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Selling and self letting

Discussion in 'The Buying & Selling Process' started by sandyfeet, 8th Apr, 2016.

  1. sandyfeet

    sandyfeet Well-Known Member

    Joined:
    19th Jun, 2015
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    130
    Location:
    South Coast NSW
    Hi all,

    We are looking to sell one of our IPs this year and we self manage the lease/tenant. They have been excellent tenants and are on a lease until september. I understand that they can stay until the end of the lease even with a sale.

    How would people approach the following situations: (we have never sold a property before at all)

    - Letting the tenant know we are intending to sell and asking if they are interested in buying? (we have no idea if they are or not)
    - what would be the pros/cons and differences between putting it on the market in the next few months whilst tenants are still on a lease vs selling after lease period ends?
     
  2. Xenia

    Xenia Adelaide Property Manager Business Member

    Joined:
    21st Jun, 2015
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    Location:
    4/136 The Parade Norwood, South Australia
    Hi Sandy
    most of our properties are sold with tenants in them, the pluses are, 1. cash flow while it is selling and 2, the property is already furnished.
    The above assumes that it is a great tenant who keeps the property in an excellent condition. If not then it will devalue the property and what you gain in cash flow at the time of selling you will lose in the tenant devaluing the property so some discretion is needed to make a choice.

    Jennifer Duke recently wrote an article on this which you may find helpful: How to sell a home in Australia while it is being rented - yes I was one of the agents she interviewed, but great article regardless ;)

    Very few properties are sold to the tenant, but it can sometimes happen.
    You need to let them know you are selling, send them the legal documents of allowing access and specify open inspection times.

    Good luck X
     
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  3. Nick Valsamis

    Nick Valsamis Real Estate Professional

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    Location:
    Sydney
    You could ask them if they want to buy, but you don't really have any leverage to get the best price in this situation.
    If you don't know the tenants that well, then you should inform them that you are going to sell before you do to get a feel if they will cooperate with open houses, presentation etc.

    Provided the place presents well and they are cooperative then there shouldn't be any issue selling while they are living there.

    However, the main thing that should be considered is that you could miss out on potential buyers that want to move in as soon as it settles.
     
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  4. Xenia

    Xenia Adelaide Property Manager Business Member

    Joined:
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    Location:
    4/136 The Parade Norwood, South Australia
    good points Nick
    I would also suggest to sell in last 3 months of the lease so that settlement is coordinated with lease expiry to accommodate owner occupiers - your best target market.

    Just a trick that agents use - wide advertising, even if you get an offer from the tenant (which we usually often get as a first instance when a property is marketed for sale) advertise widely anyway and there is a very high chance you will get a higher offer and tenant's offer will be priced out of the market.
     
  5. sandyfeet

    sandyfeet Well-Known Member

    Joined:
    19th Jun, 2015
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    130
    Location:
    South Coast NSW
    they do keep the place looking very good (gardens are 10x better then when I lived there :()

    nick, so your suggesting it might be a good idea to advise them that we intend to sell and then go ahead with an agent? i guess this way if they are interested they can then approach us, but we can still go ahead and have a couple of agents look through and give us a value we should be looking for

    your point re: 3 months Xenia seems like a good idea, looking to place it on the market around the beginning of june may be a good time as it is 3 months out from expiry of lease.

    whats a general timeframe for getting an agent to appraise a property, have paperwork done and for them to get the property on the market?

    thanks,
     
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  6. Nick Valsamis

    Nick Valsamis Real Estate Professional

    Joined:
    20th Jun, 2015
    Posts:
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    Location:
    Sydney
    Yes generally if you are still deciding whether to sell with tenants or without. Imagine if you don't tell them, and they are annoyed about it and make it difficult for you by being at the open house and leaving it messy. It may not happen but it is possible.

    If you are going to have more than 1 agent look through then you will have to talk to them about it anyway.

    In Sydney 2 weeks at least. Technically it can be done quicker but to do it correctly you would need to give at least 2 weeks notice to the tenant and also have a contract for sale with the prescribed documents.
     
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