Selling a Property with Tenants

 When it comes time of selling a property, you have two options: wait for the lease to end before selling or sell while your renters are still living there. Both options have advantages and disadvantages.

The real estate market is rising in many regions of the country, which means that landlords who have been holding onto a property while waiting for their equity to rise may now decide that now is the best moment to sell.

Of course, if you're a landlord selling a property, it's likely that it's occupied. It can be difficult to sell with tenants, and a tenant can make or break your transaction. To make your sale a success, you'll need to plan ahead of time, speak freely with your tenant, and make some compromises. Let's look at the benefits and drawbacks of each choice.

Wait for the lease to expire:

Benefits:

Allows time for updates:

If you can wait for your tenants to leave, you'll have more time to clean, make any aesthetic repairs, and overall tidy up the house before advertising it, potentially resulting in a better sale price.

Closing delays can be avoided:

In a strong real estate market, the house may sell faster than you think, and depending on the terms of the lease and state rules, you may have difficulty evicting your renters on time. You can accept the best offer without worrying about timing if the house is vacant when you list it.

Drawbacks:

Carrying costs for a mortgage:

Each month you go without tenants means you're responsible for the mortgage payment. You'll be responsible for the full carrying costs if it takes a few months to ready your property for sale, advertise it, accept an offer, and close.

Solution for the Landlord:

When the lease expires, you'll most likely want to sell the property as soon as feasible. If you like the offer, you can close swiftly and reliably on a date that is convenient for you and your renter.

Sell with tenants in the home:

Benefits:

Staging is built-in:

When a property is furnished, it is simpler for purchasers to imagine themselves living there. It may be more appealing to potential purchasers if your renter has taken good care of the property and decorated it tastefully.

Attractive for investors:

Having renters already living in the home is a huge selling factor for anyone wanting to buy it as an investment property - you'll save them the trouble of finding a tenant!

Drawbacks:

Unhappy tenants can make difficulty:

You've just informed your renter that they must vacate the premises. Now you expect them to maintain the home showing level tidy and available for showings and open houses? This is a difficult pill to take, and unreliable tenants may have a significant influence on the appearance of the property.

Solution for Landlords:

Consider providing your tenants a reduced rent for a few months in exchange for an agreement to present a clean and well-kept property in order to encourage them to cooperate with your listing plans. Offering a flexible move-out date or reimbursing moving fees are two more options.

Allow your tenant to buy the property:

If your renter like their apartment, they may be interested in buying it and it’s beneficial for you in selling a property. It's OK to discuss this possibility with your renter directly, but if they're interested in purchasing, you'll need to deal with a real estate attorney. These transactions can take place in a variety of ways:

• A lease-to-own with a one-time, non-refundable option fee that gives tenants the opportunity to buy the house at a predetermined price within a year. Meanwhile, they continue to pay their rent.
• A lease-to-own deal in which a portion of the rent is used to a down payment.
• A contract between a buyer and a lender. Instead of a bank, you, as the property owner, act as the lender. The renter agrees to pay you over a period of several years, usually with a single balloon payment. The money you'll make in interest on the debt is the largest benefit for the seller. To take advantage of this sort of sale, you must own the property outright and without a debt.