Frequently Asked Questions When Selling Investment Properties in Vermont
BY Lisa Friedman
Many sellers of investment properties would like to know how to prepare for listing their property for sale. Here is a list of items that you should take into consideration when selling.
1. Have keys available to all units. In addition to having keys to the entrance of each individual unit, also have any separate keys to the basement, locked storage areas, utility rooms and garages available. If buyers cannot get into an area they will often consider it to be in poor condition which could affect the price of their offer. Some buyers will not offer on a property until they can see all components of it which could delay an offer if those areas are not accessible. If a buyer is unable to make an additional trip back to the property to look at the hidden areas, they may offer on another property all together. We don’t want to give the prospective buyer any reason to delay making an offer on your property.
2. Have copies of the leases available. The prospective buyer will want to know the amount of the monthly rent, the term of the lease, expiration date, termination agreement and other items. Having this information available up front gives the buyer the sense that you are a serious seller and easy to deal with versus having to ask for the information.
3. Have information on income and expenses available. Some buyers will not believe an owner’s statement of income and expenses and may ask to see the applicable section of the tax return to verify the information. Do not take this as an insult. Many owners lie on income and expense statements that they give to buyers. Do not bend the truth as it could be considered fraud. You will want to portray an accurate financial picture of the property. Copies of rent checks and utility bills are helpful.
4. Have a list of updates, improvements and repairs available. Supply receipts, especially for any big ticket items.
5. Have any warranty paperwork available.
6. Have service records available such as when the furnace was last cleaned or when the septic was last pumped.
7. List the age of all structural and mechanical elements and appliances such as roof, windows, furnace, water heater and appliances. This helps the buyer to plan on what items they may need to repair or replace.
8. Complete a seller’s disclosure. All real estate agents will have a copy of this form for you to complete. If you leave sections of the disclosure blank or state that you do not know about certain items, the buyers will often believe that you are hiding something or did not take good care of the property. Be thorough.
9. Prepare your tenants for showings. When you initially sign leases with your tenants, be sure to discuss showing procedures for the time when you may want to re-rent or sell the unit. Getting their agreement up front at lease signing is much easier than trying to negotiate it later. Offer them an incentive for keeping their home clean and for allowing it to be shown. Many tenants would like 48 hour notice to show their home. Laws vary by state as to how much notice must be given. Be respectful of the tenant and their right to privacy. If dealing with a difficult tenant, try to designate specific times of day that they will agree to show the home such as between noon and 6 p.m. Of course, not all buyers have the ability to adjust their viewing time and you may miss out on showings by limiting the times that the property can be shown. Buyers do not want to inherit problem tenants. Limiting showings or messy units can discourage buyers from offering on a property.
10. Consider leaving a unit vacant for easier showings.
11. If you have any historical background on the property, supply it. Many buyers are interested in the history of a building such as if a notable person lived there or if it had a unique use such as it used to be an inn.
12. Supply your Realtor with all of your contact information. If you go out of town, make sure that your agent has a way of contacting you. You need to be able to return your agent’s calls within 24 hours, if not sooner. If the buyer has questions and has to wait for information, they may lose interest and look elsewhere if they deem the seller to be difficult to work with. Also, there is the ‘heat of the moment factor’. A buyer is most excited about their offer at the time that they write the offer. If the seller delays a response, the buyer may become frustrated or feel that the seller is playing games and go elsewhere. Supply all information that the buyer requests as quickly as possible while their interest is high and to show your cooperation.
13. A binder with all of the above information is concise and helpful. You never want to make a buyer have to ask for information. Supply the information up front so that the buyer can make an informed decision quickly.