have right to give notice to vacate the property whether they are on a lease or not. Make sure you talk to your property manager about your specific state and territory legislation.

Open homes and inspections

If the property has tenants, you have less control over how well the property will be presented to potential buyers. Most tenants will do the right thing and ensure the property is tidy and in a reasonable state for inspections, however overflowing garbage, a smelly bedroom or an unmade bed can have a negative impression on buyers. If the property is presented very poorly this can directly affect the sales price.

Again open communication is key here. In most states and territories, written notice must be provided to the tenants at least 24 hours before the property will be shown to a potential buyer. To help ease tension over last minute requests, it is a good idea to organise 2 set times per week for open home viewings as this gives your tenants enough time to tidy up the property and make plans if possible to be out of the premises. There is no official requirement for tenants to be out of the property but by giving them notice they are often happy to go out for the duration of the inspections.

Offer incentives to your tenants

Having income coming in from your tenants during the sale period is important to many investors and they find offering an incentive to their tenants can make all the difference to how willing they are keep the property clean and tidy and vacant for inspections.

Offer the chance to break the lease

If your tenants are really unhappy it may be better to offer them an early release from the tenancy. While you will miss out on the rental income during the sales process, having them out of the property offers benefits too. You can get into the property easily and fix anything that needs to be repaired, things that you couldn’t do while the tenants were living there. Do the walls need a repaint, how is the carpet looking, does the bathroom or kitchen need a refresh? These changes can often bring in more money when you sell than if you had the tenant in place collecting rent. Plus, you don’t have to worry about access and considering them at open inspections.

A few points to consider though – if they are on a fixed term lease you cannot ask them to leave unless they choose to break the lease themselves. If you can’t wait until the end of the lease to sell, then your property manager can try to negotiate with them and perhaps offer an incentive for them to break the lease.

If your tenant is still living in your property past the end date of your fixed term lease they are protected under what is called a Continuing Agreement Tenancy. You can terminate this lease if you give them 90 day’s notice, or advise them that you plan on selling the property and give them 30 day’s notice when the sales contract is signed. Of course you need to make sure the tenants are out of the property before settlement date.

Pay for a clean up

A well-presented property has a direct impact on how many people are interested in your property, how quickly it sells and how much it sells for. Relying on your tenants to prepare your property for sale is a bad idea. Hire a cleaner (and gardener if you have and outside space) to do a thorough clean and garden tidy up before you take any photos or open the property for inspections. First impressions matter so spending some money on making your property look its best can really pay off, plus the cost of this is tax deductible and your tenants will be happier living in a fresh, clean and tidy home.

Sell my house in Grand Prairie Tx

What features should a good real estate agent have?

Licence: In all states and territories, all real estate agents have to be licensed in accordance with local legislation. The legislation also regulates such matters as trust accounting, continual education of licensees and those engaged in the business of selling, managing property and renting. In some areas this legislation also prescribes the form of agency agreement or contract to be used.

You should check the licence details of all real estate agents you are thinking of using before signing up with your preferred choice.

Local Agent: It’s important that the agent you choose knows the area you are selling in and that they are aware of other properties for sale and properties that have recently sold. They are experts at knowing the local market and can give you an honest appraisal on the expected value of your property and assess how it is placed in the market alongside similar properties.

Experience: Does the agent display local knowledge of your area and do they have experience in the method of sale you are looking at using? Can they show you any comparable previous sales?

Market Knowledge: The agent should be able to give you a local market report of your area and surrounding areas. They should know about property trends, schools, transport, demographics and the sorts of buyers looking for homes in the area. Ask your local agent for our industry leading Local Market report packed with property information, trends and insights just for your neighborhood.

See them in action: An excellent way to assess an agent is to see how they perform at an open for inspection. At the inspection watch their behavior, were they on time? Do they stand at the door and welcome attendees and capture their details? Do they highlight the property’s features and could they answer any question you put to them? Did they follow up after the open for inspection offering more information? And was their marketing of the property of a good standard?

Trustworthy: Honesty and trust are key to any good relationship – especially in real estate.

Approachable: You’ll need to find an agent who you feel comfortable with, who will listen to your concerns, answer honestly your questions and who is approachable by you and prospective buyers.

References: Don’t be afraid to ask for references and referrals, as speaking with past clients can give you an idea of how the agent has performed previously.

Professional expertise: Can they clearly outline the activities and marketing they will undertake and offer a guarantee of service? Can they show you their recent results including sale prices, time on market etc?