What’s best when selling – rented or vacant?
Brisbane’s market is running strong. Demand is high and listings supply low, so many investors who’ve been waiting for this spike in prices are now wondering if it’s the perfect time to go to market. But should you wait for your tenants’ lease to end?
While a third of Queensland’s homes are rented, more than half of inner-Brisbane’s have tenants in place. And the vast majority of homes our Bees Nees team sell are rented. There are some obvious advantages for sellers in marketing a vacant property, but also some big disadvantages. We share our insights on the pros and cons, along with some tips to make it work best for you:
- There’s not much in this for your tenants – their home is about to be invaded by a bunch of strangers and a high priority for your selling agent is to consider their needs and quickly build a respectful relationship. Our sales team find almost all tenants good to work with once they understand we’re supportive of their needs. But charging in and barking orders, as some sales agents can do, rarely ends well. Those agents struggle with limitations on access and refusal of photos and open homes (yes you need tenants’ consent for both these). So choose your selling agent wisely.
- It’s important to check the tenants’ current lease term. If you go to market within 60 days of its commencement (officially marked by the issuing of a Notice of Intention to Sell), they could choose to vacate with just 14 days notice to you. So early on you and your agent need to resolve who you think your ‘best’ buyer will be. If it will be an owner-occupier then a long (6 months +) lease can be a deterrent. Remember a tenancy agreement transfers to the new owners – tenants are protected by it. Those properties might be best held until closer to lease expiry, but it is worth your agent discussing this with your tenants. Many times we find they’ve contemplated a move and are open to relinquishing their term.
- Will an investor pay the best price and see a current tenant as an advantage? My partner recently bought a Milton apartment where the tenants have been living for some time and entered into a new 12 month lease just prior to the sale. While the rent is slightly below market, she was attracted by the way they treated the place as their home and had a history of paying rent on time and taking care of things. For her it was peace of mind and one less issue to consider.
- Make sure your selling agent asks the tenants if they’ll want to stay on. Investor activity is building strongly and we’d expect they’ll be a dominant buyer segment over this next 12 months. So knowing your tenants want a new lease can be a selling benefit, even if the current one has expired.
- A willing tenant, one who wants to stay on and works cooperatively with your agent to achieve a sale, can be a huge benefit. I’ve sold homes where the tenants cleaned the place impeccably and put scented candles about before inspections, all with the aim to show an investor they wanted to stay in the home. This seller didn’t need to spend money on staging a vacant property as it was presented as good or better than the experts would do!
- Is there a win-win-win? Bees Nees sales Consultant Brady Hope recently sold a Fairfield house where the tenants had a long lease, the first home buyers needed to move in within 6 months of settlement (to qualify for their stamp duty concessions – make sure your agent is across this) and they were prepared to pay a better price than the next offer. Brady explains his solution: “We agreed on an extended settlement date that achieved the seller this better price, the buyers their duty savings, and the tenants were happy to be able to see out their lease term. It really was a good outcome for all.”
- Get the dates right! If your tenancy has expired then you can give the tenants 30 days notice to vacate where your contract calls for vacant possession. But make sure your agent knows this tenancy legislation as there’s trips for the uninformed. For example, you won’t want to issue the notice until you know your sale is unconditional – you might end up with no buyer and no tenant!
Brisbane is very much in a sellers’ market and it’s no surprise many investors are looking to take advantage of the opportunity. There’s no doubt a vacant property gives us simpler access (with no need for 24 hours’ written notice) and you have full control over your property’s presentation. But there’s no need to wait for an empty property! Whether or not your tenant has a fixed term tenancy, and whatever its length, there’s strong results to be achieved when there’s so few listings to meet current buyer demand.
Working closely with your selling agent you can secure some terrific opportunities in this boom market.