Selling Your Investment Property? Don’t Evict the Tenants!
by Neil Jenman
READING TIME: 3.5 minutes apx
The main goal of most agents is to make sales, not look after home-sellers. Oh sure, agents say they put their clients’ interests first. But the evidence suggests otherwise.
Agents focus on two factors when selling a property – price and motive. The lower the price and the stronger the motive (reason) for selling, the more chance of making a sale.
Generally, the more pressure on sellers, the more likely they are to ‘crack’ and sell, often at any price. This is especially so with auctions. Auctions make sellers nervous and agents like it that way. To quote from a book by one auction trainer: “It’s your job to wander around and keep them nervous.”
Another ploy occurs when agents sell investment properties. They give owners the erroneous advice that it’s better to sell a property vacant.
Really? Better for whom? The agent, of course.
You see, when investors lose their rental income, they must find some other way to make their mortgage payments. And that usually means dipping into their savings. Of course, this can put investors under enormous pressure. Having to find an extra couple of thousand dollars a month to replace lost rent soon adds up. And agents are quick to remind owners that they are “losing money every month” which, in agent-speak, means “Drop the price and sell it.”
To say that it’s good for any owner to lose a steady source of income doesn’t make sense. By the time sellers realise they have been duped, if they ever do, it’s too late, they are under extreme financially pressure. Most crack and sell. The agent gets paid. Next seller, please!
So, how will a good agent look after investors who are selling their properties?
Simple, leave tenants in the property, especially good tenants. But what about the claim that tenants make things “difficult” and it’s harder to show a tenanted property? Or what about the tenants, who, knowing the property is for sale, move out of their own accord?
All problems can be solved.
First, a good agent will tell a good tenant that the owners have decided to sell, but the property may be sold to another investor. This means the tenant may avoid the stress of moving.
Second, a good agent will get the tenants on-side by telling them that, if they co-operate and assist the owner to sell (allow regular inspections and keep the place tidy, being the two main concerns), the owners will give them plenty of time to find another place to rent should their current home be sold to home-owners not investors.
Third – and this makes such perfect sense and makes everyone a winner: The owners can offer the tenants a rent discount while the property is for sale. This is in thanks for the tenants’ co-operation and any inconvenience they suffer.
Be careful, however – make sure the discount is payable after the tenant has co-operated and the property is sold. If you give the discount upfront, the tenant loses the incentive to co-operate (not saying they won’t, but it pays to be safe). “If you assist us with allowing inspections and you keep the place in good shape, the owners have agreed to give you a discount on your rent of, say, forty dollars a week payable once the sale occurs.”
So, in the above example, if it takes ten weeks to sell, the owners will refund four hundred dollars. That’s a lot better than what would have happened if the property was vacant, namely four thousand dollars in lost rental income.
The next time an agent gives you a suggestion which causes you to lose money, always ask: “Is there another way of doing this without it costing me thousands of dollars and putting me under financial pressure.”
Just pick up the phone and get some real estate support you can trust at no charge or obligation. Call us on 1800 1800 18 or go contact us here.
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