Nicole Glazer McKee

(949) 636-3659
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25950 Acero St, Suite 100
Mission Viejo, CA 92691

24851 Del Prado Ave
Dana Point, CA 92629

How to Sell Your Place While Your Tenants Are Still Living There

March 7, 2016

Whatever your reason for wanting to list your rental property for sale, having a tenant still living there while selling the place can definitely make the process a little more complex. But it’s not impossible, nor does it have to be a total nightmare if you play your cards right.

While it might be a lot easier to wait until the lease expires and your tenants have vacated the premises, you might not necessarily have the luxury of time. Not everyone can necessarily afford to have the place vacant with zero income while the property is up for sale.

In that case, there’s little choice other than to list the property, even while it’s occupied by renters.

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Be Open and Honest With Your Tenants

Before anything else, the first thing you should do is show some common courtesy and inform your tenants of your intentions to sell. Think about it from their perspective: this is currently their home, and odds are, they may not want to move.

Perhaps they don’t have to, if the buyer you find specifically wants an investment property that will provide them with residual income through monthly rent checks. But there’s a good chance that the people who buy the place may want to move into it themselves. In that case, your tenants will need to find themselves a new home.

In the meantime, they’re essentially being inconvenienced as strangers come in and out to check the property out before putting in an offer. This can be disheartening, so it’s important that you are sympathetic to their situation. And that starts with keeping them in the loop about your intentions.

You’re going to need the tenants’ permission to show the property at specific times, considering the rights they hold, such as the right to quiet enjoyment. You’ll need to give them a certain amount of notice before a prospective buyer visits the property. Since tenants do have some influence over a landlord’s selling decision, your best bet is to communicate with them early on in the process – and often – when placing your rental property up for sale.

While you’re having the conversation with your tenants about your plans to sell, that would be the perfect time to ask them if they’d perhaps be interested in buying. You never know – you just might make the entire process of finding the right buyer a lot easier and less time-consuming for you if your tenants are interested in purchasing the home  at an agreed-upon price and closing date.

If not, the doors of communication need to be open throughout the listing and sales process.

Check Out Your Local Landlord-Tenant Rules

At the same time that you inform your current tenants, you should also be scoping out the local rules and regulations surrounding tenant and landlord rights in the case of selling a tenant-occupied property.

Some areas in the US have rules that state that tenants have the right of first refusal, which means owners have the obligation to offer the current tenant the opportunity to purchase the property at the listed price. Even if they refuse at first, they still have the same right of first refusal when an offer comes in. These rules can vary from one jurisdiction to another, so it’s important to find out exactly what these regulations are in order to avoid stepping on toes and getting yourself into hot water.

Offer Incentives to Entice Cooperation

Monetary incentives can help sway your tenant’s attitude in your favor. You might want to consider offering your tenant a discount off rent during the showing period for keeping the place in proper condition and being flexible with letting in prospective buyers and their agents.

Consider offering them something along the lines of a gift certificate for dinner during each month the property is listed. You’re going to want your tenants to make sure that dishes are out of the sink and beds are made, and that all their little knick-knacks are put away and kept out of sight. All that takes some effort, so rewarding them for their troubles can encourage them to cooperate with buyers.

Offering them a free hotel room on the weekend of an open house is also a great option, as this would significantly reduce any inconveniences on their part.

Rather than leaving them out in the cold, you may want to consider helping your tenants find a new rental place while they’re making plans to vacate yours. Help them find a real estate agent or provide them with a listing of properties that are up for rent and meet their criteria as far as location and price. Show them that you care about their well-being, and that you understand that your property is their home, and not just a commodity.

The Bottom Line

Having tenants living in your property while it’s being shown to prospective buyers can definitely throw a wrench in the selling process. But how you approach the situation and deal with your tenants can have a huge effect on how smoothly the transaction goes. Before you make a move, get an experienced real estate agent on your side who can offer you tips and advice on the landlord-tenant laws in your area, and how you should deal with you specific tenants when trying to sell.