Selling A Rental Property With Tenants
Selling a rental property with tenants may be very straightforward; having a tenant in place can make for an unpleasant selling experience. Most real estate professionals will recommend allowing a lease to expire before selling a home. That isn't always a possibility, so it is important to make sure that local landlord-tenant laws, which vary by jurisdiction, are taken into consideration. Some tenants have the right of first refusal. Others have this right when an offer comes in. A smart tenant can hold up the sale of a rental property for at least 12 months. This has a negative impact on the sales price, so getting the tenants on board with the sale is incredibly important. You get the advantage of selling the property. Your tenants need some advantages too. Here are some ideas to help get them on board so they house stays clean.
1. Offer a Rental Discount
If you know that the property is going to be on the market for at least a month, then give them a break on their rent for that month. Most tenants will laugh at a 10% discount or less. Think bigger – like 50% - to make an impression on them. You might take a small loss that month, but maybe you'll get a sale on the property that will make up the difference.
2. Tenants Don't Always Need to Vacate a Home
If the house is going on the market, landlord-tenant laws are often very specific about the lease you have signed. Your tenants may not need to vacate the premises at all because they have a business contract to occupy the property. Having a tenant home during an open house is a bad idea, so try offering a free hotel room or other incentive that will make life easier for them.
3. The Lease May Not Expire Upon a Sale
Many jurisdictions have the new owner taking over the business contract for the property. This means that an eviction does not automatically take place upon the sale of a property. If there is 9 months left in the lease and the new owner wants to live in the house, then some tenants may stay the full amount of time. Offering to subsidize a new rental deposit, the cost of rent for a month or two, or a straight cash payment might change their mind.
4. It is the Tenant's Home
Many landlords see a rental property as an investment or business commodity, but tenants see it as their home. Their belongings are there and they've build memories there. Offering them a gift certificate to go have a nice dinner somewhere isn't going to alleviate any concerns they have for their family heirlooms. You'll likely need to put something into writing that will give them a legal guarantee that you and your real estate professional will protect their things.
5. Give Notice in Writing
Most jurisdictions require at least 24 hours in a written notice for a showing or an open house. If you do not provide this notice, then a tenant may not be required to let you, the real estate agent, or anyone else into the home.
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