Whether you have a two family or a four family home, selling a multi family home has it’s challenges. To have a successful sale it is imperative you have the co-operation of your tenants. With out it, it can turn selling a multi family home into a headache! Many of the steps of selling a multi family home are the same as any other home there are a few extra steps that should be addressed.
Check Your Rental or Lease Agreement
When you decide to sell your multi family home make sure you have the right to do so. In Massachusetts, you have to clearly state that you have the right to show the property with a certain amount of notice. Of course you have the right to sell the property but you need the agreement to spell out your access to the unit. The Massachusetts Association of Realtors boiler plate lease has an entry and inspection clause as follows.
Entry And Inspection. The LANDLORD or his agents or designees shall be permitted to enter the Premises at reasonable times and upon reasonable notice to TENANT for the purpose of inspecting the Premises; for the purpose of maintaining or repairing the Premises; to ensure compliance with any statute, code or regulation; or for the purpose of showing the Premises to any real estate agent, appraiser, mortgagee, prospective buyer or prospective tenant or inspector/contractor for prospective buyer/tenant.
Tenant Relations
Nothing puts fear in the heart of a tenant than the fact that you are selling a multi family home they are living in. Thoughts of having to pick up and move, fear the rents will be jacked up etc… start to run through their mind.
The best thing to do is personally take the time to be upfront and honest with them. Many times if their is a good tenant in place some one purchasing will want to keep them. It can be a positive thing having a good tenant already in place. If they are in a lease remind them that a lease cannot be broken and is just transferred to the new landlord. Unfortunately no one has a crystal ball, a new owner could be moving in and possibly moving in a family member in to the additional unit.
Personally take the time to introduce them to the real estate you have chosen and if at all possible work out a showing schedule that will inconvenience them as little as possible. Work with the tenants and don’t dictate what is supposed to happen. Try to make them apart of it.
Many times when I am selling a multi family I go out of my way to make the tenants happy. I give them my phone number and encourage them to call with any comments, questions or concerns. many times the tenants end up being my allies because I have treated them respectfully.
Alternatively, if you have a problem tenant. One who is an absolute slob and does not co-operate, if it is all feasible get rid of them before you try to sell the property. A vacant unit all cleaned up and painted will show far better. I know giving up rent for a few months can be a tough pill to swallow. But if the property can’t be shown, or can’t be shown in reasonable condition that is going to drastically effect what you net on the sale of the property.
Get Your Paperwork in Order
There are s
everal things a prospective buyer is going to want to see. So get the paperwork in order before they ask rather than scrambling around trying to get it together. A prospective buyer will usually ask for:
- Current Lease or Rental Agreements
- Income and Expenses. It is actually really frustrating to work on the purchase of a multi family home when some one does not take the time to fill this out on the Multiple Listing Service, especially if the property is an income producing one. A savvy investor will look at the cap rate and will prepare an offer based on the income and expenses.
- Escrow information. If you collected deposits all the escrow money will have to be turned over at the sale.
If you get these three steps in order it can make selling a multi family home easier and make for a smoother sale.
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This article, Selling a Multi Family Home, is provided by Kevin Vitali of EXIT Group One Real Estate. If you have a mutli family home to sell in Essex or Northern Middlesex County give ma call at 978-360-0422 to discuss the upcoming sale. If you are looking to buy a multi family I can help as a buyers agent. Search Multi Family homes for sale.
