Selling a House With a Tenant Living There: What Are Your Options?
When we talk about selling a house, we usually think about two scenarios – either the house is vacant, or the owner still lives there. But what happens if you need to sell a house that’s currently occupied by tenants? That is definitely a different and more complicated situation.
The rising cost of living, along with the ever-changing job market, has made renting a more popular option than ever before. According to the US Department of Housing and Urban Development, the number of renters in the US was 43.6million.
With such a high demand for rental units, many investors have started buying properties specifically to rent out. But what happens when an investor wants to sell one of their rental properties? More often than not, they will have tenants living there at the time of sale.
Finding an appropriate tenant is itself not an easy task and on top of that, when selling is involved, it can be quite stressful for both the tenant and the landlord. You can’t just sell a property and kick the tenants out – there are laws in place to protect them. Depending on your state, the laws might differ.
Are you selling your rental property with a tenant still living in it?
If so, you already know that dealing with tenants is a complicated affair. Selling your rental property with tenants adds more complexity to an already elaborate process.
The United States has seen surging rental real estate trends surrounding this issue.
Most notably, the ongoing shift to remote working has caused rent growth to shrink in metropolitan areas and skyrocket in suburban markets. In recent years, rents have been growing at a brisk pace due to low rental vacancy rates and an increased demand driven by expensive new home builds. (1)
The Tennessee home buyers today give you some tips on how to deal with selling a property when tenants are living there.
Challenges involved in selling a house with tenants
Selling a house with tenants living there can definitely throw a wrench in your plans. Even if you do find a buyer who’s willing to take on the tenants, there are a few challenges that you need to be aware of:
1) An occupied property can turn off some potential buyers, as they don’t want to deal with the hassle of evicting the tenants.
2) You might have to deal with troublesome tenants who don’t want to leave or cause damage to the property on their way out.
3) In some cases, offering a financial incentive to the tenants to leave might be the only way to get them out.
4) It can be difficult to show an occupied property, as the tenants might not be cooperative. After all, they weren’t planning on moving any time soon, and now they have to deal with strangers coming in and out of their homes.
You can’t just put a sign in the yard and have people come traipsing through whenever they want. You must coordinate with the tenants to schedule times when potential buyers can come to see the property. It is difficult, especially if you don’t live nearby and can’t pop over whenever you want.
5) There is always the possibility that the tenants might refuse to leave, even after the sale has been finalized. In this case, you would need to go through the eviction process, which can be time-consuming and costly.
6) Getting a top-dollar offer is difficult, as potential buyers will factor the condition of the property and the inconvenience of dealing with tenants into their offer price.
7) If the tenants have a long-term lease, they won’t be willing to leave then. In this case, you have to wait until the end of the lease period or try to negotiate a buyout with the tenants.
Identify your buyer
Now that we have gone through some of the challenges involved, it’s time to take a look at the possible options available to you. When you’re trying to sell, identifying a buyer is crucial – figure out whether you want to sell to an investor or a buyer who plans on living in the property.
But investors are a right match in our case because owner-occupants usually don’t want to deal with the hassle and potential legal liabilities of evicting someone or waiting for the lease to end. And if the property is in poor condition, they won’t be able to get a mortgage or may have difficulties getting insurance.
Investors are generally more understanding of a given situation and would like to work with you to find a solution. They want a return on the investment and are less concerned with the condition of the property or its current occupants. However, they most likely want a discount on the price to make up for the hassle and potential legal fees involved.
Consider Tennessee home buyers as we are best in the business and serve a smooth selling experience even if you have tenants in the property.
Wait until the lease expires
If the lease agreement is about to expire within 2 or 3 months, you can wait until the tenants move out and then put the property on the market. This is the most straightforward option and will give you the best chance of getting a good offer for your home. However, if you need to sell sooner, or the lease has a clause that allows either party to terminate it with 30 or 60 days’ notice, then you’ll need to explore other options.
The law requires that you give your tenants a reasonable amount of time to find a new place to live, usually 30-60 days. This will give them enough time to start looking for a new place and to make other arrangements.
Tennessee homebuyers can help you out from this situation and will determine the best course of action for your particular case.
Sell the property with the tenant living there
One of the most common questions we get is “Can I sell my house with a tenant living there?” The answer is yes, but it’s not always very simple. You’ll need to find a buyer who’s willing to take on the tenants and their lease agreement.
As most buyers would prefer an empty property that they can move into immediately – an investor who’s interested in buying a property with tenants already in place is a great choice.
You have to be upfront with potential buyers about the tenant’s rights and how that will affect their purchase. For example, if the tenant has a fixed-term lease, the new buyer would be legally obligated to honor that lease as we do at Tennessee house buyer.
Let the tenant buy your property
If you have a good relationship with your tenant and they’ve expressed an interest in buying the property, then this could be a great solution for everyone involved. Not only will you be able to sell the property without having to go through the hassle of finding a new buyer, but you’ll also have the peace of mind of knowing that a tenant can’t be evicted.
Be polite and effective in your communication
The whole process should be well managed and organized – provide the tenants with as much notice as possible that you will be selling the property and show potential buyers around at times that are convenient for the tenants.
It’s important to be respectful and understanding of their situation. They are, after all, just trying to live their lives and may not be thrilled about the idea of strangers coming in and out of their home.
Be clear about your expectations; if you want them to be present during open houses or showings, let them know in advance. If you need access to the property for repairs or inspections, again, give them plenty of notice and try to be accommodating with the timing.
Although it’s wise to consider the tenant situation, as a property owner you still have certain rights. If the tenants are being uncooperative or are making it difficult to sell the property, then you may need to take legal action. Take the time to understand your rights and the tenants to avoid any potential conflict down the road.
Selling your home could be the key to a happy retirement so get the best out of your property!