Need to Sell an Occupied Property? Here’s What to Do

Selling a rental house that is currently occupied isn’t something most investors want to do. Of course there are the oddball situations where you’re selling to another investor who actually wants to inherit your tenants, but that’s not usually going to be the case. More often than not, you’re selling to a regular buyer who plans to move in themselves, or to another investor who will want to bring in their own tenants.

And this is where things can get complicated. Selling a house can be hard enough, but when you’re trying to offload a property that someone else is living in - well, that ratchets up the challenge significantly.

Put yourself in your tenants’ shoes. This is their home (yeah, you own it, but it’s their home). There’s going to be a change that will more than likely impact them in a big way. Often, they’ll have to move, which is stressful on many levels - packing up, finding a new place, possibly having to change schools or jobs. It’s a tough situation to deal with when you’re not expecting it and when you seem to have no control over it.

As the property owner, it’s your job to make this process as smooth as you can for both you and your renters. The trick to doing this with an occupied home is to be open, honest, and understanding with your tenants. You definitely don’t want to get on their bad side, because they can - and they will - make your life miserable and possibly even cost you a sale. At the same time, you do need to sell the property, and you need their help to do it. Between showings and inspections, you’re basically asking them to be ready 24/7 to have people traipsing through their home, and then booting them out once it’s sold.

Getting them on board with the plan is the best way to handle this and avoid potential conflict. Hopefully you’ve already established a good relationship with your tenants. If you haven’t, this is going to be a bit more difficult. But if you are on good terms, all it should take is a __ conversation and maybe even a few incentives to help grease the wheels. Here’s what I like to do:

• Start with an explanation of what your plan is and why you’re doing it. Talk to them just as you would any friend or family member, being respectful, courteous, and forthright. Remember, you are going to be inconveniencing them, so acknowledging that and keeping them in the loop every step of the way will help ease some of the inevitable frustration.
• Emphasize the fact that you’re not going to kick them out without notice. This is the #1 worry that tenants have when there is an ownership change, and while they may indeed have to move, it will not be without adequate notice.
• Give them a proper heads-up whenever a showing or inspection or any other visit is scheduled. Ten minutes is not enough time. A few hours is pretty good, but letting them know as far in advance as you can will ensure that they have time to prepare (clean up, find somewhere to go, etc.), which will benefit you as well.
• Speaking of having to clean up, it might be worth it to hire a cleaner to stop by once a week while the property is on the market. It will remove some of the worry from your tenants about keeping the house clean, and your property will show better, too.
• Offer some incentives to motivate them to WANT to help you. For example, you might offer them cash or a gift card when the property sells, or even offer to cover some of their moving expenses. If the home is in great shape when they move out, consider giving them a $100 bonus on top of their security deposit. Incentivizing them to help you move the process along will ultimately save you money, so why not share the love?

Selling an already-occupied property doesn't have to be a nightmare. It may take a bit extra on your part, but if you can get your tenants on your side, you’ll be better off in the end.