Ask Phyllis: a blog series of frequently asked real estate questions.
Selling income property
Dear Phyllis,
My sister and I inherited four units across the street from where I live. I manage the units, and due to their proximity, the tenants often come to my home to deliver rent and sometimes to complain. There is a lot of interaction between us. Shortly after my father passed, several tenants came over and asked if we planned to sell. Understandably, they are concerned because their rents are well below market. My sister and I do want to sell the property. However, we’re concerned about the potential disruption this may cause, given the low rents and our close relationship with these tenants. When selling income property, what is the best way to minimize the inconvenience for the tenants?
Manny
Dear Manny,
I understand that managing the property and living across the street puts you in an extremely uncomfortable situation. The tenants will likely come to your home with their concerns, and I understand that you want to minimize any additional conflict or contact. Some common ways of dealing with showings and offers exist when selling income property.
One method requires an accepted offer before the buyer can access the property. When marketing this way, there is often a renegotiation after the buyer views the property in person. Thus, the renegotiated price may no longer be acceptable to the seller. And you can go down a long line of “accepted offers” that don’t result in opening escrow.
I understand your desire to minimize disruption to the tenants. It’s best to try to placate the tenants, as uncooperative tenants can be a bigger problem. When I list income property, I market it a bit differently. I often obtain a professional floor plan, photographs, and a pre-inspection. When marketing this way, we require that the buyer approve the inspection report and the disclosures, understanding that the seller is selling “as is.” This method will prevent the window shoppers from requesting showing appointments, which results in less disruption to the tenants. You and your Realtor can then decide if you want to require an accepted offer before allowing access to the property.
Although you can minimize the disruptions experienced during this process, there is little you can do about rent and the inevitable rent increases.
