Posted 28 days ago

How to Sell A Home That's Occupied By Tenants

Hello again! As you may know, I am a realtor who specializes in working with investors. I’ve helped people with all kinds of transactions, including this gem – selling a home that is already occupied by tenants. This is often an ideal situation for investors because they won’t have to look for new tenants (yet). But it does come with its challenges. Watch my video or read on to learn more about selling a home that is occupied by tenants.

Why Are the Tenants There?

I see two main situations that call for selling a house while tenants are occupying the property (though, I’m sure there are plenty more).

  1. Your tenants are moving out soon and you want to take the opportunity to sell the house.
  2. You have tenants and their lease is continuing for several months longer and for whatever reason, you want to sell the property.

Case Studies

I am a property manager and have helped many people through this kind of transition. I’m going to give you two examples from my own experience to give you an idea of how the transactions went down.

Tenants Moving – Owner Wants to Sell

The first example I’ll go over is a time I sold a home where the tenants were moving out soon and the owner wanted to take that opportunity to sell the property. We had to arrange a way to show the house that was also amenable to the tenants. This also had an added difficulty of being towards the beginning of the pandemic, so there was the extra fear and uncertainty about keeping the tenants safe and minimize contact with others.

What we ultimately decided to do was to list the property early in the week and we decided to do only Saturday showings. We had the tenants leave the house for the day while all the showings were going on and then had a cleaner come in to sanitize everything to make sure the tenants felt safe to return. We ended up having 15 showings that day and received 4 or 5 offers over the next couple of days, got it under contract and it was done. So the tenant only had to deal with one day of showings and then that was it! After that, they accommodated the inspection and appraisal just fine and it was sold.

What you need to prepare your tenants for is that they will need to prepare for showings of the house and then inspectors and appraisal visits. There is a clause in the Texas Association of Realtors standard lease that says that tenants will have to allow the landlord to place a key box to grant access for showings during the last 60 days of their lease. There is an option for tenants to pay a fee to not allow this access, but most don’t want to do that. Even though that clause is there, and you have the legal right to do something doesn’t mean that you should force your way into it. The best strategy is to work with your tenants and your realtor to arrange a schedule or plan that is amenable to everyone and keep everyone in the loop, so that no opportunities are missed and so that everyone feels safe and taken care of.

Property Has a Tenant That is Going to Stay

The second case I will talk about is a situation where the tenant’s lease is not ending any time soon and they are planning to stay in the home. In this case, your only buyer is likely to be an investor because the buyer will have to honor the terms of the lease with the tenant. A person looking for a house to live in is probably not going to be willing to wait for the lease to expire to move in. With that in mind, we did the marketing geared towards investors on the MLS and on social media. I made sure to include all of the details an investor would want to know, including that there were tenants in the property who intended to stay.

I called the tenant and asked how we could accommodate them to make sure it worked with their schedule and wasn’t too much. Because I went out of my way to work with them, they were always pleasant, kept the house nice and clean for showings, and generally made their part of the transaction go smoothly. It ended up being a win-win situation.

In both cases, as a token of my appreciation, I sent each tenant a gift card for Uber Eats as a thank you for their cooperation and for allowing us to work with them.

Showing the House and the Tenant

In case I haven’t stressed enough the importance of taking extra care to work with the needs of the tenant as best as possible during a sale, it is also important to consider what buyers are going to see during the showing process. Not only are they going to be looking at the physical house, but they are going to be looking at the tenant that is occupying the house, whose lease they are going to have to honor.

They are much more likely to have a positive impression of a tenant who keeps the place clean and is accommodating of showings, etc. Tenants are much more likely to be accommodating when you include them and their needs in the process. Also consider the fact that potential buyers may have an opportunity to speak with the tenants themselves, so you want to make sure that they are on your side.

It is the best strategy to be thoughtful and kind to your tenants and include them in the plans for showing and inspections. It is a bit of extra work on the front end, but in my experience, it works out much better.

What is Your Experience?

Have you ever sold or bought a house occupied by tenants? Tell us about your experience below! I’d love to hear from you!