Selling house tenanted or vacant (house staging)

Hi everyone,

I’m about to sell for the first time. We put our PPOR for rent earlier this year and have now decided to sell. We have tenants in but the lease will end mid Jan 2021. Our PM said we need to give the tenant 60 days notice. My question is, should we try and put it up for sale while the tenants are in or wait until they leave before putting it up.

We cleaned up the house and fixed everything that was wrong with it when we put it up for rent. So the only thing we really need to do is spruce up the front and back yard. We had an inspection this week and the garden has a lot of weed, grass needs water and fertiliser. Hedges need trimming, decks need reoiling. We also need to put quite a few plants to fill gaps etc. We aren’t allowed to go in to do these things until the tenant leaves, or we would have to pay a gardener to go in if we wanted it done now. I would prefer to save the money and do it myself.

The other issue with the tenants is that they are ethnic, and the house has no furniture in there. Just mats and cushions and rugs on the floor. Although they do keep the house clean, even putting foil on the stove to keep it clean and plastic wraps over the bench top. I guess what I’m trying to say is that I feel the house wouldn’t have a ‘lived in feel’ without furniture in there. It’s a 35sq home so rather large and looks soulless and empty without furniture.

Ideally I would like to wait until the tenants leave and then hire someone to stage the house. Does anyone know how much it would cost for a basic stage, I don’t want the house to look clutter. Just bare essentials. I’m located in SE Melbourne. However, selling the house vacant means we are paying for our mortgage as well as our rent. I’m worried the house might take a long time to sell, which would then be costly to us and might potential erode any added value we might have gotten from the staging.

sorry for the long post! For anyone who’s been in my position, what do you suggest is the best approach to take? Thank you.

 

I've just sold a townhouse, while tenanted (not very well presented, didn't look great at OFI etc). The townhouse next door was on the market at the same time - empty of people, and definitely staged for sale.

While mine was the better of the two (end of the block, so had windows on three sides, instead of two, had direct yard access to the back etc), the neighbour's place sold for $15K more than mine. If I was you, I'd wait until it had nobody living in it, and stage it.

 

Would definitely sell vacant given the situation you have above. I would also stage it.

Make sure the agent sends the notice to vacate ASAP before Christmas - otherwise you won’t have the place vacant till March.

Hire a gardener now to stay on top of the lawns and keep the weeds at bay. That way once you get possession you can give the lawn a quick feed and some regular watering to get it green for the inspections.

 

Some of your yard maintenance work could be deductible as the place is rented. Still cost more than DIY but in my experience it takes a bit of time to get lawns and gardens looking good.

 

I definitely recommend staging too! Would also recommend getting onto the yard maintenance as others have noted, gardens take a bit of love to get looking good. If the tenant allows you access you can do this work yourself though and then just pay a gardener to come and tidy it every fortnight or so.

If you’re in Melbourne you can’t issue a notice to vacate until end of March unless you go to VCAT (which means vacant possession end May/early June). If you need/want to sell sooner, I’d be negotiating with the tenant to leave by offering costs for moving, free rent, you’ll pay for a cleaner etc. if you have a PM ask them their opinion on an approach for this.

 

Thank you everyone for all your advice and insights! Yes we are in Melbourne and the tenant has said that they will try to find some place new but they could potentially be there another 60 days. They seem ok with this 60 days, which is better than having to wait until March before giving them the 60 days notice.

we were hoping to sell our house for $900k but the tenant has offered us $850k for it. We’ve rejected the offer as we are fairly confident that we could get this price. But now I’m second guessing whether the extra money is worth the extra troubles and uncertainty

 

You aren’t far away though. Seriously consider the expenses involved in selling before you reject their offer. if you can sell to these tenants with low/no commission for say $865k, you are probably ahead compared to the agent/advertising/staging/rent free period involved in a sale to someone else.

 

A 50k discount is what... about 6%

Seems like a good deal considering the selling fees, staging costs, and a potentially vacant property would come close to 50k if you didn't sell to them.
Put your own dollar value on the uncertainty and headache factor, but I would say take the 850k if you were happy with 900k anyway.

 

It depends on where you think the market is headed as well.
If you think Melb is going down more, then yes to sell.

On the flip side...
We have sold two homes in Tassie this year. Both times we lined up tradesman to commence fix up work (Painting etc) at the end of the lease - then staged the home.
It cost just under 2k each time, for staging.
Both homes sold the 1st weekend, and we are very happy with both results.

 

Hi @Wonderland ,

Just to add on to the good advice from our fellow members, here's my little two cents' worth ...
as sellers we want to get the highest possible price , not only with the first property sale... but with every single sale . However, it's the market supply/demand and the timing of sale that determine the results. If your potential buyers are investors, they won't care much about vacant house or staging. The one which comes with tenancy and good rent is attractive to them. On the other hand, if your suburb is popular with owner occupiers, with low supply and high demand, a quick sale is possible and the staging enhances. PPOR buyers like to envision how they are gonna fit into and live at your property. Staging doesn't guarantee better results but in many cases, it better connects potential buyers to the property who would in turn be willing to pay a premium price.

As with timing of sale, the weather, the economy , the supply vs demand, and a great deal of good luck do come into play.

How long have your tenants been living at your place ? They are your first potential PPOR buyer, so don't rule them out too fast. They are giving you an offer means they do like your property and your suburb. Check out the recent sale stats of your suburbs for similar properties to arrive at a realistic selling price, then try negotiating with your tenant for a win-win deal. Would a 60-day or a 90-day settlement be more attractive than a 30-day ?

To your selling agents... here's my apologies for attempting to crush your lucrative deal...damned my humongous two cents' big-mouth

 

I am currently selling a house in Perth so numbers may be slightly different, but based on $900k property value, agents fees would be $20,000 (2.2%), staging would be around $3,000 and marketting would be $2,500+.

All you are interested in is net cost in your pocket. In your situation I would gladly sell for $860-$870k to avoid the whole hassle preparing a property for sale plus the loss of rent during the process.

 

Thanks everyone for your advice! We’ve decided to put it on the market as I think we can get $900k plus for the property. We found an agent who is charging 1.6% for commission. Our area is a ppor market, a lot of families are moving in. There isn’t many houses in our price range on the market atm so we are hopeful he will sell fairly quick. Our current tenant has apparently been offering a lot of houses around the area $850k so I’m thinking that must be their budget. But they are willing to vacate the house as soon as they find another rental property.

I did work out the numbers between selling it for $850k as is, compared to getting the house ready and putting it on the market and I think it’s worth while to try out luck with the market. Our mortgage isn’t much on the house so if the house doesn’t get sold within a few weeks, we are concerned.

 

Good luck! As you are going to put in on the market, have a think about the exclusivity conditions in the sales authority. If your tenant’s offer of $850k ends up being the best offer, you wouldn’t want to pay your REA commission as essentially, you found the sale.

 

Hi @Wonderland, would you be opting for auction or private sale ?
In any case, best of wishes for your desired results

 

I’m not sure how it works. Our tenant put the offer through our property managers so they didn’t come directly to us. We have no signed on with anyone as yet for the exclusive authority

 

We are hoping to sell before taking it to market, but if we take it to market, it won’t be an auction. Thank you, we are hoping for the best!

 

Running a good property management business has no correlation with ability to sell as I have found the skill sets are completely different.

Find the best agent and pay them a market rate (and stage it and tell the agent you are doing it to help them earn their commission)