I Have Renters. How Do I Sell My Home?

I Have Renters. How Do I Sell My Home? (Source: Pexels.com - used as royalty free image)

There are any number of reasons why a landlord may want to sell her property. Maybe she’s moving across the country and doesn’t want to be responsible for a property long distance, or maybe she’s simply losing money and wants to cut her losses and get out of the landlord business. In many cases here in Chicago, the landlord is simply someone who rented out their house until the market was right to sell, looking to make some passive income until the time came. With markets stabilizing across the country, that time may be now. 

Whatever the reason, if you’re a landlord looking to sell with tenants still occupying the property, things can get tricky from both a legal and logistical standpoint.

If you’re trying to sell your rental property, you more or less have three options, each dependent on your unique circumstances and your tenants. Let’s look at each choice in some depth:

1.) Try to Sell the Home to Your Renter

If you have a fairly positive relationship with your long-time renter and they’re in good financial standing, it makes sense to offer them the first chance to buy the property (if not necessarily the legal right of first refusal).

Within this scenario, you and your tenants have two options: You can let them find financing on their own, or you could offer what’s known as a seller-financing agreement, in which you (with the approval of your mortgage lender) act as the lender and let your tenants make payments to you on a short-term basis in order to buy the property. In either case, we strongly encourage seeking professional advice from your qualified real estate team. Without guidance, this "For Sale By Owner" situation could easily become bogged down by contracts, appraisals, and disclosure - all of which are much easier to navigate with an experienced real estate team by your side. 

2.) Wait Until Your Tenant’s Lease Expires

By law, a tenant with a fixed lease must be allowed to see out the extent of that lease, whether the property is owned by you or someone else. To avoid any legal complications – or any of the hassles that come with trying to sell a home occupied by someone else – it may make sense to hold back on the sale until your tenant’s lease runs out. Some landlords, however, may not be able to afford having an empty home for that long.

If you want to stage and sell an empty house but refuse to wait for a lease to expire, you can try to pay your tenants to end the lease early by negotiating a “cash-for-keys” settlement; in this situation, you may offer to pay for moving costs, pay your tenant’s security deposit, or buy out the rest of their months on the lease.

It helps to prepare for any eventuality early on. If you anticipate moving while having tenants, you may consider adding a reasonable early termination clause in the lease, or rent out the property on a month-to-month basis (which will generally allow you to end the lease with only 30 days’ advance notice).

3.) Sell With an Active Tenant

If you can’t afford to wait until your tenant’s lease expires, you can sell the home with them still occupying it.

It can be tricky to sell and stage a home in a normal ownership situation; the stress of selling is only exacerbated when your house is occupied by another family entirely. For that reason, it’s extremely important to be respectful and communicative with your tenants, and consider offering them incentives to help the sale go more smoothly.

Sit down and explain your desire to sell early in the process. After all, what could sour your tenants to a sale more than discovering it in the classifieds? Be open with your tenants and lay out clear expectations. For instance, offer to give 24 hours (or more) notice before showing the house, and help make them feel safe by promising to only show the home with a real estate agent present.

To sweeten the tenant on the sale even more, offer rewards for keeping the house clean, organized, and ready to sell: Offer discounts on rent for the months that the house is on sale, give away gift cards to restaurants, or even offer to put your tenants up in a hotel for a weekend full of showings or an open house.

Above all, remember that the house you’re trying to sell is a home to your tenants, full of their memories and belongings. Treat them as active participants in the sale, rather than as a nuisance, and they’re more likely to cooperate – or even try to help the sale along.

Have any more questions? Looking for a real estate team skilled in negotiating all sorts of tricky sales? Why not give Real Group a call? Drop us a line when you’re ready to get your sale started!

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