Selling your investment property
Make sure your salesperson is on side with your tenants when selling a residential investment property.
What are the differences between selling a residential house and a residential investment property?
The timing of putting a house on the market generally depends on the season that you are in.
Spring is lovely because the grass grows greener and shrubs and flowers are blooming. But so do weeds which, for the absentee landlord, can be the biggest curse at that time of year.
Investor-owners must also consider when buyers will have time to make their investment decisions. Strangely enough busiest selling times are often mid-winter and in the new year. Presumably people are either stuck inside (away from golf) or relaxed on holiday and take the time to make important decisions.
But, whatever the reason, the timing is certainly different from that of the home owner.
The investor who is selling must ensure that the chosen real estate salesperson knows how to treat tenants.
Whereas a homeowner will clean their home with a toothbrush in preparation for sale, the selling of a tenant's home is merely an inconvenience to the occupiers.
A salesperson cannot make presumptions about access either, and often becomes confused with the landlord's rights of entry.
This is a common mistake and has led property managers to refuse keys to salespeople who have a habit of mistreating tenant access. The tenant has a right to put reasonable conditions on entry by a salesperson that must be adhered to. These must be worked out with the tenant, not the owners.
Also, the tenant must be informed when a property goes on the market. Traditionally an investor may have been approached to sell without the tenants ever knowing. However, under the new real estate laws this is less likely as a property must be listed before an agent sells it, therefore the tenants must be told.
The tenant has a right to quiet enjoyment of the premises that they rent and should be schmoozed as an integral part of the selling process. For example a salesperson used to having open homes may be in for an unpleasant surprise when a tenant refuses that process. It is all about communication. A box of chocolates goes a long way.
So too with photographs. A home owner is happy to show off the ambience that an internal photograph of the property can reveal. A tenant may see it as a breach of their privacy and an invitation to burglars to see what they've got, especially if it's on the internet.
Of course the vendor has every right to sell, but not to assume that the licensed occupier (in this case the tenant) has the same enthusiasm for that process.
Generally, unless the situation is handled correctly, there are only two outcomes that a tenant presumes will happen at the change of ownership - that either the rent will go up or that they will be evicted.
Unless your chosen salesperson knows the Residential Tenancies Act well, don't use them. The Tenancy Tribunal officiates between tenants and landlords so if there's a problem you, the landlord, will wear it.
What else should you expect of your investment salesperson and/or their agency?
An honest written appraisal. However, don't be surprised if your salesperson politely walks away from the opportunity to sell for you if after having researched your price it is duly ignored. Agencies, after recent times, have far too many overpriced listings weighing them down and prefer someone else to be shackled with them.
Multiple choices of selling technique, not just one to fit all.
Various styles of marketing approach, tailored to suit the type of property.
Honest reports. Not just what you want to hear but what you need to know.
Results. If the above are done, then results should come within a month of starting your marketing.
Most of all you will want communication, although maybe not daily as a home owner might. We all know that no communication presumes no action, and 95 per cent of any problems with a salesperson can be traced back to a lack of communication.
As the seller you don't get off scot-free either. Investment property owners (landlords) are notorious at not knowing their own businesses. Incorrect rental statistics, lost tenancy agreements, who uses what garage, what and where all the chattels are? You name it. We've seen it.
The owner needs to take care to gather their information carefully in order for the salesperson to represent them accurately and confidently. Most listing authorities now have an indemnity clause that states the owner will take responsibility for any misinformation provided to the agent that turns out to be untrue.
As the agents and their salespeople enter this new age of compliance, where fines are substantial, they will be very vigilant in ensuring that the information they are given is correct and directly attributable to the person who gave it. If not, marketing will be delayed until supply is satisfied.
In general, selling an investment property has never carried the same emotion or urgency as selling one's own house and has lead to a relaxed, and at times sloppy, marketplace. Landlords selling up will now notice their salespeople bringing themselves and their clients into the new world of professional compliance to ensure the best results are achieved in as smooth a transition as possible.
Tony Brazier has worked in the property industry for 22 years and owns a real estate company specialising in the sale and management of rental property. This column's information is of a general nature only. Readers should seek professional advice before acting upon it.