This page has been made to answer some frequently asked questions about our single and multifamily properties listed for sale that are currently occupied.
Multifamily:
From time to time we’ll list a multifamily investment property for sale. If someone has interest, we will share whatever financial information they might want, allow them to walk the property, show as many photos of the units as possible, and answer any questions they might have. Basically provide all the details an investor might want to make a good decision. However, as our multifamily properties are being sold as investments we see very little need to show an occupied unit to someone until all other factors that might determine a decision have been made.
As buyers ourselves, viewing the units is typically done after the property is put under contract — as part of due diligence. While someone might ask “why put it under contract until I’ve seen a unit?” we ask “Why bother viewing a unit until you’ve gotten it under contract?“. We don’t want to waste the sellers time setting up viewings, and bothering tenants, unless we know the deal is going to happen.
If a building is fully or nearly fully occupied, and you have unit photos, there typically isn’t much to see in a unit. They’re typically pretty boring. Almost every building we have has studios, 1 bed, or 2 bed units that are all pretty common to each other. That’s not to say we don’t view before we buy, we’re just not worried about viewing units before going under contract. Especially if they’re occupied (which suggests at least a minimal level of market demand and unit quality which can be evidenced by the rent roll)
As such, on any multifamily property we have for sale, we will not show occupied units unless the property is placed under contract. While under contract, you may use your due diligence period to view as many of the units as you’d like. But before going under contract, we want to respect the privacy of our tenants and their enjoyment of the apartment. We understand that might turn some buyers off, and we respect that, but it’s the policy we stick by.
Single family
When we list a single family home for sale, it’s totally reasonable to suggest that someone is going to want to view inside before going under contract. It’s not so much an investment as something someone is buying to live in. Even though personally we might think that location, seeing the property from the outside, seeing pictures, knowing the price, etc. might be enough for us to go under contract; we understand that’s not the norm.
However, the fact is that almost 100% of the time our listed single family homes are occupied by renters. That’s why they’re on the market so long. Having renters turns off potential buyers, and at the same time having renters lowers our desire to do several showings and get the place sold. So our single family homes sit on the market longer than normal, but as they are rented, we’re fine to wait till the right buyer comes along.
We’re often called by agents of buyers asking “Can we see the property today?”. Given there are renters in the property, and I want to respect their enjoyment of the home and privacy, we’ll tend to turn down requests for showings unless the following conditions are met:
- The buyer understands the property is currently occupied and the lease terms
- The buyer is qualified for the loan (or has proof of funds if we’re seller financing)
- The buyer has driven by the property
- The existing tenant has been given 24-hour notice
- The buyer has “applied” on our site
Often we’re asked about the existing tenant and their lease terms. Many are month to month so upon closing, a new buyer could decide to leave them in there and cash flow (as all properties bring in more in rent than their mortgage + expenses would be), or give them notice to vacate.
What about having them removed before closing? If the property is placed under contract, and the tenants are in a month to month lease, we will consider providing the tenant with a 30 day notice to vacate and even having the home being empty a condition of closing. However, the only possible way we’d consider doing that is if non refundable earnest money was put up. Reason being is we’re not about to remove a tenant prior to closing and have the risk that the property doesn’t close and then we are left without a renter. Typically the non-refundable EM required to make sure the property is vacant prior to close is 3x their monthly rent.
The final requirement before we’ll do a showing is having the client “apply” on our site. This might be considered a showing fee. The application is $40. This helps to separate the people that have seen our listing and are very interested from those who had an agent run a search on all properties like ours in a given area and have ours as one of 100 on their list. We are very aware that requiring an application before doing a showing will turn off most buyers, however we’re also aware that if someone is very interested in the property based on the location, description, price, photos, etc. then a $40 showing fee isn’t going to stop them. Note that if you (buyer) or your client (agent) apply, we do not need a social as we won’t be running credit. However, the application does have that as a required field. So just put 111-11-1111