What Is An Exclusive Listing?
It’s not a secret that the best way to sell a property for its highest and best price is to have the property on the market vacant and staged. The only issue is that when you decide to sell your investment property, your Tenants most likely will have their own set of objectives. Requesting Tenants to vacate on demand may be easier said than done. Some tactful negotiation may be what’s in store! Like any productive discussion, the key is to ensure the goals and objectives of both parties align.
When potential buyers tour a property for sale, the seller should want them to imagine themselves living there. We at Fox Marin have always believed that “people buy on emotion and justify with logic afterwards” – the buyer’s first impression cannot be over-stressed. Record sales happen when a buyer becomes emotionally connected to a property. Any experienced listing agent will tell you that having a property free from clutter and a tenant’s belongings will allow a buyer to create that emotional connection more efficiently. Having the property staged will increase that likelihood by tenfold.
To stage your property in its Sunday best will undoubtedly require the Tenant to vacate the premises. One of the most significant advantages to having a property vacant while on the market is that it remains pristine, and private buyer appointments may be permitted at any time. Nothing is more disappointing from listing agents’ or landlords’ perspective than having a tenant repeatedly restrict buyers showing confirmations or keeping the suite messy, cluttered and sometimes unsalable.
When exposing a property to the market, the ideal scenario is to allow interested parties to view the property at any time without limitation to a tenant’s schedule or preferences. A tenant will not be nearly as motivated to sell the property at a record price; any experienced buyer agent will tell you the worst client showings are often the tenanted ones! Even worse, the Tenant remains on-site during the showing – sitting on their couch and eating chips in their sweats and stinky socks while taking in the football game.
In summary, tenanted properties are a challenge because it’s impossible to secure a showing time; the property often looks in disarray, and the occupants are usually hanging around (which is often more awkward than you could imagine)!
The first thing to understand as a landlord is that the Tenant has more rights than you, so be careful with what you say and how you position your end of the bargain. The last thing you ever want to do is be heavy-handed or try to back them in a corner.
As a landlord, you are still looking to uproot someone from their home regardless of whether they rent it or not. Legally speaking, as a landlord, unless you are a direct family member are moving into the premises, you cannot force your Tenant to vacate before or while your property is on the market.
A tenant can only be “forced” to leave after a sale has been successfully negotiated and firmed up. The purchaser will need to swear on an affidavit that they are end-users, meaning they will move into the premises as principal residents. If the purchasers are investors, the Tenant will be legally allowed to remain, and the buyers will assume the existing Tenant and their current rental rate.
From a tenant’s perspective, living in a property while it’s on the market can be a big nuisance with strangers coming in and out of their residence. Most likely, especially in Toronto, the property will sell, and the Tenant, in the end, will have to vacate regardless. Therefore if they (the Tenant) can score fair compensation to depart from the Landlord, it would likely be in their best interest. Otherwise, the Tenant endures the inconvenience of living in a property while it’s for sale with a high probability of having to leave when it closes – but now empty-handed.
One can encourage their Tenant to vacate by using a diplomatic approach and adopting a win-win mentality. It can be in all parties best interest for a tenant to depart before a property goes to market. In such an instance, the Landlord will get the best and highest return on investment, and the Tenant can smoothly transition to their new home without disruption (and some remuneration in hand). A true win-win.
Negotiating with a Tenant to vacate needs to be handled with care and respect. These are some of the most common strategies:
1/ First, ask the Tenant how much they would reasonably accept to leave on their accord – you would be surprised how many times the Tenant is looking to move and may not require compensation.
2/ Landlord compensates the Tenant with an additional 1-2 months’ rent and, or;
3/ Landlord offers to pay the Tenant’s moving expenses and, or;
4/ Landlord refers the Tenant to a qualified leasing agent to help them find a new rental property and, or;
5/ Landlord writes a glowing reference letter on behalf of the Tenant
Even though you own the property, the Tenant is being asked to uproot from their home. And lots of people (including the Landlord and Tenant Board) will be giving them all kinds of advice. As a Landlord in Toronto, it’s best to be over-generous. View the additional expense as a cost of doing business to ensure you get the highest and best price for your property and move on.
If presented in the proper manner and tone, you should be most likely be able to work something out. It’s all about time, money and a reliable bedside manner. Once you have negotiated terms with your Tenant, it’s best practice to request a signed N9 Form (Agreement to Vacate) and outline the arranged compensation in writing.
Suppose you are still struggling with how to best address a move out with your Tenant, source an experienced Realtor familiar with both the process and the Landlord & Tenant Board. It will make a world of difference to have an advocate take on the heavy lifting, so you don’t have to!
If you have additional questions about selling your property vacant and Tenant-free, feel free to reach out to us anytime. We’ve got your back on this topic (and many more).
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This article was written by Ralph Fox, Broker of Record and Managing Partner here at Fox Marin Associates. Ralph is a Torontonian native who recognized from an early age that the most successful people in life apply long-term thinking to their investments, relationships, and life goals. It’s this philosophy, along with his lifelong entrepreneurial drive and exceptional business instincts, that help to establish Ralph as a top agent in the real estate market in downtown Toronto.