Real Estate

How to align the dates when selling

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  • Jan 31st, 2019 10:25 pm
[OP]
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Jan 17, 2005
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How to align the dates when selling

Hi,
I am planning to sell my invest property. This is my first time selling a property, and I'd like to get some advise on timeline.

Both mortgage and tenant's lease expires on May 1. I already told my tenant that I'll put it on sale, and she's okay moving out on May 1. So that makes things easier.
Would if be feasible to start listing it soon and set the closing date to be May 1? Or should I wait until March?
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danthemightyone wrote:
Jan 30th, 2019 9:40 am
Hi,
I am planning to sell my invest property. This is my first time selling a property, and I'd like to get some advise on timeline.

Both mortgage and tenant's lease expires on May 1. I already told my tenant that I'll put it on sale, and she's okay moving out on May 1. So that makes things easier.
Would if be feasible to start listing it soon and set the closing date to be May 1? Or should I wait until March?
I don’t know about your financial position, or how in demand this investment property is (location), but would you consider waiting until the tenant is gone to list? Yes, you will need to cover some of the expenses and mortgage cost in that time, but if it’s possible, I would definitely sell without a tenant in place.

RE agents can comment if one can command more money by showing the property without a tenant, versus tenanted. It definitely is less of a hassle for everyone involved, showing, etc.

They may have damaged the property and even if they didn’t, it might require some TLC, paint, etc. It will definitely show better without the tenants in place. The person buying can then do whatever they want, and that would also include getting their own tenant (at a higher market rate).
[OP]
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onlineharvest wrote:
Jan 30th, 2019 9:49 am
I don’t know about your financial position, or how in demand this investment property is (location), but would you consider waiting until the tenant is gone to list? Yes, you will need to cover some of the expenses and mortgage cost in that time, but if it’s possible, I would definitely sell without a tenant in place.

RE agents can comment if one can command more money by showing the property without a tenant, versus tenanted. It definitely is less of a hassle for everyone involved, showing, etc.

They may have damaged the property and even if they didn’t, it might require some TLC, paint, etc. It will definitely show better without the tenants in place. The person buying can then do whatever they want, and that would also include getting their own tenant (at a higher market rate).
It's a fairly new 1 bdr condo near Yorkville, and I don't see a problem selling it. We are planning to check the property this weekend for the condition.
Penalty Box
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danthemightyone wrote:
Jan 30th, 2019 9:40 am
Hi,
I am planning to sell my invest property. This is my first time selling a property, and I'd like to get some advise on timeline.

Both mortgage and tenant's lease expires on May 1. I already told my tenant that I'll put it on sale, and she's okay moving out on May 1. So that makes things easier.
Would if be feasible to start listing it soon and set the closing date to be May 1? Or should I wait until March?
Condo market is hot right now. You can list it now and have the buyer closer on May 1 or assume the tenant.
Kevin Somnauth, CFA
Mortgage Broker - Mortgage Architects (#10287) and Real Estate Salesperson - Century 21 Innovative
President's Club Award Winner At The Mortgage Architects
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CdnRealEstateGuy wrote:
Jan 30th, 2019 10:28 am
Condo market is hot right now. You can list it now and have the buyer closer on May 1 or assume the tenant.
If his mortgage term ends also on May 1st, shouldn't the OP have some kind of contingency in place, financing etc - in the event even if they close, the buyers request an extension, even for a week, etc?
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danthemightyone wrote:
Jan 30th, 2019 9:40 am
Both mortgage and tenant's lease expires on May 1. I already told my tenant that I'll put it on sale, and she's okay moving out on May 1. So that makes things easier.
Would if be feasible to start listing it soon and set the closing date to be May 1? Or should I wait until March?
Re your mortgage. check your agreement to see what the early termination terms are for penalties if any. Since it's up for renewal on May 1 a closing date very close to but prior will have little impact on interest but a penalty could bite. y

Re your tenant: unless your tenant gives you notice they are moving out they don't need to move out. I'm presuming you and the tenant think they have to leave because you're selling.

If your tenant is a good tenant, pays on time, keeps the property clean, respects it and they don't dislike you or argue with you, there is no need to have them leave first - that's a myth perpetuated by some agents who either lack the ability to properly handle a tenanted listing or don't want to deal with tenants.

If you're satisfied with the above and the lease will be month to month by the time you list, then find yourself a good Realtor who can advise you as to the best route to take (sometimes a tenant in place is better than an empty) as well as guide you as to how to properly handle the tenant and transaction.
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onlineharvest wrote:
Jan 30th, 2019 10:33 am
If his mortgage term ends also on May 1st, shouldn't the OP have some kind of contingency in place, financing etc - in the event even if they close, the buyers request an extension, even for a week, etc?
Lender will likely auto-renew him.

Also, since the closing date will be so close to the maturity date, the penalty shouldn't be big at all. I'd focus on selling in at the highest price and not so much the penalty.
Kevin Somnauth, CFA
Mortgage Broker - Mortgage Architects (#10287) and Real Estate Salesperson - Century 21 Innovative
President's Club Award Winner At The Mortgage Architects
[OP]
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licenced wrote:
Jan 30th, 2019 10:34 am
Re your mortgage. check your agreement to see what the early termination terms are for penalties if any. Since it's up for renewal on May 1 a closing date very close to but prior will have little impact on interest but a penalty could bite. y

Re your tenant: unless your tenant gives you notice they are moving out they don't need to move out. I'm presuming you and the tenant think they have to leave because you're selling.

If your tenant is a good tenant, pays on time, keeps the property clean, respects it and they don't dislike you or argue with you, there is no need to have them leave first - that's a myth perpetuated by some agents who either lack the ability to properly handle a tenanted listing or don't want to deal with tenants.

If you're satisfied with the above and the lease will be month to month by the time you list, then find yourself a good Realtor who can advise you as to the best route to take (sometimes a tenant in place is better than an empty) as well as guide you as to how to properly handle the tenant and transaction.
CdnRealEstateGuy wrote:
Jan 30th, 2019 10:35 am
Lender will likely auto-renew him.

Also, since the closing date will be so close to the maturity date, the penalty shouldn't be big at all. I'd focus on selling in at the highest price and not so much the penalty.
At the worst case, I am going to renew the mortage with open and probably whatever the lowest rate from the current lender. It's a collateral mortage so I am expecting some discharge fee when I sell this.

So far the tenant has been okay. Never heard since the lease was signed. No rent issues at all. Hopefully the condo is well maintained. The tenant already said okay to move out on May 1, even though she doesn't have to.
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danthemightyone wrote:
Jan 30th, 2019 10:42 am
... The tenant already said okay to move out on May 1, even though she doesn't have to.
not good enough.
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licenced wrote:
Jan 30th, 2019 10:48 am
not good enough.
This. Get the appropriate form from the LTB and get it signed.

C
[OP]
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CNeufeld wrote:
Jan 30th, 2019 10:51 am
This. Get the appropriate form from the LTB and get it signed.

C
I am already aware of this. Is it really necessary though? Will it be N11 in this case?
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licenced wrote:
Jan 30th, 2019 10:48 am
not good enough.
Doesn't this speak to my point about just making sure the tenant is out before selling? Anything can happen even with the proper form that may delay a tenant from leaving and that is hardly a headache someone who wants to live in the unit will want to deal with. If they're looking for an investment property with a tenant, different story.

All things considered, if the tenant agrees to leave, and they say they are going to leave, and you get the proper papers, etc, why not wait anyway? Then a personal buyer or investor can purchase the unit.
[OP]
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onlineharvest wrote:
Jan 30th, 2019 11:00 am
Doesn't this speak to my point about just making sure the tenant is out before selling? Anything can happen even with the proper form that may delay a tenant from leaving and that is hardly a headache someone who wants to live in the unit will want to deal with. If they're looking for an investment property with a tenant, different story.

All things considered, if the tenant agrees to leave, and they say they are going to leave, and you get the proper papers, etc, why not wait anyway? Then a personal buyer or investor can purchase the unit.
I notified the tenant informally that I will be putting it on sale soon, and I just said I can't guarantee an investor will buy and resume your lease. It was more of an headsup. Rent these days are crazy so I wanted her to get onto the search early. Maybe I am naive?

What I was not sure of is who should give her the notice to move out. Seller or propect buyer who would move in? If it's the latter, then I wasn't sure how the closing period aligns with the move out notice, which I believe requires at least 60 days in advance.
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danthemightyone wrote:
Jan 30th, 2019 2:55 pm
I notified the tenant informally that I will be putting it on sale soon, and I just said I can't guarantee an investor will buy and resume your lease. It was more of an headsup. Rent these days are crazy so I wanted her to get onto the search early. Maybe I am naive?

What I was not sure of is who should give her the notice to move out. Seller or propect buyer who would move in? If it's the latter, then I wasn't sure how the closing period aligns with the move out notice, which I believe requires at least 60 days in advance.
Whoo, boy... Where to start...

OK, you can't terminate the lease just because you want to sell. You can't even terminate the lease because you have a prospective buyer. You can only terminate the lease if you (or your family) are going to live in the unit, or if the ACTUAL (not prospective) buyer wants the unit for their personal use. If it's for the buyer's personal use, you can't give her the termination till you have an unconditional offer, which means a long closing period.

You can alleviate these issues by asking her nicely to sign the N11 form. That form just gives an end date for no reason. Not because someone needs it for personal use, nothing. She can't come back later and say "Hey, they turned around and rented it out again" and sue someone for damages. Unless you somehow mislead her and tell her she has to sign it because you're selling the unit...

The whole point to this is to try to prevent issues. If you do things your way and everything goes smoothly, all of this is a waste of paper. But if the tenant suddenly decides that a new place would be a lot more money and she'd like to stay there, you'll be grateful if you have paperwork to back it up. So yes, it's nice of you to give her an early head's up. But get the paperwork done and signed to CYA. Keep in mind that she doesn't have to sign the N11, if she decides she wants to stay. In which case, you're back to waiting till you have signed unconditional offer. But there's nothing saying you can't give her an incentive to leave...

It obviously won't affect anyone in here (besides you) whether you do as suggested or not. You came in here looking for guidance, and that's what you're getting. If you don't want to listen, feel free. But you WILL have it rubbed in your face if you post back in the middle of May that your tenant won't move out and has filed for relief with the LTB, and can we help... :)

C
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onlineharvest wrote:
Jan 30th, 2019 11:00 am
Doesn't this speak to my point about just making sure the tenant is out before selling?
No, not really.

And yes anything can happen but the chances of that are significantly reduced in the hands of someone competent whether that's the seller or Realtor without incurring costs to the seller that is unwarranted.

Your suggestion is based on the presumption that the tenant either is now or will be a difficult and disagreeable tenant who will overhold come closing. The questions I asked of the OP are meant to first establish if the tenant has given any indication to date that they would turn into such a person during the listing.

Understanding the tenant is key since the rules concerning eviction are so stringent and a competent Realtor would know how to advise the seller as to how to handle the entire process with the tenant, how to manage the disruption to the tenant which is really what sets them off and how to ensure that on closing the tenant has left the premises even if they turned from agreeable to nasty and tried to stay.

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