Now that the real estate market is heating back up, many home owners who opted to rent out their Albuquerque houses rather than sell them during the economic downturn are eager to finally list those properties for sale.
While it may sound like a good idea to the owner of an investment property to keep a tenant in a home while it’s on the market , listing a home for sale before a tenant moves out almost always costs the homeowner money.
That’s because, as every experienced real estate agent knows, houses with tenants residing in them are much harder to sell than homes that are vacant. And not just a little but harder to sell, but more like 4 or 5 times harder to sell. Here’s why:
Tenants Don’t Make Homes Ready for Showings
Selling a home is a difficult thing to go through, even if you are a homeowner living in the house you’re trying to sell. Buyers and their real estate agents can call and ask to come see your home any day of the week and any time of the day, and if they give you acceptable notice (usually a minimum of two hours), you’re not supposed to turn them away. That means you need to keep your house clean, uncluttered and ready to show every day of the week.
This is such a hard task that many sellers are unable to do it themselves even when their own financial interests are on the line; it’s unrealistic to expect tenants to do it. It’s so unrealistic, in fact, that real estate agents who have shown rental properties with tenants more than a couple of times in their careers shy away from showing them again.
The stinky leftover food on the kitchen counter, the trash that’s overdue to be taken out, the heaping piles of dirty clothing on the floor of the bedroom and other unmentionables laying around make even the nicest property unappealing and and can be ouright embarrassing.
Those are some of the conditions that Realtors are used to seeing in properties with tenants.
Remember, we Realtors are trying to help our buyers find the best properties, when we show the houses that are less than the best it can reflect poorly on us. The words “Tenants Rights-Please Give 24 Hour Notice to Show” are a signal that 4 out of 5 times the house is going to show poorly.
Renters May Discourage Showings
In the best case scenario, a tenant will not only keep their rental house in the best shape possible, they’ll allow it to be shown freely with little or no notice as well.
However, this is extremely rare, and when a tenant doesn’t want to move, or they just don’t want to be bothered, they can make it next extremely difficult for a home to be shown at all. This can be especially true if they do not allow a keybox to be placed on the home, or if they refuse to return phone calls to schedule showings.
I’ve even had them turn me and my buyer client away, even though we had an appointment, when we were at the front door to see the home.
Here’s how scheduling homes for showings works. My buyer client and I identify 5 or 6 home to go see, hopefully two or three days in advance, then I look up the showing instructions for each house and begin scheduling them.
Ok, that’s rarely true, usually it goes more like this: the prospective buyer calls me the day before, and I am expected to get them into the houses they want to see the next day. If we’re going out the next morning and they don’t call me until late in the afternoon, guess what? There’s not time for 24 hour notice. So in most cases I can’t even show them the house with the tenant if I wanted to.
I’ll explain why we can’t see that house and they have two options-let me know further in advance next time, or push the tenant occupied home down to the end of the list just in case they can’t find anything else.
Fewer Showings, Bad Condition Equals Lower Price
Fewer bodies through the door, and less appealing conditions once those bodies are inside will, in all but in the rarest cases, lead to longer marketing times. Longer marketing times lead to lower sales prices or in the worst case, listings that expire.
A much better approach is to let the tenant move out, then go in and clean the place up before placing the home on the market.
Rental properties almost always need new carpet and new paint, and there are usually some repairs that need completing before the house is ready for the market. Once the repairs are done, then you can list the home for sale on the MLS at a 30 day price (you don’t want it sitting vacant too long, there may be issues with your homeowner’s insurance).
Are You Sure You Want to be a Landlord?
When you get ready to list your investment property for sale please consider all your options carefully!
by Rich Cederberg, Albuquerque real estate agent. Call me or Text me at (505) 803-5012.