Are you an out-of-state investor looking to downsize your real estate portfolio? Or, perhaps you’ve recently moved away and simply experimented with renting your house out. Either way, it may be time to look into selling a rental property from hundreds or even thousands of miles away.
Of course, selling a home is so much easier when you live just across town. An out-of-state sale is a different game entirely. Luckily, Evernest’s Brokerage division has managed thousands of real estate transactions across the country, including small- and large-scale sales for out-of-state investors.
So, we’ve gathered our top five tips to make selling your rental property in another state a breeze.
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First things first, you’ll be glad to know that it’s entirely possible to sell a property without being physically present. It will likely be a bit more complex, though.
Selling a rental property in another state may not be a cakewalk, but it certainly is possible. Here are some tried-and-true tips to streamlines the process:
A seller’s first step should be finding a reliable real estate agent or broker. A professional agent can help ensure each stage of the sale follows the proper processes.
Sellers often choose to work with a real estate agent local to the market their rental property is located in. For best results, this should be a seasoned agent who knows the area well and, ideally, has worked with out-of-state investors before.
This is a critical step, so you may need to speak with a few different agents or brokers. The individual you choose to hire will serve as your eyes and ears on the ground, suggesting a listing price for the property, negotiating with potential buyers on behalf of the seller, and overall keeping you in the loop. As you won’t be present, it’s critical to find someone that you trust.
As the seller, you should also make a point to inform any potential agents about your absence before signing any contracts. It’s fairly common for agents in this position to advocate for permission to operate semi-independently when you cannot be present, but be sure to carefully read the language in any documents before committing.
Whether you inherited a home, have been renting one out, or the property has long been vacant, doing some clearing and decluttering before listing is almost always a good idea.
There are a few options available, depending on your goals and the level of cleaning needed.
If what’s left is primarily junk and debris, you can hire a company to haul trash, complete any necessary repairs, and clean the premises up a bit.
If any belongings remain, moving companies may also be able to collect these items and bring them to a storage unit for you. From there, you could consider keeping or selling belongings on eBay, a home clearance auction, or Craigslist, for a little extra cash.
Whether you’re selling locally or out of state, real estate transactions come with their fair share of tax-related expenses. You should expect to pay capital gains tax, with the amount depending on the sale price of the property.
You’ll also need to pay any applicable state and local taxes, potentially in the state of the sale as well as the state you reside in.
Consulting with an accountant or a tax attorney is the best option to get detailed advice on taxes related to selling from out of state.
When it comes to selling an out-of-state rental property, you’ll want to pay as much attention to the things you shouldn’t do as the things you should.
Unless you’re a highly experienced real estate agent, and plan to be in town throughout the sales process, it’s typically not a good idea to try to sell a property yourself. Real estate market conditions, trends, and demographics vary drastically throughout the country, so it’s best to leave this job up to a local professional.
If you’re only seeing the property through photos or over video chat, it can be tempting to go no-frills. The reality is, though, staging an out-of-state property is just as important as staging a local one. Try to keep, rent, or buy a small selection of furniture to fill the vacant property. After all, strategically placed beds, couches, and chairs all help potential buyers visualize themselves within the home.
Property owners should keep in mind that there are several expenses they might encounter when selling their out-of-state property. These costs are:
Typically, real estate agents don’t take upfront fees. Instead, they’ll take a commission from the final sale price once the property is sold. For example, let’s say the commission is 6% and the property’s final selling price is $300,000. That means that the agent will be entitled to $18,000 after closing.
Before selling a property, even from out of state, you may need to arrange cleaning, staging, and home repairs. You (or a representative) might need to fix roofs, fill holes in the walls, address dripping taps, and more.
Consider hiring the jobs out to companies you can trust. After all, since you won’t be there personally, you’ll need to ensure the jobs are done right, even from afar.
Whether you’ve purchased property before or are simply studying up on the process, it’s no secret that unexpected costs are almost guaranteed to pop up. Vacant home insurance, utility bills, yard maintenance, and more could be additional expenses.
By hiring and working with an experienced real estate agent, you can feel comfortable and confident even if absent on closing day. Your agent can handle all the aspects of the sale without your physical presence!
It’s important to note, however, that there are some things the property owner must take care of before the sale is finalized. The agent will prepare all of the necessary documents and send them your way, but you should be prepared to sign, notarize, and promptly return them. Then, you’ll simply need to check in with the agent for regular updates.
Unfortunately, selling a property from afar isn’t always easy. But, with preparation and a little help from the right team, it doesn’t have to be a nightmare. Working with cleaning and maintenance companies, real estate agents, and home finance professionals can save you a lot of work and a few long flights.
Whether you’re selling one out-of-state home or one hundred, you don’t have to go it alone.
If you’re ready to sell your first (or next) investment property, here are 3 steps to get started today:
Start the conversation!