Property Investment
5 min read
Thinking about selling your rental property? You’re not alone.
Over the last year I’ve seen plenty of property investors start looking to sell … only to pull the plug halfway through.
Why? Because selling a rental isn’t always as straightforward as it sounds.
If you get the timing wrong, you can suddenly encounter:
That's why it pays to understand what it actually takes to sell your rental, including:
It can easily take 3 to 3.5 months to sell your house. That’s from choosing a real estate agent to eventually getting paid.
There are 7 steps you’ll usually follow:
First things first, you’ve got to choose a real estate agent.
They’ll help decide on your sales process. Will your property be sold by auction, tender or deadline sale? Your real estate agent will organise:
Decide early whether to sell your property with the tenants in place or vacant.
One common misconception is that tenants must leave if you sell. That’s not true, but it can be recommended because it’s the way you can often get the best price.
That’s because you then have more flexibility around:
If the tenant is on a fixed-term agreement you generally can’t terminate early just because you want to sell.
If the tenant is on a periodic agreement, you can give 42 days’ notice.
Just remember your tenant can come back to you and leave with just 3 weeks notice, but I’ll tell the story of how that happened to one investor I know in a moment.
Even if tenants leave the place in good shape, there’s often cleaning, small repairs or touch-ups to do.
Real estate agents will often recommend you get a property inspector to look at your property. That way you can fix any issues before the buyer finds them.
You may also decide to rent furniture and stage your property. It makes your property look like it could be in a magazine and helps buyers visualise living there.
Once the property is ready to hit the market your real estate agent will get the property listed online. Today’s buyers expect:
Most real estate agents bundle these into a marketing package, then run open homes for a few weekends while buyers come through.
The next step changes depending on your sales process.
If you’ve chosen to sell your house via auction, then you wait for auction day to roll around.
If you are selling ‘by negotiation’ you wait for the offers to roll in.
If it goes to auction, you may get an unconditional offer quickly; other strategies may take a bit longer. It all comes down to what you have decided with your real estate agent.
Once you receive an offer, you may need to negotiate. That often means going back and forth with the buyer to agree on a price (and any other conditions).
This happens through your real estate agent.
Once you and the buyer are happy you’ll both sign the sale and purchase agreement.
The sale may not be final yet, though. There may be some conditions the buyer has to meet. For instance, the sale might be ‘subject to’ the buyer getting a mortgage from the bank. Or it could be subject to the buyer selling their own house.
Once those have all been worked through, the buyer will go ‘unconditional’. That means they are committed to buying your property. They then pay a deposit to the real estate agent …
or they might pull out altogether (cancelling the contract).
Even if the buyer goes ‘unconditional’ there are still a few weeks before the property officially changes hands.
Once your property is unconditional, the buyer usually has 20 working days (4 weeks) to pay up.
This can be longer or shorter … it depends what you agree to in your contract.
Here’s how long the whole process usually takes:
| Step | Timeframe | |
|---|---|---|
| Serve tenant notice | 42 days for periodic tenancy | 6 weeks |
| Tenant vacates (if they choose) | 21 days after giving notice | 3 weeks |
| Repairs + staging | e.g. fresh paint, spruce gardens, staging furniture | 1-2 weeks |
| Marketing campaign | Take photos, post ads, run open homes | 3-4 weeks |
| Sale process | Auction/tender/negotiation | 1 weeks |
| Settlement | After contract signed | 2-4 weeks |
Here’s a true story that happened to one of the property investors I work with. It illustrates the 3 key risks you run when you decide to sell your rental.
These are the risks that some owners often overlook.
Once your tenants are gone, you might not get them back.
In one case an investor I worked with had great tenants when they decided to sell.
The tenants decided to stay while the house was being sold, but after a few weeks they had had enough.
They had to go through weeks of disruption with the real estate agent taking photos and allowing open homes.
So the tenants found a new place and moved out. The owners lost them for good.
Now, the moment those tenants left, the property was empty. There was no rent coming in.
And the owner couldn’t really get new tenants because those tenants might have to move out in 2 – 3 weeks anyway.
To make matters worse, the house never sold.
It takes 7-8 weeks to sell a house (on average). In a hot market, that can drop to 4 weeks.
So the owners were left with the worst of both worlds … no buyer and no rental income.
Trying to sell a rental isn’t cheap. Between real estate advertising, legal fees, staging and marketing photos, you can be looking at $7k+.
And if substantial repairs need to be made, you can easily add another $10k to that.
Then, if the property doesn’t sell you have to pay your property manager to find another tenant.
In the end, the owners (above) were thousands out of pocket … without ever selling their house.
Now the good news is we found new tenants fast, but not before the owners had learned an expensive lesson: selling your rental comes with more risks than most realise.
If you’re thinking of selling your rental, plan ahead. Understand the notice periods, talk to your tenants early, and weigh up the risks.
Sometimes it makes more sense to keep a reliable tenant and collect the rent rather than gamble on a sale.
And if you do decide to sell, having the right timeline and steps mapped out will save you stress – and potentially thousands in lost income.
Development Acquisition Manager & Real Estate Salesperson
Sold over 450 properties in the Christchurch area as a licensed Real Estate Salesperson and working for Opes Property to procure premier investment opportunities throughout New Zealand.
