The best ways to sell rental property
The latest NRLA Landlord Confidence Index found that one in three landlords is thinking of selling property in 2023. If you're one of them, what approach should you use to get the best results? This article will outline your options, but if you want expert advice tailored to your own situation, contact Movewise, the NRLA's official property sales partner, today.
Depending on the type of property you have, how urgently you need to sell it, and whether you are selling with tenants, there are four main routes to consider when selling rental property, each with its own pros and cons.
1) Estate agents
This is the most obvious method to use if you are thinking of selling. The vast majority of property sales in the UK are carried out through estate agents, with traditional high-street agents accounting for about 83% of sales and online agents another 5%.
Pros:
- Wide audience. Because most sales are through estate agents, most buyers will be looking at agents' windows, websites and property portals, and you will get the greatest number of eyeballs on your property,
- Local knowledge. An agent will be able to give you an accurate valuation based on local market conditions, know what yields people are looking for in the area, and list the property in the most effective way to generate interest.
- Proactive marketing. Any decent estate agent won't just rely on inbound interest, but will reach out to their contact book of buyers who they believe could be a good fit to a particular property.
- Good value. Estate agency is a competitive market. Agents' fees will be lower than auction fees, for example, and selling on the open market will often give you the best chance of achieving the highest price.
Cons:
- Not specialised. Not all agents are used to handling rental property, especially when tenants are involved. This is where choosing the right agent is crucial.
- Inflexible. Most agents will tie you into an exclusivity period, often 12 weeks or more, which means you wouldn't be able to sell through another agent in that time. So even if the agent isn't finding you enough viewings, you're stuck with them.
- Slow. Especially in a cooling market, selling through an estate agent is likely to be a long process.
2) Auctions
Only about 2% of residential property sales in the UK occur at auction, and it's a method that can be viewed with suspicion by many people. Sellers often think that auctions are a “last resort” to offload property cheaply if it can’t be sold elsewhere. And buyers need to have done their homework, because when the hammer falls, they can't back out of the sale. They'll also likely need cash in hand, because they probably won't have time to arrange a mortgage.
(NB This information relates to traditional auctions. There is another type, known as the modern method of auction – see our full guide to selling at auction for details of that.)
Pros:
- Fast. The biggest point in favour is that they are quick. If there’s a winning bid, the buyer and seller are legally committed to complete the purchase, usually within 28 days.
- Effective. There's also a high chance of selling. Nearly 80% of properties that come up for auction will sell, which is a very good success rate when you consider estate agents only tend to sell about half the homes on their books – and doubly so as many properties that come to auction tend to have some type of problem that prevented them being sold on the open market.
- Transparent. The mechanism of an auction means that bids are out in the open, and there is the chance of a bidding war pushing up the price.
Cons:
- Smaller audience. Many people simply won’t be looking at auctions, and those who do tend to be cash buyers – typically investors who are likely to drive a harder bargain.
- Expensive. Whereas estate agent fees are typically less than 1.5%, the commission taken at auction is usually around 2.5%. There's an additional entry fee, typically several hundred pounds, to have the property listed in the first place.
- Lower selling price. We did some research on this last year, which you can see in our auctions guide, and found that selling prices at auction are typically about 20% lower than those on the open market.
3) Quick sale firms
Anyone who has searched online for selling property will have seen ads from firms offering "cash for your property fast" and so on. These are not an option most sellers will consider, unless they are desperate to sell and speed is the only priority, but are worth a mention here because they often target landlords.
Pros:
- Speed. Many of these firms will offer to complete a sale in as little as seven days
- Convenience. The process is usually much more straightforward than a conventional sale.
Cons:
- Very low price. The trade-off for a quick sale is a lowball offer: often 25% below market value or even more.
- Can be unreliable. Because they know they are dealing with desperate sellers, some of these firms have been known to cut their offer at the last minute after initially quoting a higher price.
4) Direct marketing
Because rental property appeals to investors, who may not be in the same area or even the same country as the property is located, local channels often won't reach them. By marketing property to specialist investor lists, you can increase your reach to exactly the right type of buyer.
Pros:
- Targeted. Property details can be sent directly to investors who have expressed an interest in buying properties of that particular type, location and price.
- Discreet. Selling "off-market" means properties don't appear on estate agents' websites or property portals. For landlords wishing to sell larger portfolios this is useful as it avoids giving the impression of oversupply in the local area.
- Maintains rental supply. If you sell to another landlord, it's less likely that the buyer will evict your tenants. This is important because there is a growing shortage of rental property in the UK.
Cons:
- Smaller audience. The trade-off for targeted marketing is that you are focusing on a much narrower cross-section of the market.
- Price-sensitive. Professional investors will be heavily focused on the bottom line, so you need to make sure the numbers add up and your rent is set at a level that provides an acceptable yield.
With Movewise, you don't have to choose
If you sell with Movewise, we can offer a choice of sales methods. Our unique multi-agent sales strategy gives you all the benefits of selling with an agent without the drawbacks: we always choose the best agents for any individual property, and we don't tie you into exclusivity periods. We can also offer direct marketing to our list of investors, or combine both direct marketing with estate agent sales. Finally, if you do want to sell at auction or even through a quick sale firm, we can refer you to a recommended firm.
For a no obligation consultation to find the best sale method for you, get in touch today. As a trusted NRLA partner, we offer members a discounted fee too!
