At a recent REIQ zone breakfast the topic was selling tenanted properties.
Brad Kerrisk, Member Liaison Manager from the REIQ pointed out some tips to help when selling a tenanted property.
When an Owner/Vendor is ready to sell the first step is to notify the Managing Agent of intention to sell. This is best to come from the Owner. The Selling Agent should also contact the Managing Agent to discuss. The Owner/Vendor may select one or multiple agents to appraise their property.
The Managing Agent then gains the consent to carry out an appraisal from the Tenant (Form 9, Entry Notice is issued) on behalf of the Sales Agent, the Sales Agent then conducts the appraisal. The Tenant must be given 24 hours clear notice from time notice is received to gain entry to the premises. Best Practise is to call and discuss this with the Tenant.
The Owner/Vendor then completes and signs the appointment of Real Estate Agent – Sales and Purchases (Form 22a) with the Sales Agent. It is best practise to provide a copy of this form to the Managing Agent to verify that the property is on the market.
The Sales Agent must inform the Tenant that the property is officially on the market by issuing a Form 10 Notice of Lessors Intention to Sell Premises. (It is best practise that the Sales Agent issue this form to ensure that the notification is definitely given) and a copy provided to the Managing Agent.
It’s important to remember to work with the Tenants, not at them. Be consultative, be professional, they could be your next buyer and biggest advocate. Take time to explain what to expect now that the property is on the market. Negotiate terms and build a relationship with them. Always get Tenant consent forms signed it’s absolutely critical when using internal photos, conducting auctions and carrying out open homes.
Once a contract of sale is entered into inform the Tenants that the property is under contract, inform the Managing Agent. Managing Agent will then explain to the Tenant their options under the lease.
When the contract is unconditional and if new Owners want vacant possession of the premises then a Notice to Leave (Form 12) marked with grounds, for sale contract, must be issued for the Tenants to vacate the property (subject to the terms of the lease).
Minimum settlement time is 48 days for a tenanted property however that is a very tight schedule and it is best practise to set approximately 60 days.
§ Day 1 sale date
§ Day 2 inform agent of contract
§ Day 15 unconditional Tenants given notice
§ Day 45 4 weeks is up for the Tenants to vacate
§ Day 47 Exit cleaning, repairs, pre settlement inspection
§ Day 48 settlement ( business day) 60 days is best practice
If a fixed tenancy is in place the details of the lease are to be recorded on the contract and as best practise a copy of lease should be attached to the contract.
Remember if the lease is a periodic lease the Tenant can give 2 weeks notice on Form 13 (Notice of Intention to Leave) at anytime.
At the end of this process everyone should feel informed and a smoother, more streamlined process accomplished. Communication is the key.
Further, have your Managing Agent sell your Tenanted property, they are the best Agent for the job.
Choose an Agent that is interested in the relationship of everyone involved and takes into account what’s best for all parties not just earning a commission.
Your Managing Agent will always have a relationship already formed with your Tenant which makes it so much easier to sell your Investment Property with a Tenant in place.
It makes sense that keeping a Tenant in place on a fixed term lease ensures that the property is still income producing and if your Agent knows the market well, then the rental return should look attractive to a Prospective Purchaser.
In my experience most Agents will recommend that the Tenant be evicted and the property left vacant whilst on the market. This is poor advice as there is no income generated on the property whilst on the market for sale, and it will not look appealing to Prospective Investors.
Choose LJ Gilland Real Estate to sell your Tenanted property. If your property is managed by another Agent and you want to sell, transfer to LJ Gilland Real Estate and we will remove the hassle from sales and rentals aiming at the best result possible in any challenging real estate market, whilst making selling a sweet, smooth and nurturing experience for all involved.
Thinking of selling? If you would like a current Market Appraisal contact us now.
Looking forward to hearing from you.