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How to Sell a House With Tenants

Tips For Selling a House With Tenants

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Tenants are a definite wild card when it comes to selling a home. On the one hand, there are plenty of horror stories about angry or disgruntled tenants making it impossible to sell a home.

On the contrary, a tenant can be a valuable ally in the sales process if he or she is cooperative and motivated to help you sell. In the end, it is up to you to gauge your landlord/tenant relationship and to decide how to sell your home – while the tenant is residing there, or after he or she is gone.

Keep in mind that what a tenant tells you they will agree to do while you are trying to sell your home and what they do could be two vastly different things.

Most real estate agents will tell you that having an uncooperative tenant will make selling your home next to impossible. Knowing how to sell a house with a tenant is a critical aspect of getting top dollar for your home!

Before hiring a real estate agent to sell your home it goes without saying that you should ask the tenant first if they have any interest in purchasing it.

You are going to need your tenants utmost cooperation in this situation so you best respect them by explaining completely the situation you are in and why you want to sell. Giving them first dibs shows you have some compassion for their housing needs as well.

Options for Selling with a Tenant

Wait for the lease to expire

Tenants can wreak havoc on a sale. Some tenants can become angry when they discover that you are selling the home they live in. Other tenants are just not nice people to begin with. Still others are just dirty and will not keep the home in a good state for showings.

If you know you have a slob living in your place you can count on this not changing when the for sale sign goes up. Once a slob always a slob. If your long term plan is to sell your home it makes sense to be extra careful when initially choosing a tenant. Let the renters know up front that your long term plan is to sell your home and get the tenants reaction.

If you don’t get positive vibes you may be better off waiting for a tenant who understands your goals.

There are a lot of ways that tenants can throw a wrench in your sale, ultimately costing you money and causing unnecessary stress in an already stressful process.

If you have this type of tenant, often the easiest course of action is to just wait until the lease expires and let the tenant leave. Once he or she is out of the house you can clean it up and make any necessary renovations to make the home appealing to buyers. Then you and your agent can list the house and sell it like you would any other home.

If there is any doubt whatsoever that this is the type of tenant you have renting your place do not make the mistake of trying to sell your home while they are there! Your chances of success are very slim.

When you are selling a home the property can become stigmatized very quickly with real estate agents if it is difficult to show, intentionally left in complete disarray, or the tenants are hanging around during showings.

One of the most important variables in getting top dollar for a property is ease of access. If a home is impossible to show the days on market are going to grow. Days on market is a sellers enemy in real estate sales. Historically the longer a home is on the market, the larger the spread between the asking price and the eventual sale price.

Work with the tenant

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Unfortunately, not every home owner has the option to wait until the tenant leaves before they sell they home. You may be one of those who was forced to rent the home when the market went bad. You may still not have the finances to cover the mortgage while the home remains empty.

Considering that it can take several months to sell a house, you could have very good reason to sell while the tenant is still paying rent.

If you are lucky, you have a tenant that is actually friendly and helpful. This can be a real blessing when it comes time to show the house. A good tenant will keep the place tidy and looking good so potential buyers will see what the house looks like with furniture in it – a plus for many buyers.

The tenant may be perfectly amicable to opening up the house for showings and he or she may be eager to move on from the home anyway.

Give incentives

But even if your tenant is not ideal, you can help motivate him or her to assist in the selling process. Some owners will offer to lower the rent for a few months to encourage the tenant to be helpful. Doing so is one of the best tips for selling a house with tenants.

Money is one of the greatest motivators for cooperation.

Others will offer to help cover the moving expenses for the tenant, or will guarantee to the tenant that he or she will be given extra time to find their next residence before the house is sold.

A good rule of thumb when you have an occupant who has a tenancy at will agreement which are typically 30 days notice, to give them an additional month. You can do any or all of these things to make the tenant eager to assist you in the sale.

Work With What You Have

How you choose to deal with your tenant is something only you can decide. Although there are certainly problem tenants out there that are only interested in being difficult, some are not actually this way.

Many will be more than happy to work with you, especially if you give them something in return. And if they aren’t, you can always wait until the lease expires to try and sell the house.

The home had tenants and he thought it would be a piece a cake to sell his property because he thought the tenants would be angels. I explained to him that in my experience this was rarely the case and most of the time tenants make selling a home very difficult. He wanted to use my services and hired me to sell the home with the tenants.

Almost immediately the tenant would not allow people to see the home. They consistently said no to most of the showings creating a very difficult situation. Of the showings they did allow the feedback repeatedly said the same thing – the home shows horribly.

Unfortunately sometimes a seller needs a reality slap before they will believe how challenging it can be.

Know The Tenancy Rules

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Before you decide to sell with or without the tenant, make sure you know what the laws are concerning selling your home with a tenant in your particular area.

Laws can vary considerably from one area to another and it is important to know what rights you have and what rights your tenant has according to local laws.

It may be beneficial to consult a real estate attorney if you are unsure. Professional guidance can save you a lot of headaches later on.

In certain areas it is possible for tenants to hold up a home sale for a considerable amount of time – up to a year in some cases. In a number of states including Massachusetts, housing laws are set up to completely favor tenants and not owners.

Even if a tenant has clearly violated the terms of a lease or tenancy at will and remains in a house after the agreement expires, the onus will be on the seller to go to court to have them removed.

The process of eviction can take months to get put before a judge. Tenants may have the right to refuse the sale in some instances.

These are things you really should know about before you go and try to sell the home with someone in it. Tenancy laws are something you should be well versed in.

Many sellers don’t have a clue just how much tenants are favored when it comes to housing laws. They can be completely in the wrong but they get the benefit of the doubt according to the laws in many states.

Establish a Rental Game Plan

If you can convince your tenant to work with you while selling the home, you should lay down the ground rules for the arrangement. Make it clear what you will be giving the tenant and make it clear what you need in return.

A reduction in rent is a great incentive, but the tenant needs to know that this means you need the beds to be made and the dishes to be done before anyone views the home.

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A good real estate agent is going to be concerned with the cooperation level from the tenant.

For example when an agent calls to schedule the showing will the tenant say yes in most circumstances? While it is not unreasonable for a tenant to be granted advance notice on showings, how much is too much?

The easier it is to access a home even in short notice the better. Even in a traditional sale where there are no tenants involved most professional Realtors are going to council their clients on making the home as accessible as possible.

The more restrictions you place on any sale the harder it is going to be to sell. The longest notice that should be granted a tenant is 24 hours. Anything longer than that will make it extremely hard to sell a home.

You should also stress to the tenant that a Realtor will be accompanying any buyer that wants to view the home and that all valuables and any embarrassing items should be kept out of site while you are showing the house.

To make it easier on a tenant, one of the things you could do to ease the burden of showings is schedule an open house the first weekend the home is on the market and not let any showings take place until then.

Clear rules and rewards are the best way to get what you need out of your tenant during the home sale. With a little negotiation and a reasonable tenant, selling the home will go much easier.

The Investment Property Exception

When you are selling a multi family home the rules of the game on how to sell a home with tenants are different. Given the fact that two to four family homes often times are investment properties, it is possible the buyer for the property could be an investor who would love for the tenants to stay. In this circumstance, selling the home with tenants occupying the property is a little less of a concern.

This is not to say that the problems mentioned above completely go away in fact far from it. You still are going to need the tenants to be accepting of showings and also to keep the place reasonable clean. If the tenant however wants to remain in the home they are going to need to show to the perspective new owner they are worthwhile tenants to keep.

If the home looks disgusting and not well cared for you are inviting a buyer to make a low ball offer. Don’t put yourself in this position if you don’t have to. Hopefully all of this advice to sell a house with tenants have been eye opening!

Posted by ERA Big Sun Realty on May 6th, 2019 10:28 AM

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