By Condo Culture
It’s a big decision when the time comes to sell your condo and there are lots of important factors to consider. One key consideration is; Does it make more sense to sell your unit vacant or tenant occupied?
There are positives and negatives to most decisions, and this one is certainly no different. Below, we explore the case for each scenario and hope that the insights and information help you determine which is the better condo selling approach to take.
How to Sell Your Tenant Occupied Condo
Based on the chart above, you now likely realize that it’s more challenging to sell your condo with people living in it, even if it’s you who does. It doesn’t mean that you can’t still get a great selling price though, even with unpredictable tenants, and below are some tips for how to go about the process more effectively.
Develop a solid relationship with your tenant(s)
If your condo is an income property, then be sure that you and your tenant(s) are on good terms prior to telling them that you’re selling it. Let them know where you’re coming from and why you feel the need to sell your unit, and get them to understand the reasoning behind your decision. Perhaps you’re buying another home and need more down payment funds, your financial situation has worsened for whatever reason and you need money, or you plan on retiring and need additional funds to draw from since your working income will dry up. Just be honest with your tenant(s) and while they may be disappointed to some degree, they will also respect that you’re being real.
Have your agent do showings around their schedule
If your tenant(s) work traditional day jobs from 9 am to 5 pm, Monday to Friday, then that gives your agent lots of days and times to do showings with your tenant(s) out of the unit. Ask for some information and guidance as to when your tenant(s) won’t be home so that your agent can make plans and so your tenant(s) don’t need to inconveniently leave to accommodate showings.
Do an open house
Have a conversation with your agent about doing an open house for a few hours, so that he or she can get a bunch of potential buyers in at the same time to take a look at your condo. Aim for a weekend and maybe offer to pay for your tenant(s) to go out for a nice lunch to their favourite restaurant and to go see a popular new movie in a theatre, for example. By treating your tenant(s) to meals and/or experiences or even a bottle of wine or a case of beer, you are showing them that you do care about their wellbeing and want them to be content during the selling process. You may also want to pay to have the condo deep cleaned before the open house so it shows better and so your tenants have a cleaner space after, as well.
Make an introduction to your agent
Your agent will likely spend several hours in your condo, but in someone else’s current home for showings, so offer to have your agent pop by and speak with your tenant(s) if they would like to know who will be in their place. Make them feel like they are part of the team, and show that you are doing everything in your power to accommodate their needs and want to make them feel at ease with the experience.
Help them find a new home
Displacing your tenant(s) is something that you likely don’t want, but you need to put yourself and your family first. Offer them some assistance in their search for a new home by recommending your agent or another one, or provide some recommendations for similar units close by that are available to lease in the months ahead. Again, show them that you care about them now and want nothing but the best for their future, and they will hopefully do their best to help you out during the process by being open to showings and tidying up a bit before each one.
As a condo owner, do I pay for staging my unit?
It depends on the brokerage, the agent you work with, and your unit itself, but the seller typically pays for the service. If your condo is empty, working with a talented designer to have your unit beautifully staged can help deliver top dollar, even in this sizzling hot seller’s market. You can stage your condo yourself, but to really showcase it in the best light possible, you should get professional help. Pricing varies widely depending on the size of your unit and other factors. Here’s some additional information regarding condo staging.
Can I sell my condo before my tenant’s lease term is up?
It depends. If the new buyer is open to assuming the current tenants and lease, this can be transferred through the Agreement of Purchase and Sale. The lease agreement with the previous term is carried over, and the tenants can feel at ease knowing that the foundation of the original lease will still be honoured. Condo Culture has a large, active base of investor buyers that may be interested in purchasing a great investment property that already has a quality tenant(s) in the unit.
If the new purchaser is buying to move in themselves (an end-user), you ideally want to make sure that the lease’s initial fixed term will be finished upon closing your unit’s sale. A new purchaser must honour the current fixed-term lease unless otherwise agreed to with the tenant. If you want to sell before the end of a fixed-term, this can be negotiated with a tenant. Make sure to follow proper protocol including completing an N11 form in order to avoid potential fines or challenges.
Once the lease’s fixed term has concluded and the lease is on a month-to-month term, you can sell your condo as long as you provide the 60 days legal notice to your tenants, or provide a 30-day window for them to move out after the sale has closed.
This is a relatively complex topic with many variables and intricacies involved, so we strongly recommend that you reach out to a condo expert for help.
Will my profit margin be higher selling my condo without tenants in it?
You need to really look at the numbers to answer this question. If you’re currently making $2,000/month in rental income and it will take 2-3 months from the beginning to the end when the closing date is reached, then you are sacrificing $4K-$6K in rental income. You also have to factor in any costs associated with upgrading your condo, as well. So maybe you intend to have it cleaned and painted, and have it staged prior to listing it for sale. When you factor in these expenses, you could be looking at around $8K-$10K between the loss of rental income, minor upgrades and renovations, and staging. To achieve break even on your overall investment then, you could need a final sale price that’s at least $8K to $10K higher than selling your condo with tenants in and doing no upgrades or staging. It’s an investment and there is some risk involved, but it can really pay off and ultimately lead to a profit margin that’s thousands higher than with tenants in there. You want to receive as many offers on your condo as possible, and you will typically get more when it’s unoccupied and positioned for success as outlined above. More offers usually means that the selling price is higher because the overall demand is stronger, and the economics are more favourable for sellers in this scenario.
Can you provide some other good condo selling information?
Absolutely, check out our recently released 2022 condo sellers guide, it offers lots of juicy insights to help you get top dollar for your unit.
__I’ve got tenants who have pets, what should I do? __
If you’re going to sell your condo with tenants in it and they got pets, then you have to determine a couple of key things. Can the pets be removed during showings, or can they at least be put into contained spot(s) so that potential buyers aren’t affected by their presence while touring your property? Another thing to consider, is there a “wet dog” type of odour in your condo because of pets living there? If there is, then you may need to buy some quality deodorizers so that your condo smells fresh when potential buyers come in for a look. Pets are a tricky variable that needs to be managed well, as they can really hurt the marketability of your condo.
Making the decision to sell your condo as an empty unit or one that has residents in it can be a challenging one to make. Consider all of the factors involved, break down the numbers, consult with your agent, and decide what the best fit is for you and your condo sale. We have helped thousands of clients make important decisions such as these - reach out to our friendly Condo Culture team with any questions or inquiries that you may have, or drop into our Waterloo store at 191 King Street South for a conversation.