Selling a property with tenants?
One might sell their rental property for a number of reasons - moving to another place, money, a part of their investment strategy, or they can’t maintain the property anymore. Making that decision is hard enough, but more so if the property has tenants. How can one navigate selling their property even if it still has tenants? Here is a guide for you.
Before anything else, do your due diligence.
Notify your tenants. Once you’re certain that you will sell your property, notify your tenant as soon as possible. You or your property manager should give them the official notice in person, so you can personally talk them through the process. This will also give them the time they need to look for another place.
Remember the do’s and dont’s. Aside from the notice, you should also take note of what you can and can’t do when selling your property.
Making Tenants Leave. You can’t make tenants leave if they’re on a fixed lease, unless they break the terms of the lease. If they’re on a periodic lease, you can, but of course, go back to #1: notify them as soon as possible.
Open Houses and On-Site Auctions. These can only happen if the tenants provides a written agreement.
Entry Notice. The tenants must receive a written notice at least 24 prior to showing the property to a buyer. If the selling agent is different from the property manager, the agent must give the manager a copy of each notice before going into the property.
Photographs and Signages. The outside of the property can be photographed without the tenants’ permission. However, it’s different for the interior of the home—you need their permission first. Same goes for putting a For Sale signage.
Tenants’ Comfort. With all these people coming in and out of the property, your tenants might get a bit uncomfortable, as it is still their home. You need to make sure they can still enjoy living in the property, maintaining their privacy.
Here’s what you should expect…
Selling your property will get more difficult with the added variable: the tenants. With that in mind, here are some things you need to expect when selling your home:
You have less control.
You can’t control how the property will be shown to the buyers if it’s tenanted. How the home will look, the furniture, the state of the property - all of those depend on the tenant. Oversights have an impact on the buyer’s impression. In fact, bad tenants can drive the property’s price down. You need to consider this in your calculations, and consequently, lower your expectations. If you can, you can give the tenants compensation, so they have the incentive to move out faster.
The buyers’ desires differ.
Not all buyers want a property with tenants. Homebuyers who want to move in immediately will be driven off if you have a property with tenants on long-term lease. Investors, on the other hand, will find this appealing, especially if you have good tenants.
Because of this, you should consider how long the tenants still has to stay in the property in deciding on the type of buyer you want to attract. This will help refine your marketing strategy once you list the property.
Having tenants in your property while selling it is a tricky situation, as they can make or break the sale for you. Hence, it’s essential for you to communicate openly with your tenants, prepare for the sale well, and get ready to make compromises for the sale happen.
If you feel out of your depth about this, we can help you with that. With our tailored strategy, latest technology in our arsenal, and our desire to give you the best results, you can get the best price for your property. And of course, we’ll help you smooth things over with your current tenant. All you have to do is drop us a message!
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