How Do You Sell a Rental with a Tenant Living In It?
My name is Brianna Griffis, and I’m thinking of selling my mother’s house which I’ve owned and rented out for almost 10 years as I have some financial problems with another rental property and I need the money. My problem is that my real estate agent, a good friend of mine, says it’s almost impossible in today’s rental market to sell a house with tenant in it and suggests that I not renew the tenant’s lease when it comes up next month. She’s a great tenant, though, and I hate to lose the income since it could take months to sell. What should I do?
Brianna Griffis, Olympia, WA
Hi Brianna,
Does the tenant know you’re selling? You’re obligated to tell her one way or the other what you’re planning. If she’s willing, you can always renew on a month-to-month basis. That way, a buyer would only have to give 30 days notice. This could even be done once you go to contract, so buyer could move in shortly after closing. Alternatively, you can renew her lease but add a clause stating that if the house is sold the remainder of the lease term is negated once 30 days notice is given.
But I suspect this isn’t the real issue. I think your agent would simply prefer the house be vacant before trying to sell it. There’s a reason for this, as real estate agents know that tenants can make a house harder to sell as (1) they don’t take care of it the way an owner would, so it usually doesn’t show well; and (2) they have no incentive to make it easy to show, since a sale means they’re going to have to find another place to live (and quickly too, 30 days isn’t much time). Still, that being said, I’ve shown plenty of properties with renters in place and it’s usually not a problem. It often comes down to whether your tenant is a nice person or not! If like you say she’s been a good tenant, you might offer her a relocation allowance of a thousand dollars or more if and when the house sells. This might create the incentive you need to motivate her to make sure it shows well, and in the meantime you don’t risk losing several months worth of rent while waiting for a buyer. In fact, houses show best when a caring and neat person or family is still living in it, so this would actually encourage a sale and might in the end get you a higher sale price than if it showed vacant.
