Selling your house is regularly rated as one of life’s most stressful experiences. Try telling that to investors who’ve gone through the sale of a tenanted property. I for one know many a hardened real estate agent driven to their wits’ end when selling a house occupied by untidy and unhelpful tenants!
Fortunately, as I’ve said before, times are changing.
The Property Market has recently sold a number of tenanted properties and we think we’ve cracked the formula for keeping all parties to the transaction sweet – buyer, seller, tenant and (somewhat selfishly!) real estate agent.
Our Magic Formula
- Communication is absolutely critical. As soon as you know you’re going to sell, advise your tenants – verbally at first and then in writing. If you have a property manager on board, so much the better… they will break the news for you.
- Introduce your tenants to your real estate agent. I like to meet tenants in person (I usually take a small pressie to make sure we start off on the right foot… chocolate works a treat). At the meeting I explain when the marketing campaign for the property will begin, how long it will last and on which days open homes will be held. I also let tenants know that they’ll be given at least 24 hours’ notice for viewings outside of scheduled open homes.
- Set expectations early. When I meet with tenants I make sure we walk around the property together and I explain what is required in terms of presentation for open homes and viewings. While tenants will never have the same vested interest in a property’s image as its owner, it is fair to expect both house and garden to be clean and tidy.
- Offer a financial incentive, payable after settlement. Rather than offering a rent reduction during the marketing campaign, authorise your real estate agent or property manager to offer a financial incentive that’s payable after settlement. They will let your tenants know that, if they keep the property looking smart and facilitate access for open homes, you’ll rebate part of their rent once the property has sold. The trick here is to make the rebate a decent amount – say a third or half the weekly rent – or else the tenants won’t see the benefit.
- Keep a record of what’s been agreed. After I meet with tenants I prepare a brief report that summarises what we talked about, and send copies to both property owner and tenant to ensure there are no surprises down the track.
- Stay in touch. Make sure your tenants are kept in the loop throughout the campaign. For example, let them know when an offer has been received so they can plan accordingly. If the property is being marketed as tenanted, make it clear that the tenants would love to stay (assuming this is the case) and offer to introduce them to serious buyers.
While this formula does wonders for keeping tenants sweet during the sale process, if you’re looking for the maximum financial return on your investment, the best bet is to give your tenants notice well before the property goes on the market.
Why? Well, bear in mind that your tenant’s furniture is unlikely to represent the home in its best light, and they are not obliged to leave the property during open homes and viewings. It’s far better to have them long gone before the marketing campaign begins, allowing time to complete maintenance and repairs and have professional property stagers work their magic inside.
If you’re looking for more advice about selling property investments we can help – contact us on 09 965 3656.