Should I sell my tenant occupied home? This is a question many landlords ask themselves when their home is rented. While selling a tenant occupied home might be the right decision for some landlords it could be the wrong decision for others. If you are a landlord unsure if you should sell your tenant occupied home this article will help you determine what the right decision is for you.
What are the PROs to Selling a Tenant Occupied Home?
Appealing to Investors
An income producing property can be very appealing to investors especially if there is a great tenant in place who wants to stay and is paying market value for rent.
Even if a landlord doesn’t have a mortgage on the property there will still be expenses, like property taxes and homeowners insurance. So a huge plus to selling a tenant occupied home verses a vacant home is it’s generating income that can be applied to the properties monthly overhead.
Statistics show occupied homes can deter thieves and can also decrease the chances of vandalism, so a tenant occupied home verses a vacant home is another benefit.
Unlike a vacant home where the landlord has to cover the utilities or decides to have them turned off, which is a huge negative when selling, the tenant will most likely be covering all of these expenses.
What are the CONs to Selling a Tenant Occupied Home?
Difficult to show
A majority of tenants do not want strangers walking through the home they’re renting, so they may make viewing the home impossible and put unrealistic restrictions on showings. Some of these restrictions might include a 24-hour notice, not allowing a lockbox or limit the days and times the home can be shown.
Not Show Ready
Unless a tenant always keeps their home immaculate odds are they will not jump through any hoops to make the home show ready. In fact, some may intentionally not clean to deter prospective buyers.
Since the property is tenant occupied there will most likely be a lease in place, which means the property cannot be sold until the lease ends and the time frame of when this will occur may not work for all buyers.
Unlike an owner-occupied property where a buyer is confident the seller will vacate the property as agreed to that isn’t always the case when a home is tenant occupied. Depending on the situation in some cases buyers are concerned the tenant won’t vacate the property prior to closing, some are also concerned about the condition the property will be in and whether or not the tenants will take items that belong to the property.
Some tenants love to talk if they’re home for showings and depending on what they say can greatly impact the sale. A few might point out every single thing wrong with the property while others might say whatever they can to deter buyers even if it’s false information.
Deciding whether or not to sell a tenant occupied property is a big decision and the wrong decision can be extremely costly to the seller’s bottom line. I’ve listed and sold countless tenant occupied properties throughout my career and unless the circumstances are right it’s almost a guarantee the seller will lose money. My recommendation to any landlord who’s considering selling their tenant occupied home is to sit down with a top Realtor, discuss all of these pros and cons and how they will affect them, positively or negatively.
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— Michelle Gibson (@WellingtonHomez) January 23, 2018
Additional Selling Resources
- 24 Hour Notice will Make your Home Harder to Sell by Bill Gassett
- The 6 Most Common Home Selling Mistakes to Avoid by Maria Mastrolonardo
- Tips for Selling a Home with Tenants by Kyle Hiscock
- Sellers be Prepared to Close on Time by Kevin Vitali
- Pros and Cons to Using a Lockbox when Selling a Home by Sharon Paxson