General Real Estate Library Articles on home buying, selling, marketing and 203k Consulting
Should An Owner Keep Rental Property Vacant or Tenant Occupied During the Listing Period?by Sparky Beardslee
This has been hotly debated for many years; whether to leave your rental property rented out to others or have the unit vacated during the listing period. You've decided to sell your investment property; a single family condominium, townhouse, or home and you don't know whether to leave it empty or keep it rented.With over 30 years of experience in this area, being a licensed real estate broker, it is my experience, leaving the property rented to others is the best a real estate broker can do to help his seller. I have found, that, most realtors prefer to have a vacant listing, as it is much easier to show, causing little in way of inconvenience, not only to the listing office, but to any realtor wanting to show the property to a prospective buyer. I will repeat, "it is convenient to the agents"; it is not in the best interest of the seller. First, when a property is "for sale" and it is vacant, you are risking the possibility of vandalism. I have seen and heard of many listings being the victim of vandalism while under the care of a listing broker. Also, the sellers entire investment is "empty" and generating no income; and while this may seem like a reasonably good idea at the start, it becomes quite burdensome after months of "no activity" while being listed on the market. As a licensed broker for nearly 30 years, I would prefer a vacant listing, but I would also like to do what is best for my client. The best you can do for your seller is to generate as much income as you can while preserving the property and making the listing available to realtors with little or no inconvenience.
Here is what I have found to be a solution: a lengthy conversation with the tenant, discussing the wishes and desires of the owner to market and sell the property with the tenants occupying the unit. Letting the tenants know the owner requires their complete cooperation during the listing period and making the unit available 24/7. For this inconvenience, an addendum to the lease agreement is drafted and the tenant is given a 20% discount on his/her rent. They are to pay their rent on time as usual, and to pay the usual amount, however, 20% of the rent amount is placed into his/her deposit account each month. This will reward the tenant for cooperating fully and assure them of getting this reward only after they successfully vacate the unit after the close of escrow. A 20% discount is an aggressive discount and finds favor with most tenants and with the understanding that this discount is given in advance for their complete cooperation, a successful marketing plan to list and sell the property is increased. The property is to be, not only available, but kept clean at all times. Your tenant becomes your partner in a sense. I have successfully managed 100's of these special situations in my 30 years of managing real estate. It first became useful in the early 80's while many lending institutions were compiling foreclosures at record levels. I was in charge of their REO "real estate owned" department and was able to help carry their inventory while disposing of each and every foreclosure utilizing this strategy. While it is hard work, it is the best thing you can do for your seller.There are many reputable management companies available with this experience and training; many listed with the better business bureau, local chamber of commerce, members of the ethical internet association, etc. and practicing realtors. Interview as many reputable management companies as possible and ask your realtor for referrals. Lazarus & Co., Inc. is just one of several with the expertise to advise clients as to this option.
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