Selling with tenants | The West Australian | Ralph Lauren

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A slightly more complicated proposition than selling a vacant home, listing a tenanted property for sale can be tricky to navigate and requires some careful consideration on the part of the seller to get right.

Ray White City Residential Perth Selling Principal Brent Compton said the first thing to consider was how much time was left on the lease.

“It’s not in an owner’s best interest to try and sell when there is a long timeframe left on a lease, as they will limit the chances of selling to an owner-occupier, leaving just investors to purchase; and they will determine the price predominantly from their calculations on returns,” he said.

Raine & Horne Mandurah Senior Property Manager Diana Gilbert said owners had the right to sell their properties, but had to do so in accordance with legislation.

“Under the Residential Tenancies Act 1987 (WA) a tenant must be given a minimum of seven days’ written notice or maximum of 14 days’ notice to enter the property to show it to prospective purchasers,” she said.

“This notice must be by way of a ‘Form 19’ notice of proposed entry to premises.”

Ms Gilbert said if the rental property went under contract, the tenant must be given 30 days’ notice to vacate from the time the notice was received – or approximately 35 days if allowing for postage.

“This notice can only be issued in a periodic tenancy agreement if the seller has entered into a contract of sale,” she said. “In the event of a fixed term tenancy agreement, the purchaser inherits the fixed lease agreement and is bound to honour the lease until the expiry date is reached.”

Mr Compton suggested owners first ask the tenant if they would be interested in purchasing the property.

“If they are, great. If not, then provided the owners have selected an experienced respectful selling agent, the rights of the tenant should be protected throughout the sale,” he said.

The best way to approach the tenant about your interest in selling the property is with consideration and compassion, according to Ms Gilbert.

“Perhaps offer them a week’s free rent if the property sells, or a rent reduction for the inconvenience of having strangers invade their domain, and negotiate a day and time each week to allow access for viewings that suit the tenant,” she said.

Mr Compton said if it was possible, it would be best to wait until a property was vacant to list it on the market.

“I’m not a fan of selling tenanted properties based on my time in real estate,” he said. “Sadly I have pretty much seen all of the things that can go wrong.

“Even the best tenants sometimes make it harder to sell due to buyers’ concerns that arise from leases, presentation, timing and so on.

“A vacant, clean, well-presented property that an agent can access anytime, and that a buyer can have at any time, always sells for more than a tenanted property.

“Any potential loss of rent from an owner having their property vacant, from my experience is more than made up for in a superior selling price and shorter days on the market.”

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