Selling a Home with a Tenant

Emergency Real Estate Flotation Device

Selling a tenant occupied home … how do I put this delicately … kind of sucks. That’s right, selling a home with a tenant sucks.

Why, you ask?

Because there is little to no motivation on the part of the occupant to participate in the process. Think about it. With zero financial stake in the sale of a property, why would anyone care to have their daily lives disturbed by pushy Real Estate agents and their snooping clients? As such, tenants tend to make home showings more difficult than owner occupants.

You want to show the home in an hour? No, today is impossible.

Tomorrow? No, tomorrow doesn’t look real good either.

Given that a landlord or an agent of the landlord cannot legally enter the premises in cases of non-emergency without permission or 48 hours written notice (under the AZ Landlord-Tenant Act), it is not uncommon to come across such tenant-occupied listings that require 2 days minimum notice prior to showings. These constraints cost owners more than a few showings, particularly those of the spur of the moment, I’m in town to buy a house today variety.

In a market choked with inventory, especially in the lower price points where rental properties typically live, few will bother looking at the homes that are difficult to view. There are simply too many readily accessible options to make special plans to see one nondescript investment property.

So how does the owner of such a home counter the tenant malaise that is killing his/her ability to sell prior to the expiration of the lease (inviting the holding costs and desperate pricing decisions that can accompany a vacancy)? By incentivizing the tenant to participate in the process.

It frankly amazes me that tenant-occupied properties are often so difficult to show when the remedy is so readily apparent: money.

Offer your tenant a discounted rate on the rent or nominal alternative compensation ($500 is a lot of money for the average tenant) if the home sells while they occupy it. By doing so, you will not only encourage your tenant to eagerly agree to the showings that were formerly abhorred, but will provide the requisite motivation for showing the home in its best condition as well. Get the tenant on your side by offering a stake in the outcome and watch the beds make themselves, the dirty socks disappear from the living room floor, the food-caked plates on the kitchen counter find their way into the dishwasher.

When you empower the powerless, everyone benefits. From the only perspective that matters in a Real Estate transaction – yours – that means minimized holding costs and maximized sales price. Cool beans.

Selling a home is not rocket science, just an exercise in the practical study and application of human motivation. For your own sake, you have to step outside of your head every once in a while to learn how to help others help you.

This is your Jerry Maguire moment. Don’t blow it.

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  • Anonymous

    It is a good idea to selling home with a tenant. I think the buyer has double benefits to buy a home with tenant. The buyer first give the price of selling home and after bought a home he or she get the monthly rent from the Tenant.

    omaha houses

  • Provided the buyer is purchasing the home as investment rather than a primary residence, of course.

  • GMAC Mortgage

    It’s a good idea. However, I think in some cases the tenant may hold resentment that they need to move, which can be very stressful. $500 may not be enough to make up for having to move if the tenant wants to stay in the house.

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Paul Slaybaugh is here to sell houses and chew bubble gum. He's all out of bubble gum. More About Me >>>

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