Tony Brazier

www.braziers.co.nz

Tony Brazier

The Press - Wednesday 2 December 2009

Selling Your Investment Property

After discussion on choosing the best agent for the job and the ways to market covered in previous articles, one now needs to look at the differences between selling a residential house and a residential investment property.

The timing of putting a residential house on the market generally considers the season that you are currently in. Spring is lovely because the grass grows greener and shrubs and flowers are blooming. But so do weeds which, for the absentee landlord, can be the biggest curse at this time of year. Investment/owners must also consider when buyers will have time to make their investment decisions. Strangely enough our busiest selling times are often mid-winter and in the New Year. Presumably people are either stuck inside (away from golf) or relaxed on holiday and take the time to make important decisions but, whatever the reason, it is certainly a different timing choice to the home owner that must be understood.

The investment seller must ensure that the chosen sales person knows how to treat tenants. Whereas a homeowner will clean their home with a toothbrush in preparation, the selling of a tenant’s home is merely an inconvenience to the occupiers. A salesperson cannot make presumptions about access either and often confuses the landlord’s rights of entry in giving 48 hours notice to a tenant under S48(2)(b) of the Residential Tenancies Act. This is a common mistake and has lead the more compliant property managers to refuse keys to salespeople who have a habit of mistreating tenant access. The tenant has a right to put “reasonable conditions” on entry by a salesperson that must be adhered to and worked out with the tenant, not the owners.

Also the tenant must be informed when a property goes on the market (s47). Traditionally an investor may have been approached to sell without the tenants ever knowing, however, under the new REAA 2008 this is less likely as before it is sold it must be listed (compulsory), therefore the tenants must be told. The tenant has a right to quiet enjoyment of the premises that they rent and should be smoozed as an integral part of the selling process. For example a salesperson used to having Open Homes may be in for an unpleasant surprise when a tenant refuses that process. It is all about communication. A box of chocolates goes a long way.

So too with photographs. A home owner is happy to show off the ambience that an internal shot can show. A tenant sees it as a breach of their privacy and an invitation to burglars to see what they’ve got, on the web.

Of course the vendor has every right to sell but not to assume that the licensed occupier, i.e. the tenants, have the same enthusiasm for that process. Generally, unless handled correctly, there are only two outcomes that a tenant presumes will happen at the change of ownership and they are that either the rent will go up or that they will be evicted. Unless your chosen salesperson knows the Residential Tenancies Act well, don’t use them. The Tenancy Tribunal officiates between tenants and landlords so if there’s a problem you, the landlord, will wear it.

What else should you expect of your investment salesperson and/or their agency? (1) An honest written appraisal. However, don’t be surprised if your salesperson politely walks away from the opportunity to sell for you if after having researched your price it is duly ignored. All agencies after recent times have far too many overpriced listings weighing them down and prefer someone else to be shackled with them. (2) Multiple choices of selling technique, not just one made to fit all. (3) Various styles of marketing approach tailor made to suit the type of property. (4) Honest reports. Not just what you want to hear but what you need to know. (5) Results. If the above are adhered to these should come within a month of starting your marketing.

Most of all you will want communication. Maybe not as much as the home owner might (daily) but we all know that no communication presumes no action and 95% of problems, with your salesperson if you have any, can be traced back to a lack of communication.

As the seller you don’t get off scott free either. Investment property owners (landlords) are notorious at not knowing their own businesses. Incorrect rental statistics, lost tenancy agreements, who uses what garage, what and where all the chattels are? You name it. We’ve seen it. The owner needs to take care to gather their information carefully in order for the salesperson to represent them accurately and confidently. Most listing authorities now have an indemnity clause that states the owner will take responsibility for any misinformation provided to the agent that turns out to be untrue. As the agents and their salespeople enter this new age of compliance, (where fines are substantial), they will be very vigilant in ensuring that the information they are given is correct and directly attributable to the person who gave it. If not marketing will be delayed until supply is satisfied.

In general, selling an investment property has never carried the same emotion or urgency as selling one’s own house and has lead to a relaxed, and at times sloppy, marketplace. In future these vendors will notice their salespeople bringing themselves and their clients into the real world of professional compliance to ensure the very best of results are achieved in as smooth a transition as possible.