WITHDRAWN FROM SALE

Agents often hear home owners say: "If I don't get my price, I'm not selling." In many cases home sellers don't have the luxury of holding out for an in-your-dreams figure because they have to sell in order to buy another home to live in. But if the market simply can’t deliver the price, there is often another option for those who have the flexibility to take it on. 

In some cases, it is in fact worth it for vendors to hold onto a property rather than selling for less, especially if they have the borrowing power to own more than one property and turn the unsold property into a rental investment income.

Naturally, it is important that they do their sums before making a decision.

Those who are thinking of the rent-and-hold option should consult an accountant or financial planner as well as a real estate agent. They should determine whether the market is stable, climbing or falling – after all, unless prices are on the rise, there is unlikely to be a potential increase in capital gain worth holding out for further down the track. It is important to check out the rental and vacancy rates and the likely income including capital gain against the cost of any loan required to continue holding onto the property.  

Many people moving interstate or across the Tasman automatically think “I’m moving so I’m putting my house on the market.” But it is often wise to get to know the state of the market in their new area before letting go of the one they currently live in. Is it possible that property won’t go up as fast in the new location as the old one? Or conversely, might it go up faster? Is the future sufficiently hard to predict that it could it be safer to have a foot in both camps in case they want to return and not find themselves priced out of the market?

Home owners doing the figures and deciding whether it is a better financial choice to hold onto the property rather than sell, should also take into account is whether the property is a good rental proposition. Often high maintenance properties (such as those with pools or large garden) have costs that have to be offset against income. Or the market may not pay the rent the owner thinks it should be worth if it is not the type of property in demand by typical tenants in the area.

Many people buy their first property with the long term strategy that they will never sell. They choose a property that will be suitable as a rental when they upgrade and go on borrowing and buying properties as a means of wealth creation.  This does not require high income or great wealth – simply an understanding of the strategy and some good financial advice.

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Dispute Resolution & the Tribunal

Where do you draw the line?

We often comment that our role as a property manager should be changed to people manager.  Managing the property is the easy part of our role as the property cannot communicate with us, dispute issues or become irrational. However, people are very good at engaging in these areas.

Many long-term investment owners (through their own personal experiences) will be aware that when managing properties there is often no black and white clarity to an array of challenges that can arise during all stages of the tenancy. Although there is legislation that governs the rights and obligations of the tenant and landlord, there is also a wide scope of grey areas.

It is these grey areas that often lead to disputes and frustration for property owners.

As your managing agent it is important for you to understand that we are focused on working in your best interests to maximise your income and optimise capital growth. There will, however, be times throughout the tenancy where we will need to compromise during a dispute with a tenant and work towards a win/win situation.

If a resolution cannot be achieved with regards to a grey area, then the only course of action we have is to lodge an application with the Tribunal to seek their direction and orders

From experience, this can be a risky alternative for property owners, as the decision for the outcome is often based on how the Tribunal member hearing the case feels on the day or interrupts the evidence presented.  When the matter is referred to the Tribunal, the owner of the property is also responsible for the lodgement and hourly attendance costs.

When a dispute does arise it is important to ascertain the dollar value in question, the circumstances and possible outcomes to determine if it is financially viable to pursue the matter. Sometimes it is beneficial to compromise, rather than being focused on just one outcome.

Areas where common disputes can arise:

• Tenant request to break agreement
• Required maintenance needed at the property
• Presentation of the property 
• End of tenancy bond disputes 
• Rental increases 
• Tenancy renewal requests

Should we not be able to resolve a dispute with the tenant you can be confident that we will seek your instructions before taking the matter further.

SELLING A TENANTED PROPERTY

While many investors still own every investment property they ever bought as part of a self-funded retirement portfolio, there are others who want or need to sell a property because their circumstances – personal or financial - have changed. Is it better to give the tenant notice to quit before putting the property on the market or should they sell it while the tenants are still in place?

The obvious answer is to keep the tenants in residence. This incurs the least loss of income and unless the house is really dirty and untidy, a house usually presents better with furniture and household items making it look lived in.

However, there are times when a tenant in residence could be a financially less rewarding scenario. Tenants who do not want to move can put a lot of obstacles in the way of a sale. They can limit and postpone inspection access almost at whim in spite of legally having to provide ‘reasonable access’ (what is ‘reasonable’ to one person may not be ‘reasonable’ to another). By the time this sort of obstacle is sorted out, valuable time has been lost and many purchasers have moved on. If the market is not trending up, this can result in a lower sale price as the market drops before the property can be sold. Furthermore, if the seller is using the money for another financial project, delays in having the money available could cost them the project or render it more expensive if bridging loans are required.

Disgruntled tenants can also highlight the property’s faults in order to put off prospective purchasers and while many owners are happy to absent themselves from the property to allow the agent to show the purchasers around at their leisure and improve their selling prospects, tenants have no such motivation to leave the property and many reasons to stay watchfully present.

Sometimes property owners have no inkling that tenants will behave badly in the event of a sale, but there is a bit of basic research investors can do to try and determine whether their tenants will play ball. Ask your agent how easy it has been for the agent to get access for periodic maintenance inspections or for tradespeople who have been contracted to carry out work on the property. Tenants who have been slow to concede access for activities such as repairs that will benefit them are highly unlikely to come to the party when they think they will ultimately lose their home to a successful purchaser.