How to Transfer Bookings When Buying/Selling A Vacation Home
Many of the thousands of vacation homes sold in Orlando each year are resale homes and have pre-existing bookings. It can be confusing as to how to structure the transfer of the bookings and keep track of all of the guests information and payments. In a blog coming soon, we'll discuss why you want to keep bookings in your vacation home when going to sell it, as it will actually help sell the property. As a full service Vacation Rental Management company in Orlando, we've undergone the transfer of bookings process many times. In this blog, we'll share the best way that we've found to keep the homes in the property so that the guests keep their stay, and the new homeowners have immediate cashflow.
How you structure the transfer of the existing bookings is extremely important, as it gives guidance to both the buyers and the sellers of the property as to who is responsible for different aspects of the transfer, and to help schedule the transfer.
Step 1: Make sure the previous owner/manager will transfer the bookings
Step 2: Establish a baseline for payments
This is an important step. Both parties need to know how much the guests have already paid (i.e. deposits), when that paid money is going to be transferred to the new owner/manager, and what is left to be paid on the bookings. It is our recommendation that this information is given upfront, and that all payments that have already been paid are to be transferred to the new owner/manager upfront at closing with the sale of the property. This is not a difficult request, and is easily written into the contract to be scheduled at closing. This eliminates any guess work and follow up work with the previous manager/owner for these bookings.
Step 3. Understand/Establish Structure and Responsibilities
A. Transfers from a self-managed owner. It's also important to understand how the previous owner/manager will handle these bookings once transferred. The process is a bit different if an individual homeowner is transferring the bookings vs. a management company. If previous bookings are transferred by an individual homeowner who took their own bookings, the new owner/manager will be responsible for corresponding with these guests, collecting future payments, and responding to the needs of the guests during their stay. Bookings transferred from a previous self-managed owner, effectively become the new owner/managers responsibility. With that being the case, these bookings may be subject to a management fee (although it should be a reduced management fee since they're referred) if the new owner is hiring a management company for the property.
What does the previous owner do with the existing bookings? The best thing to do is contact the channel in which the bookings were taken through, and ask for the best practice in this situation and many times they can help. Sometimes a previous manager will reach out to all of the reservations and notify them of the sale, and that they will be re-booking through the new owner/manager, and to expect an email or call from the new owner/manager. This can work as well, and you'll still want to follow the next steps to ensure a smooth transfer. Sometimes this does involve the deposits being refunded to the guests, in which case there will be nothing to transfer at closing.
Of course with the uncertainty of the sale of a property, canceling bookings often does come across guests minds. There are a few ways to minimize guests cancelling their stay, due to the sale of the property.
1. Communication. Communication is the most important part of the transfer process. When a property first goes on the market for sale, we put in the property description that the home is for sale. This may deter some from renting, but it avoids the issue of renters not knowing that it is taking place, and they're more open to allowing showings during their stay. During the transfer, the current homeowner should keep all guests up to date on the sale of the home. The current homeowner should also explain what their cancellation policy is, but that they intend on not interrupting anyones stay, and ensuring a smooth transfer. Once the home is finally under contract, he/she should contact those guests explaining the next steps. This is when the decision of transferring bookings, or cancelling bookings will be made of course.
2. What happens if a guest cancels? Through good communication, the current homeowner/manager should know which guests want to cancel or transfer their booking to the new owner/manager before any work is done to transfer. If a guest changes their mind and now wants to cancel before the closing, the current homeowner should follow their cancellation policy and refund whatever needs to be refunded. Again, communication is important to make sure that the buyer knows the correct dates and payouts of the active bookings.
B. Transfers from a management company. Transfers from a management company look a little different and can actually be a bit more simple, if the previous management company is willing to transfer them. In most cases, the previous management company will apply their management commission to the bookings, but will also manage those bookings as they happen. The previous management company can keep the bookings in their management system, and simply block the dates around the bookings to not take any additional bookings. The new management company will need to block the dates of the pre-existing bookings, but should be free to take any other bookings around those dates. Here's what the PREVIOUS management company will be responsible for:
A. Collecting booking payments from the guests
B. Corresponding check-in details with new management company, including any additional services such as pool heat.
C. Fielding any guest inquiries/issues with the property and relay those inquiries/issues with the new management company
D. Refund of security deposit, once NEW management company has cleaned and inspected the home, confirming no damages.
E. Payment of Cleaning, Rental Amount, Taxes, and any additional fees to new management/homeowner.
The previous management company will just need the US banking information from the new owner/manager to pay the rental proceeds to.
Step 4 - Get booking details
The easy part. This can be done simply by sending the previous owner/manager the spreadsheet below to have them complete with all booking information listed. To download this template, just click the button below, it's free!
Step 5. Rental Agreements
The new owner/manager will need to have the transferring guests sign the rental agreements for their stay as well. Without the rental agreement, you have no booking. This is where sharing the booking details is very important to ensure that the new owner/manager establishes communication well in advance of the check-in date to avoid frustration on both parties sides.
That's it! The bookings have officially transferred. From this point, you can simply follow your standard booking practices of collecting final payments and completing our check-in process.
Still have questions about transferring bookings? Give us a call!
Written by Keith Wachter
Business Development Specialist
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