When a “For Sale” sign goes up on an empty property, there is little more vendors need to do except sit back and wait for the agent to weave his magic and present offers.
When it’s a rental property, with a tenant still in residence, the period between the releasing to market and the sale can be fraught with complication. Even the most accommodating tenant is likely to be stretched by the extra requirements that come with living in a property listed for sale.
Legally, all tenants must allow agents reasonable access to escort buyers through their residence providing appropriate notice is given.
Tenants are also have to provide permission to allow photos of their residence to be displayed in advertisements and they must face the fact that once their lease expires, the new owner is not obliged to renew it. Yet, despite the imposition of a sales campaign, most tenants are co-operative. Generally, most of them work in with the agent but don't want to be disturbed too often. It’s rare that a tenant becomes a deliberate hindrance to a sale.
Nevertheless, from a pure marketing perspective, it is better for a vendor to sell a property without tenants in place. When you’re selling a residential property, you want to attract as many buyers as possible and make a positive first impression.
If you’ve got a tenant there on a lease, you immediately eliminate [a potential owner-occupier] buyer. If a tenant is uncooperative this could shave tens of thousands from the price a vendor may otherwise have achieved. Every property’s going to be different, but but access and presentation will have a direct influence on time on market and eventual sale price.
Some tenants who have beautiful furniture really make a property look smart but if you haven’t got good tenants, you’re devaluing your property. Sellers could get anything up to 10 per cent less on some places that are badly presented. Presentation is absolutely critical with apartment sales.
In real estate terms, “bad presentation” can translate to something as simple as breakfast dishes being left in the sink or carpet that hasn’t been vacuumed recently. Sellers should also note that while tenants must allow prospective buyers to view the property, there is nothing to say the tenant must be absent during those inspections. So if you've got a couple of tenants slouching around on the sofa whilst you are showing buyers around, that could make for an uncomfortable or awkward viewing.
The ideal scenario is to have the property vacant, undertake a mini-make-over, stage the property and present the property in its best possible light. However, a vacant property means loss of income. Some sellers simply cant afford to have their property sit vacant for the duration of a sales campaign which could amount to 2-3 months.
A vacant, clean, well-presented property that an agent can access anytime, and that a buyer can have anytime, always sells more than a tenanted property.
Any potential loss of rent from having a property vacant, from my experience is more than made up for in a superior selling price and shorter days on market.
On another positive note, the current market is seeing more investors around which means a campaign tailored to investors could work in the sellers favour.
The majority of sellers, however, understand the importance of correct presentation, ease of access, and getting the right advice from an experienced local agent. Real estate sales is all about achieving the highest possible price in a reasonable amount of time and selling a rental property vacant will reap a much better result than one with a tenant in-situ
If you're planning to sell your investment property, contact Claude Iaconi on 0412 427 877 for a free sales strategy consultation specific to rental properties. With over 25 years experience in selling inner city real estate, Claude understands the importance of providing investors the right advice - the first time.