We have a lot of homeowners around the Mesa area that rent their homes various people throughout the year or even on a seasonal basis. So, how do you sell a home that already has tenants? This can be one of the biggest challenges in figuring out how to sell this tenant occupied property because there are so many different variables. Of course, it depends on your situation and every home and tenant relationship is different, so let’s really break this down.
If the tenant has a month-to-month rental lease.
Month-to-month is really the most flexible, especially in our area, because people come and go from season to season. Depending on the specific city, you may only need to give renters about 30 to 60 days notice before handing over the keys. It’s important to provide notice exactly as it states in the leasing contract so that the tenant understands when the lease agreement ends. Many landlords can terminate these leases without cause or explanation because you’re not required to tell the tenant about the sale, however, things go more smoothly with more communication.
Fixed term lease.
Longer leases can slow down the process of selling the property unless it has an early termination clause. The renter has the right to live on the property until the lease is up, assuming they’re paying rent and have not violated any lease agreements. They don’t lose their right to occupy the house just because you want to sell so it’s important to wait until the lease has expired before selling the property or at least get as close to the end of the agreement as possible.
What if the seller doesn’t want to go?
If the tenant doesn’t leave they may be asked to buy the property themselves. If they already love the home they may be your best buyer. Suggest talking to a lender or even consider seller financing since you’ve already been the lender and the payments have already been going to you. This may not work for every seller but it might be an option.
Consider selling to an investor. You might consider selling your home to an investor that wants to keep the property as a rental. The new landlord or company can honor the tenant’s existing lease.
Consider paying your tenant to leave. It might sound counterintuitive, but if you’re selling the property to make a profit and you’re in a rush, you might just pay off the renter to leave. If the average rental costs in your area are more than what they’ve been paying, you can offer to pay the difference multiplied by the number of months left on the lease. You may also suggest paying for moving costs or cover the next security deposit.
If you have a problem tenant and it’s a rocky relationship, you certainly don’t want to do anything to compromise the sale. The last thing you want is for a tenant to go crazy and destroy the home making it unsellable. An uncooperative tenant may be less willing to allow home inspections and buyers in the property so communication is huge. Maybe offering a break on rent for their cooperation or other incentives.
If you’re looking to sell a property that currently has tenants give me a call. I have some proven strategies and processes the work quite well for selling a tenant-occupied property in Mesa Arizona.