Selling a multi-family home can be an exciting – and potentially lucrative -experience and is often done for the same reason as selling any other property – that it no longer fits your needs or life goals.
Some owners choose to sell their property to free up capital for further investments. Others are simply ready to move on from property management.
No matter your reason for selling, there are some considerations you should keep in mind before going through with the sale of this type of property. Let’s break down the process of selling your multi-family property and what to look for in each step.
What is a Multi-Family Property?
Multi-family homes are many different types of buildings that have two or more units and may be owned by an individual, a corporation, a partnership, or as part of a condominium.
Understanding how your property falls into the designation of “mulit-family property” can give you clarity on how to further invest in the building – or if would be better for you to consider a sale.
What are the Benefits of Owning and Selling a Multi-Family Property?
The main benefit of owning a multi-family home is the potential to create more income by renting out one or more of its units. Most multi-family properties appreciate nicely over time, making this a great investment option.
When it comes time to sell a multi-family property, there are many aspects to consider. Not only are you selling a residence, but there may be other individuals living in the property who have to be relocated.
You also need to consider property taxes and what you are going to do with any maintenance fees during the sale period, and how long it will take for the transaction process to go through from start to finish.
How to Sell Your Multi-Family Property
1. Find an Experienced Real Estate Agent
The first step to selling your multi-family property is finding the right real estate agent for the job. You may have an agent in mind, or you may want to research a few before making a final decision.
It’s vital that whoever you work with has experience should know what steps need to happen and how long each one will take. You want them to tell you what the typical timeline for completing a multi-family property sale is and if there are any reason why you should wait to sell.
A good agent will also make sure you get top dollar for your home or unit.
Your agent can also help you find a qualified contractor for any necessary work that needs to happen before the sale of your property can go through or post-sale repairs and upkeep if required.
2. Find Potential Buyers
The next step is to find a potential buyer for your multi-family property. Selling this type of property is different and draw various interests depending on the type and size of the property.
For example, a four-unit home may be purchased by an individual or a family looking to buy their first property, while five units and up might just appeal to an investor.
Your real estate agent will need to find the best potential buyers for your multi-family property and help them see how it can meet their needs. You want to make sure you accept an offer from a buyer who has the financial resources to buy the property.
Working with an experienced agent can help you market to and locate the best buyers for your property.
3. Know the Costs Involved with Selling a Multi-Family Property
There are costs involved with selling this type of property, many of which are similar to selling any other real estate property.
Common expenses include:
Commissions:
Your agent and the buyers agent will charge a commission for their work in helping you sell your property.
Closing Costs and Fees:
Many fees go into the sale of any property, including recording taxes, transfer costs, title insurance, notary service, etc. These may vary depending on the state where you live and what type of property you are selling.
Moving Costs:
If any residents live on the premises who will need to relocate, this can be an expense that needs to be offset before your multi-family property is sold. You may also incur costs if they choose not to leave, and it becomes necessary for them to do so through legal means or eviction.
Maintenance:
If any repairs need to be done, you will want to make sure they are completed before the sales process begins to hinder your ability to sell. You may also incur these costs after completing a sale to upkeep or maintain what was sold.
Gardening and Yard Care:
If you need to do any maintenance before or after the sale of your property, this can be an added expense.
Other Expenses:
You may also incur additional expenses like monthly bills while your home is on the market for sale and any legal fees during a transaction.
Knowing all these potential costs associated with selling a multi-family property can help you plan ahead for the sale and budget accordingly.
4. Consider Your Current Tenants
It’s easy to get caught up in the numbers during a multi-family property sale. However, don’t forget about any tenants that you may have living on your property. Consider what their needs might be and how they may impact your property.
Some questions to consider:
- How much notice will you need to provide them?
- Will there be extra costs if they are required to move from the premises before a sale goes through?
- If so, do you want that cost borne by the new buyer or yourself?
You’ll also want to be aware of what might happen if they refuse to leave once the sale is finalized.
If you are unfamiliar with your state’s laws and regulations, it may be helpful to work with an experienced attorney who can help answer these questions for you before entering into a new transaction.
5. Start with Your Paperwork in Order
Before you can market to potential buyers, it’s essential that your paperwork is in order. You’ll need current tax records for the property and any information pertaining to mortgage payments or liens on the property.
You’ll also want to have up-to-date insurance policies for fire, theft, etc., so there are no surprises when a potential buyer asks for it.
6. Inspections
A qualified inspector will ensure that your property is in tip-top shape this is usually paid for by the buyer.
This will insure your buyer can keep your property in the best condition possible and may help with any future rental opportunities.
Partner with an Experienced Multi-Family Property Real Estate Agent
Selling a multi-family home can be tricky if you don’t have the correct information to guide you, such as what potential costs might arise or how a sale will impact your tenants.
An experienced multi-family property agent can help you plan, know what to expect, and navigate the unique challenges that come with selling a multi-family home.
If you are considering selling a multi-family home or want to learn more about commercial and residential property investment, contact the team at Josh and Jolene Baijot today.
We have the experience and expertise you need to navigate the complexities of the market. From marketing to closing, you can trust our team to help you find the right buyer at the best price for your multi-family property.
Hi! We’re Josh and Jolene Baijot, the creators of this website. We’re also commercial real estate brokers in Bellingham, Washington.Thank you for taking the time to read this blog post. We appreciate your time spent on this site. You can connect with us on Facebook, Instagram, or contact us through this website.
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