Chapter News

Selling with tenants

By Kathryn Hall - Kathryn Hall Real Estate

Winning a listing where tenants are in occupation can be complicated, but if handled correctly it can result in not only a happy vendor but also a positive relationship with the tenants. I have found the following steps to be worthwhile in encouraging tenants to cooperate with you.

Communicating with the tenants

The first, and most important, task once the listing is secured is to arrange an appointment to meet with the tenants

Preparing for the meeting
Remember to give your property management team a heads-up on what you plan to do.

There is nothing worse than the property manager being the last to know. Keep them in the loop at all times, as usually the tenants will contact them first.

Ask your property management team for an update on the tenants, including who they are and how they are maintaining the property.

Check to see if they have been paying their rent on time and read the condition report. Also check the history of the tenants, how long they have been in residence and if there have been any rent increases. This will give you an insight into how to approach your tenants.

You should also check the lease. If the lease has not expired, then it will need to be attached to the Contract for Sale. Refresh your memory in regards to inspections and sale. Do not go to a meeting with the tenants without this prior knowledge.

Make sure you are aware of the tenants’ rights. If you don’t know, find out by familiarising yourself with the relevant legislation. The REINSW Helpline can assist you.

Meeting with the tenant
Take an agenda of what you want to cover and a copy of their lease, and highlight the section regarding inspections.

Explain the situation and let them know that you are there to help them throughout the process. Give them the courtesy of discussion. Advise them that if the lease is current, there will definitely not be any change to their tenancy.

Discuss with them convenient times for conducting inspections. Work towards having two inspection times a week; one on a Saturday and another mid-week, which would allow pest and building inspectors access to the property.

Explain that an inspection lasting for 45 minutes twice a week will minimise interruptions for them and allow them to plan around those days and times. Confirm with your tenants that you will arrive at the property 15 minutes before the inspection time.

Once you have conducted the meeting with the tenants, send them a letter confirming your agreement and setting out the inspection dates and times. Provide a copy of the letter to your vendor. Follow up with a phone call to ensure the tenants have read the letter and make file notes.

Conducting open for inspections

Keep your vendor advised that you are doing all you can to ensure the tenants are agreeable. In some cases I have arranged – at the vendor’s expense and with the tenants’ consent – for cleaners to come in before the inspection.

Discuss with the vendor the possibility of offering the tenants a rent reduction during the marketing campaign. This may encourage the tenants to cooperate with you. Once the signboard has been put up, advise the tenants not to let anyone into the property without you. Leave business cards at the property just in case this happens anyway.

On the day before each inspection, send the tenants a courtesy email and text message. Always attend the inspections and reassure the tenants that you will be there. Keep communicating with them at all times. Also, advise tenants to keep any valuables in a safe place. This point should be covered in a letter.

Arrive at the inspections 15 minutes early. Make sure you knock three times and call out before entering the premises. You will be surprised how many times I have found tenants still in bed on a Saturday morning!

At the inspections, stand at the front door if you have no assistant to help you. Let the incoming buyers know before they walk in that the property is tenanted.

After each inspection, I often leave a small thank you gift. Nice soaps, gourmet biscuits and in some cases pizza vouchers and movie tickets; it all helps in creating a better relationship.

Once sold, offer to help find alternative accommodation if the new owner is not an investor.

How to handle any problems

You must always be considerate and courteous. Keep file notes, keep your vendor up to date at all times and ensure you confirm anything in writing. If necessary, take your property manager with you.

Be aware that an unhappy tenant could affect the sale price for your owner. This is something to advise the owner about and seek their cooperation.

The key point to having a smooth sale is about building a good relationship with your tenants and in most cases it comes down to courtesy, good communication skills and good preparation.

For more information or advice about selling a rental property, call the REINSW Helpline on (02) 9264 2343 (option 4).