Selling a tenant-occupied home: Selling a rental property before tenants move out can complicate the process.
During a down real estate market, many people make the decision to rent out property rather than sell it – in hopes that they can ask a higher price at a later date. Now that home prices have rebounded since the recession, it might be the right time to sell.
So, how do you sell a home that has tenants living in it?
Know the tenants’ rights
The process of selling a tenant-occupied home comes with some legal issues. Your tenants have a right to quiet enjoyment of their residence as long as they are following the terms of the lease. Review the lease and any applicable landlord/tenant laws before listing or showing your property to potential buyers. Many leases include a clause that allows for the owner/landlord to list and show the property with enough advance notice.
Listing the home before the tenants’ lease expires may mean the new owner would need to honor the remainder of the lease term, which could complicate the sale process for you. To simplify things, wait until the lease is set to expire. You can offer the tenants a month-to-month option until the property sells, if needed.
If you are ready to sell, the tenants will need reasonable notice of your plans to do so, and they will also need notice prior to any showings. Because tenants will need to keep the home clean and will usually need to leave the premises prior to a showing, you might consider offering them an incentive to thank them for their cooperation with the frequent interruptions to their schedule. Bankrate.com suggests offering a discount on the tenants’ rent while the property is on the market.
Take stock of the situation and the property
Before listing the property, consider whether you have a good relationship with the tenants. If they are disgruntled, they may sabotage your sales efforts and you might be better off waiting until they have moved out.
“Tenants can sometimes be a bit of a wild card in the high-stakes real estate game, so some agents feel it’s best to proceed after the tenant leaves,” writes Brendon Desimone for Zillow. “After that, make some cosmetic fixes to clean up the home and sell it vacant.”
In addition, take a good look at the condition and appearance of the home. Will it show well with the tenants’ furniture and personal effects in place, and are there any repairs or upgrades that need to be made to ensure a good sales price? The answer to these questions may prompt you to wait before listing the property.
Alternatives
Working with a real estate investor, such as Sell As Is Denver, could make the process easier for you. If you need to sell before the tenants’ lease expires, the investor might be able to work with you on terms for taking over the lease after purchasing your property.
If you are able to wait until the tenants’ lease expires, but you are concerned about the property sitting vacant on the market for too long – meaning no rental income for you to offset the mortgage – an investor can often offer a quick sale that closes within a week or two.
To learn more about how to sell your home as is for cash with a local expert, visit www.sellasislocal.com/denver.