Selling Your Home with Tenants: Tips and Strategies

The presence of a tenant does make the process of selling a property more complicated, although the feasibility and difficulty of the process depends on a number of variables, most importantly the lease agreement.

A fixed-term lease entitles tenants to remain on the property until the lease expires unless the lease agreement includes a termination clause in the event of a sale. It’s easier to sell a property if the tenant has a month-to-month lease. In those situations, the owner typically only needs to provide 30 or 60-days’ notice (depending on state laws).

Selling a House With a Tenant the Right Way

How you feel about your tenant might influence how you approach selling the property. The courteous thing to do is inform the tenant of your intentions as soon as you decide to sell.

Even if you don’t like the tenant, giving them advance warning will likely be in your best interest. Maintaining a good relationship with the tenant will reduce the likelihood of them damaging your property or refusing to pay their rent on time in protest of your decision. Their cooperation may also be vital if you want to sell the home quickly and show it while they’re still residing there.

Does Having a Tenant Complicate Showings?

Yes, it does. Tenants do have a right to privacy. In most states, property owners need to give tenants either 24 or 48 hour notice that they plan on showing the property to potential buyers. A disgruntled tenant can make this process difficult in a number of ways, so it’s best to work with them as much as possible to stay on their good side.

Property owners may even want to incentivize good tenant behavior by offering something to the tenant, like reduced rent or paying for cleaning. Be cognizant that your tenant will be responsible for tidying up and making their own space presentable to potential buyers. You’re asking them to help you sell a home they may not want to leave, so you might need to provide some kind of positive inducement.

The Alternative: Selling With the Tenant in Place

Some buyers are also investors and may actually see the tenant as a key selling point. Finding good, dependable tenants who treat a property well, don’t cause issues and pay rent on time are always preferable to the alternative. Having a good tenant and favorable lease terms might be a key selling point.

The added bonus is you don’t have to give the tenant notice that they need to move out. If nothing changes for the tenant, they might be more inclined to work with you to facilitate showings.

Negotiating Early Move Out

Alternatively, if you want the property vacant before the sale but are in a position where you can’t legally force the tenant out, you can potentially incentivize an early move out. This may require providing financial incentives, like paying for moving expenses, providing a rent rebate or even offering a lump sum to cover some of their new rental costs, like security deposits and first month’s rent.

Challenges Homeowners Face When Selling With a Tenant

There are three primary challenges homeowners face when attempting to sell a property with a tenant:

• Tenant resistance
• Marketability
• Legal challenges

Tenants may be understandably unhappy about being forced to move or having to deal with a new owner who may want to increase the cost of their lease or will treat them poorly. Even if the new buyer says they won’t change anything, renters may be justifiably wary about the type of service a new owner might provide.

People shopping for a home to live in may also be reluctant to buy a property that’s being rented. There is a stigma attached to rental properties due to the nature of renting. Owners who occupy a domicile typically have pride in it, treat it well and improve it. Renters aren’t concerned about equity. Although not universally true, some renters treat property poorly in part because they don’t own it and don’t have to deal with the financial consequences of rough treatment or property damage.

Home sellers of rental properties can also face legal challenges from the tenant if they don’t follow all proper procedures or honor all of the renter’s legal rights. States have different laws pertaining to renters, so it’s important to familiarize yourself with the requirements in your state before making demands of your tenants.

Making the Process Easier

Clearly communicating with tenants, being respectful of them, honoring their legal rights and incentivizing cooperation are all good ideas when selling a home with a tenant. Consider providing tenant relocation assistance or other monetary incentives if you think it will engender goodwill and establish a positive disposition toward you and the process.

Get Help Selling Your Tenant-Occupied Home

If you’re interested in selling your rental property, the team at 72SOLD is here to help. We excel at selling homes quickly and above the median sale price for your local MLS. We understand how sensitive these situations can be and can help ensure your home’s open house is done with respect to your tenant. Get our price for your home on our website.