Selling an Investment Property

How to prepare yourself for the sale of an Investment Property

Most property investors are in the habit of buying, not selling. Probably because they’re making good amounts of profit keeping the property on their “books”. Occasionally though, an investor will approach an estate agent to get their property on the market. Many agents point out that while investors are quite adept with buying, they might not be as familiar with selling property. Selling is an entirely different ball game; one investor’s may not be as confident with.

Jumping into the “Seller’s Seat”

The roles of a buyer and seller are so different it’s hardly comparable. As a buyer you have some control over the purchase process – after all it’s your choice where you decide to buy and at what price. You’ve also had considerable experience leasing the property, another process where you’re in control, but when you’re getting ready to dispose of a property it’s important to be able to let go of that control. As a seller you never know which way a sale could go. You’ve got to rely a lot more on your agent’s expertise and advice if you want to make a profit. This is one of many reasons why choosing an experienced real estate agent is vital.

That said, before you dive into selling any investment property, you need to ask yourself a series of questions that will help make the shift from driver’s seat (buying and letting) to the passenger’s seat (selling) easily and make the real estate sales process straightforward and hassle free.

The top 5 questions to ask before selling your investment property

Is this the right decision for me?

Your motivation for selling will most likely indicate whether you’re making a decision that you can live with. Whilst there isn’t much sentimental attachment to investment properties, the decision to sell can often be a hard one. More than likely you’ll want to realize your capital for something else. Even more so if you’ve had to sell your property abruptly because you aren’t making a profit, are no longer gaining tax advantages or a previous tenant left the property in shambles. Sometimes, it’s as simple as realizing that your investment property isn’t much of an investment any more.

Tip: Weigh up your reasons for wanting to offload the property, if they make sense to you – especially financially – then selling shouldn’t be a burden but a natural progression.

Am I committed to selling?

If you’re reading this, there’s a good chance you’re thinking of selling a property. But, for whatever reason, some sellers never make it to the sale. By that time they may have decided selling isn’t the best recourse for a number of reasons; they secure alternative financing or find that the offers they’re getting weren’t exactly what they were hoping for. Before you make any calls to get your property listed you need to be 110% sure this is what you’d like to do. You should also get a comprehensive property appraisal before you decide on the appropriate steps to take.

Tip: Depending on your reasons, get advice from a reputable broker, accountant or financial advisor. This way you know that you’re making a decision that’s right for you and one you can commit to.

How much control can I relinquish?

Relinquishing control isn’t a requirement if you’re placing your property on the market, however it’s important to have faith in your real estate agent’s marketing and selling strategy. This makes the process less stressful than if you’re holding onto the reins or trying to micromanage the campaign. It’s time to shift gears and put trust in an expert, allowing your agent to take the reins and get the best possible price for your property. That is, after all, what they’re trained to do.

Tip: Hire an experienced agent so you don’t feel the need to micromanage. A reputable real estate agent won’t have a problem keeping you up to date and in the loop. They’ll also be able to take charge and make decisions which result in the best outcome based on your circumstances.

Have I chosen the right agent?

Prior to signing an exclusive authority (giving your agent a 90-day opportunity to sell your property) you need to be completely certain that they’re the right fit for you. There are plenty of franchised agencies which employ real estate agents who might not be as experienced in selling a property like yours.

Then of course there are agents charging a number of unnecessary fees or marketing costs that only eat into your profit. Just like an interview, you’d want to take the time to find agents that are knowledgeable with your area, have a diverse marketing strategy in place and whose fees are reasonable and you can agree to.

Tip: Choose an agent who is not only proficient in the local property market, but also has extensive experience in real estate selling properties like yours. They’ll have “insider knowledge” regarding housing market trends in Canberra, why properties sell at high prices and how to draw the attention of local and international buyers. They’ll also be willing to create a tailored and personalized approach instead of the blanket approach some larger real estate firms use.

What can I do to make our property more appealing?

If you’re serious about selling you’ve got to get your investment property – that possibly requires some TLC and aesthetic renovations – into a state that jumps out and grabs your potential buyers’ interest. You don’t have to pour substantial capital into the property, but there are some minor changes you can make to ensure the property looks more appealing.

The simplest method is usually to stage your property. This entails getting professionals in to set up certain parts of your home with rental furniture and accessories. It’s a popular choice as doing this can end up resulting in further profit from your sale.

When budgets are tight, digital staging is an inexpensive alternative. Whilst not quite as powerful physically staging your house or unit, it’s great at attracting buyers on the internet. Appealing photography drives more property purchaser’s to open homes, leading to increased demand and more opportunities for negotiation.

Tip: It’s amazing what three relatively cheap things can do for your rental property. Painting, cleaning and renting furniture all add to your perceived property value and are often worth the investment.