Exit Strategy 101: How to Sell Your Sonoma County Property for Top Dollar - Article Banner

Are you thinking about selling your Sonoma County property? 

There are a number of good reasons to sell, especially now when property values are high. We expect that as interest rates begin to come down and mortgages get more affordable, a new set of buyers will be in the market, looking for homes. 

Preparing to sell for top dollar means getting your property ready and gathering the team of experts who are likely to help you have a successful experience. 

Selling a property is all about exit strategy, especially if this is an investment property we’re talking about. 

We often counsel the investors we work with to buy and hold. This is almost always the most profitable strategy, especially if you’re renting the home out, and your tenants are essentially paying down your mortgage for you. But, we’re realists, and we know that you cannot hold forever. 

You’ll eventually want to sell and do something else. 

Smart investors make exit strategies need a part of the entire planning process.

When you are ready to sell your Sonoma County investment property, you want to make sure you’re earning as much on it as you possibly can. We’re here to help you do that at Redwood Residential Property Management. We’ve taken investors through their own exit strategies before.

Re-visit Your Investment Goals and Your Exit Strategy

Step one is to look at your investment goals. You need to do this before you make any moves you’re your property or your portfolio. Before you put your Sonoma County rental property on the market, it’s essential to revisit your investment goals and establish some expectations for what you’ll earn on your property and how its sale will affect your portfolio. You need to think about your reason for selling and why this particular exit strategy is a good idea for you. Maybe you want to liquidate the asset and do something else with your funds. Perhaps you’re thinking about a 1031 Exchange that will diversify your portfolio. Or, maybe it’s simply time to get out of the investing game and retire. 

Understanding those goals and expectations will help you make informed decisions and optimize your proceeds from the sale of your property.

Lean on the Expertise of Your Real Estate and Property Management Partnerships

Selling a rental property in Sonoma County will be more profitable for you when you’re working with experts who have a deep knowledge of the local market, an understanding of how to market your property so it can easily attract attention and stand out among the competing properties. You’ll need to gather experts who have access to data that will help you with pricing.  

The right agent can help you navigate the complexities of selling your property. You’ll also be sure you’re selling for top dollar. 

Are you selling a rental property that still has a tenant in place? You’ll need more than a real estate agent; you’ll need a Sonoma County property manager. Whether you’re moving the tenant out in order to sell or you’re hoping to sell to another investor who will welcome an acquisition of a tenant-occupied property, there will be some intricacies that a property manager can help you navigate. 

Selling for Top Dollar Without Paying Top Taxes

We discussed the importance of a good agent and property manager. You’ll also need to consult your financial advisor before you sell, and a tax professional. It’s important to be clear about what selling will mean for your tax exposure. 

Selling your Sonoma County rental property is likely to have tax implications, especially if you’re making a lot of money on this sale. You’ll have to pay capital gains taxes, and there’s also depreciation recapture, and state taxes.

Look for ways to minimize your liabilities when it comes to taxes. That will help you earn more on the sale and keep more of your profits. 

One way to avoid paying taxes at the point of sale is to exchange it for another one.

This is called a 1031 exchange, and while it’s not right for every investor and every situation, it might help you craft an exit strategy that doesn’t produce a full exit. You’re still selling the rental property that you’re ready to walk away from, but instead of walking away with cash from the profits, you would re-invest those earnings into another property or properties. This allows you to defer those capital gains taxes, and it allows you to diversify or grow your investment portfolio even while selling an asset. 

This would be a twist on your exit strategy that has you exiting from a specific property, but not the benefits that come with investing. It’s something to think about. We have talked to a number of investors who have sold their Sonoma County property and then used the 1031 Exchange to buy multiple properties in other, less expensive markets. 

Selling Your Sonoma County Property for Top Dollar: Pricing and Marketing

As you prepare to sell, remember that your asking price can immediately make or break your home sale, and the way you show and market your home will impact who sees it and what they’re willing to pay for it.

  • Pricing  

What a lot of sellers fail to remember is that the asking price is only what you’re offering the home for on the market. It’s unlikely that you’ll get that asking price. In a strong sales market, you could potentially be entertaining offers that are over the asking price. In a tight market, you’ll have to prepare to consider offers that are lower than what you want. The asking price is a meaningful starting point, but you’ll have to be prepared to negotiate. 

Let your real estate agent suggest this starting point. Your real estate agent will conduct a comparative analysis that brings you some reliable statistics and hard data that supports how your home will be priced. 

Most sellers and their agents expect to be entertaining multiple offers and engaging in negotiations that include counter offers and flexibility around the terms of the sale. 

Market knowledge is essential here; you’ll have the ability to rely on your agent, but when you know your property and how it fits into the market, you’ll be able to stay in control of your exit strategy and earn what you’re expecting on your sale. 

  • Advertising and Showing

Once you have a price and a listing, it’s time to advertise your home to buyers. The way your home is marketed and advertised will impact how much you earn and how quickly you sell. It’s pretty much impossible to sell a home that no one knows is available. 

To maximize your exposure, you should expect to see your listing on the MLS, and it also needs to be syndicated across real estate websites like Zillow and Trulia. Your agent should have it on their own website, too. Social media should be used so you can generate shares. 

Selling a home starts with a great listing. Make sure your agent focuses on impressive photos and videos, detailed descriptions, and a comprehensive strategy that includes social media shares. 

The marketing process will revolve around showings. These will be scheduled by your agent, and it’s usually best for you not to be home when potential buyers are coming to see the property. There will also be open houses and special broker and buyer events. 

How to Sell an Occupied Sonoma County Rental Home 

Sell a HomeWe mentioned earlier that it’s possible to sell a home that’s occupied. Whether the fact that a tenant is in place is a help or a hindrance will depend on your likely buyer. 

Listing and selling an investment property while a tenant is in place is not impossible, but it does come with challenges. When you’re selling to another investor who appreciates that there’s already a tenant in place, you’re actually in a very strong position, especially if it’s a good tenant and your rental value is where it should be. You’ll be able to negotiate a higher selling price since you’re offering a property that comes with immediate income. 

There could be some frustrations and setbacks, however, and that’s where your property manager can be a huge benefit. Selling an investment property while it’s occupied can sometimes be a mistake if you’re not managing the process wisely. 

Staging is basically impossible because the home is occupied. Not only is it occupied, but it’s being lived in. Your tenant will have their things throughout the home. If they’re neat and organized, that’s no big deal. If there are piles of clutter on the counters, however, it may be off-putting to people who come and see the home. It’s hard to get top dollar when this is the only way to show the home.  

You’ll have to work around your tenant’s schedule when it comes to scheduling showings. Coordinating with buyers and their agents is already complicated; adding the tenant into the mix further makes things difficult. 

Selling an occupied investment property is certainly possible. However, prepare for it, and work closely with your Sonoma County property manager. 

We can help you get top dollar for your property and we can also work with you on a solid exit strategy. Contact us at Redwood Residential Property Management.