How a tenant can obstruct a sale of your investment
As an investor, there often comes a time when it is better to sell a rental property rather than maintain it. Whether due to a change in personal circumstances, or wanting to invest elsewhere, getting the property sold promptly and for the best possible price is always the goal. If the property has tenants, money is still being made on the property until sold, whilst simultaneously informing potential buyers of the viability of the investment. However, tenants may be unwelcoming to the prospect of having potential buyers inspect the property and to eventually relocate.
The Residential Tenancy Act provides some protection for tenants, such as the owner being required to provide reasonable notice for access. Therefore, the owner or selling agent cannot knock on the door and ask to take a prospective buyer through without notice. On the other hand, a tenant cannot refuse access if given reasonable notice for access. The reality is, however, if the tenant wants to be obstructive they can, and not only will it affect the sales price, it can prevent the property from being sold entirely.
Consequently, when looking to sell your occupied property, it is vital to enlist the cooperation of the tenant. In my experience, it really comes down to communication and understanding the tenant’s situation, creating a workable solution that works for both parties.
This includes:
1) Explaining to the tenant what their rights are and remove all doubts.
2) Suggest a set time that the agent can take buyers through. Usually this should be a weekly home open of no more than 30 minutes.
- Keep alternative access times to an absolute minimum and respect if the tenants says no to access.
If you have a great tenant your investment will present well. As this may not always be the case, it is worth considering offering incentives to a tenant such as:
1) Providing one, or several weeks rent free
2) A gift basket or wine
- Assist in relocating the tenant
If you are in a situation where you think access to or the presentation of your property may become an issue, it is worthwhile postponing the sale until the lease is up and presenting the property empty. It will cost money, as you can expect a 3 month period (or more) where you have no rental income, but it can also mean a big difference in sale price.
Readers should always seek their own independent advice prior to making any decisions regarding property or finances
Related articles:
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5 Tips on home presentation when selling
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Buyer beware – before it is too late
7 Tips on how to choose the right real estate agent
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