8 Steps to Take Before Listing Your Investment Property for Sale
Presenting a strong, solid property is the best way to a fast, lucrative sale. But before you plant a sign in the yard, you’ve got some work to do. From assessing the state of the property and cleaning it up and getting it ready to list to speaking to your tenants so they aren’t blindsided by the sale and gathering up all the pertinent information about the property and any tenants, the work you do before the sale directly impacts how much money you make at closing.
1. Assess the true state of your property.
A visual inspection isn’t going to be enough. A full inspection—performed by a licensed home inspector—will give you a more accurate look at the state of the property. Your buyer is going to have an inspection and will ask you to repair or give a repair credit for anything major. (In a slower market, they’ll ask for most minor things, too.) Don’t give them ammunition for price reduction or closing concession requests. Know what’s going on in your property ahead of time so you can make the repairs you’ll be asked to make anyway.
If your home inspection report turns up little or nothing, you can present it to potential buyers as a “pre-inspected home,” further providing proof that the property is a solid investment.
2. Make necessary repairs.
Once you have an inspection report, you can see what the buyers will see when they receive their inspection report. Addressing the big issues before the buyers even see the home can help bring in a higher selling price because the property presents itself as solid, so buyers aren’t asking for larger-than-necessary repair concessions—or worse, canceling the contract because they have no confidence in the property!
You can also choose not to make repairs and instead note the issue and report that these items will be sold as-is. This brings a lower upfront offer price, but you have less unknowns surrounding the inspection.
3. Clean, clean, clean.
The outside of the property needs to look great. So does the inside of the property, but if you’ve got tenants, you’ll need to coordinate with—and probably incentivize—them to clean it and keep it clean. A clean property sells faster (and for more money) than one that is less-than-tidy. Now, this may seem like a no-brainer bit of advice, but I am continually astonished by the utterly disgusting manner in which people live. You will be leaps and bounds ahead of the pack if you just have a clean home.
If you’re selling a property you have recently rehabbed, one good, deep cleaning followed by periodic maintenance through closing will suffice. Contract with a cleaning service to come in once a week to freshen up the property. If no one is living there, the cost should be minimal. You can even contract with them to clean the home after it’s sold and the new owners have moved in. An added incentive to the buyers and a bonus to the cleaning company. It’s always a great idea to be on good terms with a cleaning company!
4. Coordinate with your tenants.
If you’re selling a rental, you need to have your tenants on the same page. If you have a contentious relationship with your tenants, this is going to be just one more challenge, and you may find that waiting until their lease has expired and they’ve moved out is a better time to sell.
If you have a good relationship with your tenants, sit down with them and tell them you are selling the property. Ask if they’d like to buy it. (This doesn’t happen frequently but it’s worth asking them first.) Ask them what times would work best for their schedule to show the property to potential buyers. Also, ask what times would NOT work for their schedule, and share these with your agent – and ask them to include this in the Agent Remarks, a private section in most MLS systems.
Consider having the tenants themselves coordinate showings with the showing company. This reduces your hassle by not having to make multiple phone calls to confirm with the tenants. However, be alert and ask the showing company to report declined showings. One showing that doesn’t fit into the tenants’ schedule isn’t a big deal, but if they’re declining most showings, you could be losing sales and not even know it.
5. Find a great agent.
Residential agents can list any type of residential property—but that doesn’t mean that all agents are good at selling residential investment property. If you don’t already have a great investor-minded agent, start looking for one right now. Go to local investor meet ups and ask fellow investors who they recommend, but find someone who understands your needs—and the needs of your tenants.
6. Have excellent pictures taken.
Again, if you’re selling a rental, you’ll need to coordinate with your tenants to have pictures taken of the property. Offer to hire a cleaning crew to come in and clean their home for them, so your pictures present the home in the best light. Make sure the photographer takes pictures without fancy lenses or weird angles, so you convey the true home.
7. Gather up your documents.
Go through your records and gather up anything pertinent to the property, from repair receipts and warranties to tenant screening information, rent records, and security deposits. Ask your tenant to fill out an estoppel certificate—a testament to how much they pay in rent, when it’s due, and how much security deposit they have given you. If you have move-in documentation, provide a copy to both the tenant (as a reminder of the state of the home when they moved in) and the new landlord.
8. Remember why you’re selling.
You’re selling your property for any number of reasons: to cash in equity, move up in property size, or even to get out of the game altogether. Advanced preparation can make the entire sales process go smoother and be finalized faster. Follow these tips for a great selling experience.
Selling your home can be overwhelming. There is so much you need to do, know, and all those dreaded forms you have to fill out. In her new book How to Sell Your Home, agent and investor Mindy Jensen takes you step by step through the process, from preparing your house to sell and choosing an agent that’s right for you, all the way through the closing procedures and beyond.