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Should An Owner Keep
Rental Property Vacant or Tenant Occupied During the Listing Period?
By: Sparky Beardslee, Pres. Lazarus & Co., Inc, Property Management Services
www.lazarusandcompanyinc.com
This has been hotly debated for many years; whether to leave
your rental property rented out to others or have the unit vacated during
the listing period. You've decided to sell your investment property; a
single family condominium, townhouse, or home and you don't know whether to
leave it empty or keep it rented.
With over 30 years of experience in this area, being a
licensed real estate broker, it is my experience, leaving the property
rented to others is the best a real estate broker can do to help his seller.
I have found, that, most REALTORS®
prefer to have a vacant listing, as it is much easier to show, causing
little in way of inconvenience, not only to the listing office, but to any
REALTOR®
wanting to show the property to a prospective buyer. I will repeat, "it is
convenient to the agents"; it is not in the best interest of the seller.
First, when a property is "for sale" and it is vacant, you
are risking the possibility of vandalism. I have seen and heard of many
listings being the victim of vandalism while under the care of a listing
broker. Also, the sellers entire investment is "empty" and generating no
income; and while this may seem like a reasonably good idea at the start, it
becomes quite burdensome after months of "no activity" while being listed on
the market.
As a licensed broker for nearly 30 years, I would prefer a
vacant listing, but I would also like to do what is best for my client. The
best you can do for your seller is to generate as much income as you can
while preserving the property and making the listing available to
REALTORS®
with little or no inconvenience.
Here is what I have found to be a solution: a lengthy
conversation with the tenant, discussing the wishes and desires of the owner
to market and sell the property with the tenants occupying the unit. Letting
the tenants know the owner requires their complete cooperation during the
listing period and making the unit available 24/7. For this inconvenience,
an addendum to the lease agreement is drafted and the tenant is given a 20%
discount on his/her rent. They are to pay their rent on time as usual, and
to pay the usual amount, however, 20% of the rent amount is placed into
his/her deposit account each month. This will reward the tenant for
cooperating fully and assure them of getting this reward only after they
successfully vacate the unit after the close of escrow. A 20% discount is an
aggressive discount and finds favor with most tenants and with the
understanding that this discount is given in advance for their complete
cooperation, a successful marketing plan to list and sell the property is
increased. The property is to be, not only available, but kept clean at all
times. Your tenant becomes your partner in a sense. I have successfully
managed 100's of these special situations in my 30 years of managing real
estate. It first became useful in the early 80's while many lending
institutions were compiling foreclosures at record levels. I was in charge
of their REO "real estate owned" department and was able to help carry their
inventory while disposing of each and every foreclosure utilizing this
strategy. While it is hard work, it is the best thing you can do for your
seller.
There are many reputable management companies available with
this experience and training; many listed with the better business bureau,
local chamber of commerce, members of the ethical internet association, etc.
and practicing REALTORS®.
Interview as many reputable management companies as possible and ask your
REALTOR®
for referrals. Lazarus & Co., Inc. is just one of several with the expertise
to advise clients as to this option.
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