How to Sell Your Rental Property

If you own residential real estate as an investment and you are looking to sell – it’s important to think carefully about how you’ll approach a sale. Here is an overview of some very specific obligations you will have to consider before you can sell your investment property

How to Sell Your Rental Property

Perhaps your rental property has had strong capital growth and you want to sell while the market’s at a peak. Alternatively, you may be moving to another city or state and want to sell up your rental properties and buy in a new area.

Whatever the reason for selling your rental property, there are some important things to consider if you’ve currently got tenants in the property. There are a number of factors when it comes to selling residential real estate, but you’ve got some very specific obligations if the property you own is currently tenanted.

Communication

It’s certainly not a smart move to blindside your tenants. Keep them in the loop if there are any changes that could alter their position.

Of course, if you’re just toying with the idea of selling your rental property, there’s no point alarming your tenants if you’re not going to act upon the idea for a year or two.

However, there will come a time when your desire to sell could conflict with your obligations. At this point, you’ll need to have a chat with your tenants.

Your Obligations

It’s necessary to check which kind of tenancy agreement you have, as this will affect what approach you can take with regards to selling your investment real estate.

For instance, if you’ve signed a fixed-term agreement with your tenants, you’ll have to let this period of the agreement run through – you can’t ask them to move out part way. You’ll need to rethink a quick sale if you’ve got this type of agreement!

By contrast, you have a bit more flexibility with relation to periodic tenancies. If you want your tenant to move out before you put your property up for sale and you have a period tenancy agreement in place, you’ll need to provide the appropriate notice in writing, which can differ from state to state. Sell my house in Mooresville

Do I Sell With Tenants in the Property?

One big question landlords ask when they’re looking to sell their rental properties is whether they should host open inspections while the tenants are still living there or attempt to sell the property uninhabited.

If you go for the latter option, you have more flexibility with how you present the property, plus you won’t need to worry about tenants not keeping it tidy.

Another option is to host option inspections while you still have tenants in the property. This may be a good approach if your tenants are reasonably tidy and you trust that they’ll keep the property in good shape when prospective buyers are being shown around it.

Of course, you’ll need to give tenants appropriate notice of open inspections. If this is going to encroach on their everyday enjoyment of the property, it may be wise to offer a rental reduction.

Different Ways to Buy a Property

There are a number of different methods available to buy a home in Australia. Some buyers may choose to snap up a property at auction, while others prefer to gauge the market through a tender or expression of interest. Here is an overview of the four main types of selling methods: Auction, private treaty, tender and expressions of interest.

There are Four Main Selling Methods

There are a number of different methods available to buy a home in Australia. Some buyers may choose to snap up a property at auction, while others prefer to gauge the market through a tender or expression of interest.

Here is an overview of the four main types of selling methods: Auction, private treaty, tender and expressions of interest.

Private Treaty

Also known as a ‘private sale’, this selling method requires the vendor (or seller) to set a price from the start of their campaign.

This enables them to receive and consider offers from prospective buyers throughout the time the property is listed for sale on the market. Through this method of sale, the owner can choose to extend their campaign.

As a prospective buyer, you can submit an offer through your real estate agent to the owner and potentially negotiate the price. Once the offer has been accepted by the owner, there is a cooling off period. This is where certain conditions must be met in order for the sale to go through, such as obtaining finance or a sound home inspection.

Auction

Auctions are a very popular buying method in Australia, as there is a chance of snapping up a property quickly at a good price.

Before the auction day, you can make a pre-auction offer to the owner through the real estate agent. This is where you can submit an offer of how much you are willing to pay for the home. However, in order for your offer to be successful, it needs to be an amount that will attract the owner’s attention.

You will need to register your bid on the auction day to begin bidding on the property.

The owner will have set a minimum reserve price they are willing to accept for the property. If the bids do not meet or exceed this price, the property may be passed in, or ‘withdrawn’.

Should this happen, there could be an opportunity for you to negotiate a sale with the owner.

Some sellers allow part of the deposit to be paid at the end of the auction with the rest on a specific date. This will need to be identified in the contract.

Properties sold by auction are not subject to any conditions, which means you will need to complete an inspection prior to auction day and have your deposit cheque ready to go at the time of sale.

Unlike private treaties, auctions do not have a cooling off period. This means you need to be sure this is the property you want to buy.

Tender and Expression of Interest

These two selling methods are quite similar to private treaty, but they are usually associated with premium properties. They are more formal and both require written offers passed through the agent to the owner. Sell my house in Madison

Expression of interest

  • You must send an ‘expression of interest’ document to be sent in by a specific date
  • The property price is not always advertised

Tender

  • Buyers need to submit a formal proposal as a response to the seller’s tender price
  • Buyers compete against one another by submitting offers, but neither party knows how much others are offering, similar to a silent auction
  • Properties are usually sold to the highest bid