Episode Transcript
[00:00:02] This is Short Term Rental Management, the show that is all about short term rental property management with your host, yours truly, Luke Carl.
[00:00:16] All right, Short Term Rental Management, we're going to talk today about what to do when you're selling a home that you have for rent on an overnight basis, how to handle the bookings, how to facilitate such things. With Airbnb and vrbo. We're not going to go too in detail today on the multiple options you have. We'll do a little bit of that, but mostly I want to talk about how to facilitate what actually happens from the owner's perspective when selling a home that is rented for short term rental. On Short Term Rental Management with Luke Carl, the long hair millionaire from the cash cave, the Short term shop is hiring. We are hiring real estate agents in the best vacation rental markets in the nation. If you live in a beach town, a mountain town, or want to move to one and you are a qualified rock star Realtor, please reach out to us theshortermshop.com careers we are currently hiring in multiple markets theshortermshop.comcareers okay, so I'm actually going through this right now.
[00:01:38] This is the second or third time I've sold a house for overnight rental. I don't like selling houses. I don't like it. But every now and then it just happens for whatever reason, different circumstances. One time I 1031, two properties into another property, one property, two small ones into a big one, and that worked out pretty well. We were happy with that. And, and this one we are selling because it's just a little too far away. We've kind of moved our efforts elsewhere and we've already purchased another home to replace it with because there was no gain. So not really any reason to Exchange was a 2021 purchase. So as you might imagine, no gain.
[00:02:16] We sold it for just a little bit more than what we paid and we were happy with that.
[00:02:22] So to be honest with you, I haven't gotten into the Airbnb details on this one, but I will give you my experience from the past, which I believe are going to be the same now. VRBO has made some changes, so we will get into that.
[00:02:35] So it used to be in the past VRBO was easier and now Airbnb and VRBO are pretty similar and we're just gonna cover those two platforms today. They're the big ones, so we'll just cover those two.
[00:02:46] So with Airbnb, basically you're gonna call them up and say, hey, we sold the home. We're Getting ready to sell the home in a few days.
[00:02:53] We've got these bookings. What do you want us to do with them?
[00:02:56] And with Airbnb, at least the last time I did this, they will basically assign somebody to your case and they will try to get all of your bookings rebooked at basically other Airbnbs and they will kind of help you with that to a certain extent.
[00:03:15] Now, of course, you can give your Airbnb listing to the seller or to the. Have the buyer give you. Okay, we're doing this from the seller's perspective. Perspective, right. Which I'm not used to. I'm usually a buyer.
[00:03:27] You could have your buyer create an Airbnb. We'll stick with Airbnb for now. Give you the link they give.
[00:03:36] The seller gives all the. The link to all of the guests that are currently booked and say, here you go, here's the new listing. If you want to stay in this same house, go right ahead.
[00:03:47] But Airbnb will help with that as well. And they will try and get those people rebooked either at your house or at other quote, unquote, Airbnbs.
[00:03:56] It can be a time consuming process.
[00:03:59] In general, it's fairly painless.
[00:04:04] Now, the downside there is, what if the new host isn't any good? Because, guys, you're not renting a house here. In a lot of cases, you're renting a house and you're renting customer service.
[00:04:13] It's all about the manager, right. In a lot of cases.
[00:04:16] So in essence, am I saying that you might tell your guests, say, hey, you know, the home will be the same, but we can't promise that the reviews, you know, that they're gonna have to start over with new reviews. They're not going to get your reviews.
[00:04:30] The buyer's not going to get your reviews. Not on Airbnb.
[00:04:35] But the guests might not like that. And that's totally cool. You know, they can go find somewhere else to book. And as the buyer, the buyer might not like that, especially if they're new. Like, if they're beginners, they might think that, oh, man, I need those bookings because, you know, I need the revenue or whatever. But the truth is, is if you're good at this, you don't really need to worry about that. You can go get your own damn bookings. Right.
[00:04:57] Also, there's the price difference. You know, is the buyer going to go through their whole listing and price every one of those nights the exact same that you have it priced? That's a lot of work.
[00:05:08] So I would recommend just offer. Have the buyer just don't get involved. Have the buyer give you their link. If the guest doesn't like what they see on the link, then they don't need to book it. And unfortunately, it's not your problem.
[00:05:21] And it's a bummer for the guests in certain cases. So you do want to try and give them as much notice as possible.
[00:05:27] The downside is what happens if the buyer doesn't close and you gave all these people notice and now you got an empty calendar and then you got to go out and try and fill it again, you know. So VRBO has made some changes recently. They actually have a new policy on this.
[00:05:43] They call it VRBO's policy on property sold.
[00:05:48] And there's actually something in there that is. It stands out like a sore thumb. You're not technically allowed to have it for rent on VRBO anymore if you have the home for sale, which is something I definitely disagree with. It's a little weird, especially in today's market where it could take you a year to sell, you know, depending on how bad you want to sell it and if you want to price it right. And that's pretty common in vacation rentals and vacation rentals. A lot of times these are just extra homes that the seller doesn't really care all that much about, but they will sell it for a certain price. So I might have this thing for rent for a year before I get it sold, two years before I get it sold in today's market.
[00:06:26] But technically, Verbo's new policy is that you are not allowed to have it for rent if it is for sale.
[00:06:38] I'm actually going to read a few of these policies to you. I'll share screen if you happen to be watching on YouTube.
[00:06:45] Here's their actual policy, which is very small and kind of ridiculous to even be, you know, worried about showing it on YouTube. But I'll read a couple of these. Property will continue to be listed on VRBO and you are in compliance with the listing authority policy.
[00:07:06] Let me back up a little bit. If you've already listed your property for sale, you cannot accept new bookings unless the following exceptions apply. See, that's where it gets weird. Like they're trying to tell us that we can't rent it, but you can.
[00:07:20] So there's a lot of gray areas here. Almost like this policy was written by somebody that doesn't own real estate.
[00:07:27] So you got to go to this listing authority policy and make sure you're in compliance and I'll leave that to you to decide whether you're in compliance.
[00:07:35] To minimize risk of disruption, you.
[00:07:39] You have notified all future travelers that the property is for sale, and you have blocked your calendar for all future dates close to or after the closing date.
[00:07:48] Which I do agree with this to a certain extent.
[00:07:52] It's a little ridiculous, but if you feel like it's actually going to close, like it's under contract, it's probably time to go ahead and start letting the guests know. And if your buyer has a link, you can give the guest the link. And that's kind of how they want you to do it.
[00:08:06] You have contractually required the new owner to honor all reservations after the closing date. In such cases, new owners must follow these guidelines. They can relax the reservation terms, but they cannot increase the traveler burden.
[00:08:21] What is that? Money, probably.
[00:08:25] Travelers must be notified of changes in ownership and the offer and offer the possibility to cancel. If the traveler wishes to cancel, a full refund must be provided, regardless of the partner's cancellation policy.
[00:08:40] Remaining traveler payments must be paid through Verbo, any transfer of funds to be negotiated and handled between owners.
[00:08:48] Payments for current reservations must be negotiated and handled between owners. In other words, if I'm keeping these bookings on my VRBO profile and you own the house, I need to venmo you the money or something like that, right?
[00:09:05] It's a lot of gray areas here. And so in other words, VRBO's cancellation policy went from being very easy to understand. They would just. You would just call them up and say, hey, I sold this thing, and they would cancel everybody, to now gray areas and lots of interpretation going on. So furthermore, I did reach out to my VRBO account executive, my account manager, which if you have enough properties, you can call Verbo and say, hey, I want to count, and an account manager, and they will help you with stuff like this. So she wrote me back, and basically she said if the new owner is not willing to host the confirmed bookings, then we would suggest you reach out to the travelers and inform them that they can choose to cancel and rebook at the new VRBO listing id, which they're getting from the new owner, or they can choose to find a different property completely.
[00:09:52] And obviously her suggestion was that we don't cancel the bookings ourselves. That's if you're new to this, which you probably aren't, if you're listening to this podcast, don't ever cancel bookings. It's not good for you.
[00:10:02] So the problem with the new verbal policy is that they Want you to reach out to the guests right away, basically, and let them know and have, you know, give them the option to cancel or book with the new owner. But the problem is, is that, what if it doesn't close? There's a million reasons why the house wouldn't close.
[00:10:19] How do I even know this person's loan is going to get approved? You know, so bit of a gray area there, but we did follow the rules. Of course, we blocked our calendar off and we let the guests know. And so far, it's going pretty smooth. We were far enough in advance that there was a pretty decent gap between the closing date and the next guest that we didn't have to, like, you know, cancel anybody very, you know, in other words, we didn't ruin anybody's vacations on this one.
[00:10:48] But these are all just things to. To know. And. And again, we'll do another podcast here on short term rental management soon, talking about, you know, how to handle the bookings and what's best for the buyer.
[00:11:02] This one's specifically for sellers, but in general, if you're a buyer, most of the time, you don't care about the seller's bookings.
[00:11:12] So just, again, we'll do another long podcast on that, and I'll bring in some guests and how they handle things, et cetera. But forget about the future. Let's talk about right now. In my opinion, get the link from. If you're selling it, get the link from the buyer. If the guest wants to rebook with them, that's fine. If they don't, who, you won't even know. Like, who cares. You know, the thing that folks need to remember in these circumstances is that there's 10,000 other properties on VRBO, on Airbnb in the town where yours is.
[00:11:47] I think a lot of times buyers and sellers get wrapped up in thinking that their house is, like, special. Which, you know, that's good. You want to feel like your house is special, but at the end of the day, you got a lot of competition and there's plenty of other places for these folks to stay. And maybe they won't even like the fact that it's, you know, this is a little bit dramatic. They're, oh, my God, they're selling this house. How do I even know this is real? What if this is a scam? You know, I can understand why a guest might be a little freaked out by this.
[00:12:11] So not talking about buyers today. Do I want to keep the bookings? Do I not want to keep the bookings? My answer to that, in general, is no.
[00:12:20] But I just wanted to make you aware of what you're going to need to do as far as Airbnb and VRBO rules and regulations. If you do go to sell a house in general, it's pretty cut and dry. It's pretty simple.
[00:12:32] I think the policies could be a little better. I'm not exactly all that excited about the new VRBO policy because, again, what happens if the buyer blows it? You know, like, for instance, my buyers already had to extend closing, which is not a good sign. You know, there's a decent chance that they could blow it, meaning not close, in which case, you know, you usually keep the earnest money. That's a whole nother conversation for you and your realtor.
[00:13:03] But we've extended the closing date now another week. So you're telling me that I can't rent the house for that week?
[00:13:13] I mean, what if it's July at a beach house? It's a thousand dollars a night. That's. I'm out 7, $8,000, $10,000, sometimes for a week.
[00:13:20] So that's not cool.
[00:13:23] But long story short, check with VRBO when you are going to go sell a home. They did. They definitely have kind of stepped up their game on being sticklers on this policy. It used to be very simple with vrbo. Now they're making it a little bit more difficult.
[00:13:37] And in general, Airbnb's policy is, as of now, a little more relaxed than verbose.
[00:13:45] Okay, we're gonna do another podcast on the same subject from the buyer's perspective with multiple buyers and how they handled the transfer of the bookings. Also, keep in mind, North Carolina, South Carolina, they have legal. There's laws in those two states as to the fact that the buyer has to take the seller's bookings, which, again, I'm no lawyer, but in most cases, it sounds basically like the buyer has to offer it to the guests. If they don't book it, then that's up to them, but they have to be offered to basically the same dates at the same house in the store. State of North Carolina and South Carolina. I don't know all the laws there. I am not a lawyer. Please check with the state. Please check with your county, especially if you're doing this in the Carolinas, to make sure you're doing everything correctly. So get to know the Airbnb policy, the verbo policy in general, not a huge deal. This verbo thing has been a little bit annoying for us, especially since the closing is being extended by verbose policy. I can't go out there and make $7,000, which really just kind of stinks for them because I'll just go book it on Airbnb.
[00:14:59] And then assuming that the closing date that we have right now happens, the new owner will take over. We will give the guests his listing URL, his website with his listings on it, and the guests can rebook with him if they choose, you know.
[00:15:17] So, long story short, what did we learn? Don't sell our properties.
[00:15:21] Wealth comes when you keep real estate. Okay, but if you ever had to sell, want to know how it works? Here we are. That's why I'm here, baby. Bob's your uncle. Long Hair Luke, Cash Flow Carl from the Cash Cave on Short Term Rental management.
