5 Steps to Selling a Tenant-Occupied Home

Posted by Steph Kaye on Thursday, March 24th, 2016 at 9:30am.

Selling a tenant occupied house can be a blessing or the bane of a landlord's very existence.  Answering such detailed questions as "Where do I start?", "Do I sell the property, tenants included?", and "Will my tenant wreck my house while I am trying to sell it"? can be more than discouraging for tenant-occupied property owners.  In their desire to be helpful, tenants might actually deter prospective buyers from the sale of a home.  On the other hand, the prospect of gaining an automatic tenant could be a key selling feature for the property.  Either way, odds can be drastically improved by following five key principlels.


There are no laws against selling a property while it is occupied by lease agreeing tenants.  Actually, the lease agreement takes precedence over the final sale of the property.  Even though the the tenant is entitled to remain in the home until the end of the lease period, many renters are inclined to search for new accomodations as they cannot be certain about the terms under which the incoming landlord will negotiate a new lease agreement.  Tenants will be thinking about whether the new landlord will intend to keep the property, if the new landlord will be as agreeable as the current one, and whether or not the lease will be renewable.


It is important for both the landlord and the tenant(s) to be very clear on the rights and obligations outlined in the lease agreement contract in the event that the property is sold.  Unknown elements make for nervous, uncertain tenants.  Common practice is that both the landlord and the tenant will provide one another sufficient allowances and flexiblity during a property ownership transfer.  With mutual consent, the tenant might be allowed the option of voiding the lease prematurely in order to find a new residence once the landlord has decided to list the property on the market.  In this case, the tenant would accrue no penalties nor fees for taking such action.  Unless a specific provision is stated in the lease agreement upon the sale of the property, the tenant is not free to walk out of the contract without paying penalties - usually consisting of paying the balance of the lease in full.  This can become an emotional battle for both tenant and landlord, so proper communication is key regarding the terms and intentions with the property.  


Not knowing whether tenants will help or hinder the sale of a property can be a rather burdensome uncertainty.  Rather than risking lost finances and allowing the property to become stale after weeks on the market, consider waiting until the end of the lease agreement to list your property.  

Once the tenats have moved out, it will be much easier to clean and freshen up the residence.  Do not forget that an empty house makes for more visible imperfections and it will be necessary to dedicate some time to small and obvious repair needs.  While empty homes do not sell as easily, they are much more accessible to agents and propsective buyers.  


Most professional realtors feel that selling a home with tenants is messy business and rarely ends well.  However, some landlords do not have the luxury of waiting until the property is empty before selling.  If tenants are cooperative, be sure to clearly outline a plan including: expected condition of the property during the time on the market, the length of notice tenants can expect from agents prior to showings, whether or not there will be an open house and how many, if the tenants will get showing feedback, and whether or not the tenants can expect a reward for their cooperation.  It is crucial to communicate as much information as possible to your tenants early on in the marketing process in order to establish that everyone is on the same page.  Miscommunication is less likely when tenants are well prepared.  


Uncooperative tenants can prevent a successful sale of your home.  Tenants are aware of every issue with the property: leaky fawcet, squeaky doors, running toilet, and the list goes on.  It can also be difficult to get agents to show a property with tenants as the agents are well aware of the type of encounter they can expect to have upon a showing.  Once again, the best option is to wait until the end of the lease to list the house.



Never underestimate the power of the almighty dollar!  For cooperative tenants, a strong incentive program is well deserved.  For the uncooperative stinker of a tenant, cashola can be used as a magic wand to faciliate the miracle of a glorious attitude transformation.  Simple communication isn't always effective, but cash is!  As with any allowance, rewards must be earned.  Clearly state the expectations: messes must be cleaned up DAILY  and the property must be instantly accessible for showings.  A discounted rent, free utilites, or another form of cash incentive is likely to do the trick.   

Selling a home with tenants can be risky business.  Legally, landlords are responsible to verify the facts of tenancy, the lease agreeement, and seek legal counsel in order to sidestep a possible legal battle.  

If you'd like to learn more about selling your tenant-occupied property, please don't hesitate to message Lang Premier Properties online or call us at 1-855-526-4466.

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