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6 Rules for Selling Tenant-Occupied Homes

When you’re representing a property that’s under an active lease, you have to figure out how to get the renter on board with the seller’s plan.

January 10, 2019

Tenants know that when a For Sale sign pops up on the property they’re renting, they need to prepare for disruption to their lives. A new owner may impose additional leasing terms and rules, jack up the rent, or, most disruptive, make tenants move out. The potential emotional and physical upheaval that comes with selling tenant-occupied homes makes them much more difficult transactions than selling owner-occupied or even vacant properties. That’s not to say that every tenant-occupied home is going to be hard to sell. But tenants represent a wild card that can negatively affect the sale if they are uncooperative with you, such as refusing to make the home available for showings.

Property condition is another variable that tends to have a deeper effect on the sale of tenant-occupied homes. Though you may make efforts to get tenants to tidy up their spaces, you’ll likely be showing the home at times when the trash hasn’t been taken out, the beds haven’t been made, and dishes and food haven’t been removed from the sink. It can get even worse. I recently was forced to show a house in the dark because the tenant’s utilities had been disconnected. Given these potential obstacles, how do agents successfully navigate the marketing, showing, and ultimate sale of a home that has tenants living there?

  1. Learn what you can about the tenants from the homeowner. Not only do you work with the owner on developing a marketing plan and showing schedule, he or she is your first source of information about the tenants. You can avoid some headaches and missteps by getting a good overview of the situation from the owner. Ask what the tenants do for a living, whether they pay rent on time, if they frequently have visitors to the property, and how well they have maintained their spaces. The answers to these questions can give you a good idea about who the tenants are and whether they’re likely to be cooperative with you.
  2. Show tenants compassion, as if they were your clients. Meet and spend time with the tenants, and be transparent about your efforts to sell the house and the possible ramifications on them. Explain the process you will use to show the home, but demonstrate that you understand it could inconvenience the tenants and you’ll do what you can to mitigate disruption. Showing this kind of care and concern can help tenants trust you more easily, which will make the transaction smoother. Get tenants’ contact information, and find out their work schedules. Some tenants work at night and would probably not appreciate a 9 a.m. showing.
  3. Give tenants reasonable notice when you need to access the property. Never schedule surprise showings at a home with tenants. I try to give tenants at least 24 hours’ notice when scheduling showings. This sends the message that you respect their time and space. After all, it is still their home.
  4. Hire a cleaning service to keep tenants’ spaces show-ready. If the tenants aren’t the cleanest and most organized, and the house is consistently unkempt, let them know that at your expense—and, hopefully, their convenience—someone will be coming in on a weekly or bi-weekly basis to clean and organize their space while the home is on the market. Talk them through any concerns they may have about entrusting their belongings to an outside service. Most tenants likely will welcome this offer.
  5. Remember to manage tenants’ emotions, too. Though the owner is your client, you don’t want the tenants to get confused or frustrated with the transaction either. They’ll want to know what’s going on as they watch people move in and out of the rental property, so keep them informed. When you get a signed offer, let them know immediately. Give them some idea of the timeline of the sale so they can plan accordingly if they have to move. Also, inform them immediately if you know that the owner plans to continue renting the house as is. You’ll eliminate a lot of stress on them.
  6. Make yourself a resource for tenants. “Ninja selling” teaches the importance of building relationships and providing value for your clients. It’s no different with tenants—in fact, they are potential clients. Get to know them and their plans for the future. How can you be a resource for them? Provide information and assistance that will make the transition smoother. Let them know they are not alone and that you are ready and willing to help.

You might also work with your client to see if any incentives can be offered to tenants to encourage them to help make the transaction stress-free. A colleague of mine recently told me of a seller client who reduced her tenants’ rents while the property was on the market. The homeowner, my colleague said, saw it as a way to show tenants she understood the inconvenience the transaction posed to them and that she appreciated their cooperation. Some homeowners may feel this is unnecessary, but it is an option. At the end of the day, selling a home with tenants can be a complicated dance, but making them a part of the process can go a long way to keeping everyone in step.

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