6 Tips for Selling a Home with Tenants in Place

6 Tips for Selling a Home with Tenants in Place

Tenants in place can create challenges when selling a home. Selling a home with tenants in place can be a fairly complex process.  If there are tenants in place, it can be exponentially more difficult to sell if the proper steps are not taken. When selling a home with tenants, their cooperation is imperative in order to successfully sell the home.

Once you have decided that you want to sell your home with tenants in place, there are steps that need to be taken to work with the tenant.

Selling with Tenants in Place Versus Vacant

6 tips to sell your home with tenantsIf the lease is going to be expiring, then it might be in the best interest of the seller to wait until the property is vacant. There can be many variables with tenants in place and the number one variable will be access to the property.  If the tenants only have a short period of time such as a month or two left on the lease,  it may be beneficial for the seller to wait until the tenant’s lease expires to sell the property

Selling a vacant home will have challenges too, however having access to the home will not be one of them. Photography is not always ideal for a vacant home as it can be difficult to differentiate the rooms! And often times buyers cannot imagine themselves in a vacant home versus one that is lived in.

Work with the Tenant

Communication is key! It is imperative that the seller explain their intentions of selling the home. And wait for the tenant’s feedback.  Remember it is their home too, and this can be a delicate situation. Tenants have families and they don’t want their day to day life disrupted. And most likely, they were not aware of the seller’s intent to sell when they signed the lease in the first place!

Work with an experienced listing agent who has sold homes with tenants in place. The homeowner and the listing agent can explain the process of selling the home to a tenant. Some of the disruptions a tenant can expect can be having professional photographs taken, scheduling showings, and allowing access for inspections and appraisal.

If a new buyer is an investor, they may want the tenant to stay in the property and this can be negotiated.

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Incent the Tenant

Remember you are asking a tenant to keep a home “show ready” and allow access with proper notice, it may be in the best interest of the seller to incent the tenant. That is a negotiation between the

Review expectations with tenant

homeowner and the tenant and there is generally some kind of financial remuneration or a discount on the rent. The listing agent needs to explain to the seller what the tenant may anticipate with having access to the home, and ask them to keep it clean and ready for showings!

If a seller is going to incent the tenant, then the seller’s expectations should be clearly articulated to the tenant which may the following:

  • Ensuring the home is “show ready“.
  • Providing access to the home for showings with reasonable and agreed upon notice.
  • Decide if there are going to be any open houses.
  • Provide access to the home for inspections and appraisal.
  • A seller might offer to send in a cleaning crew to prepare for photos and initial showings.
  • Possibly have the tenant to agree to take the pets out or for a walk if a pet resides in the home during showings.

The seller should also send in a handyman to address any deferred maintenance as well prior to listing.

Understand Tenancy Rights

If there is only a short period of time left on the lease, then you may want to wait for the tenant to vacate before listing the home for sale. Yes, you will not be getting rent for that month or two that the property is vacant, so financial planning will have to be made to take this into account.

If there is a long period left on the lease, the lease runs with the land.  And an investor who may purchase the property will be acquiring the tenant. And deposits are transferred to the new owner. Tenant estoppel certificates are issued to the tenant. An estoppel certificate represents that the original lease remains in full force and effect and constitutes the entire agreement between Tenant and Landlord unless there are modifications. An estoppel certificate is a signed statement of facts that cannot later be changed by the signer.  It is used in mortgage negotiations to establish facts and financial obligations.

If this is the case with a tenant, then a homeowner needs to advise the tenant that this may be forthcoming!

Establish Showing Schedule

Establish a showing schedule with the tenant. I have had a variety of situations with tenants including one who only allowed me two hours per week on a particular day to show the property. That was it, two hours! Despite agents calling and explaining that their client was only in town for that day, it did not matter and the showing schedule could not be changed! So, we accommodated the tenant’s request and ultimately found a buyer and sold the home!

If there is an arrangement between the homeowner and the tenant, then a reasonable showing schedule can be arranged. Generally speaking, it is recommended to have 24-hour notice to schedule the showings.

Establish a showing schedule when selling with tenants

Another consideration with a property for sale with tenants is that a listing agent can provide the tenant with a lockbox and allow them to control it, meaning they put it out when they know a showing is scheduled. Often times, I don’t use lockboxes with tenants and will show the property with the other agent and their client to provide assurance to the tenant.

Inspections and Appraisal

The homeowner and listing agent also need to explain that access to the home will need to be made for any inspections and appraisal once the home is in escrow. Also, explaining that a home inspection may be intrusive to a tenant as a home inspector will be looking under sinks, running the dishwasher, HVAC and more. It may be in the best interest of the tenant not to be present during the home inspection.

Final Thoughts

From a legal point of view, the landlord needs to review the lease, review tenancy law in the state they reside in, and run their actions by legal counsel prior to embarking on the process to sell the property. After that, communication with the tenant is key to ensuring that the tenant will understand the home selling process and to avoid any surprises. If necessary, incent the tenant for their cooperation to work with a listing agent to show the home. And the listing agent should be sensitive to the tenant’s needs, so they feel as though they are part of the process.

If I can answer any questions about selling a home with tenants in place, please contact me.

Find Other Valuable Resources for “6 Tips for Selling a Home with Tenants” from Real Estate Professionals Across the Country. Please check out the articles below, and please share across Social Media if you enjoyed the articles.

Dealing with Problem Tenants via Paul Sian, Cincinnati and Northern Kentucky Real Estate

Tips for Selling a Home with Tenants via Kyle Hiscock, Rochester Real Estate

Pros and Cons of Selling a Home with Tenants via Michelle Gibson, Wellington Fl Real Estate

5 Tips for Selling a Home with Tenants via Xavier deBuck, Johannesburg Real Estate

How to Sell a Home with Tenants via Bill Gassett, Maximum Real Estate Exposure

About the Author

The above real estate article “6 Tips for Selling a Home with Tenants was written by Sharon Paxson of Newport Beach Real Estate. With experience since 2005 representing sellers, buyers, and landlords with their real estate transactions, we welcome the opportunity to share our knowledge and expertise and guide you through the home buying or selling process. We specialize in internet marketing to ensure that a listing receives maximum exposure.

We service the following Orange County CA areas: Corona del Mar, Huntington Beach, Laguna Beach, Newport Beach, Newport Coast, Orange, Santa Ana, Sunset Beach, Tustin and more! If you are considering selling your home, we welcome the opportunity to work with you and list your home with a top Newport Beach CA Realtor.

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Sharon Paxson is a full-time REALTOR® with EQTY | Forbes Global Properties and has been specializing in residential real estate throughout the Newport Beach area since 2005 assisting Buyer’s, Seller’s, Landlords, and Tenants with their real estate needs.

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