3 Reasons Not to List a Tenant-Occupied Home for Sale

In a perfect world, a landlord will be able to list their tenant-occupied home for sale and sell it for top dollar. However, the reality of that happening is very rare. In fact, listing a tenant-occupied home for sale can ultimately cost a seller more money than the tenant pays in rent. So if you are contemplating selling a house with tenants in place you’ll want to consider these three things before doing so.

1. Access

One of the biggest obstacles in trying to sell a tenant-occupied home is gaining access to the property. A majority of tenants do not want complete strangers walking through “their” homes. After all, they have no skin in the game, they do not benefit or profit from the home sale.

So landlords need to determine how difficult it will be to show a tenant-occupied home. Does the tenant have to be home for all showings? Will the tenant require 24-48 hour advanced notice to schedule an appointment? Does the tenant want to move?

Oftentimes, if a tenant does not want to move they will not cooperate with showings. On the off chance they do cooperate, they’ll do their best to sabotage the sale. This may include the tenant being home for every showing and making sure to point out everything wrong with the property. Whether it’s something small, like a broken light switch, or something larger, like a roof leak they’ll definitely point it out to all prospective homebuyers. Showing a house with tenants in place can be tricky and next to impossible.

2. Condition

In order to sell a home for top dollar in the shortest amount of time it’s imperative the property is “show ready” when listed for sale. A home seller only gets one opportunity to make a good first impression with the buyer and if the property doesn’t show well it can cost them interested buyers and money.

So there are a lot of things to consider. How does the property show? Are the tenant’s hoarders? Does the home smell like pets? Is it clean? Do repairs need to be made to the property?

While a home could have been immaculate and in perfect condition when the tenants moved in doesn’t mean it’s still in that same condition. Not all tenants are tidy, so they could routinely leave dishes stacked in the sink, garbage overflowing in the trash bin, and pet feces on the ground, both inside and out.

When a tenant doesn’t take care of the property it’s a red flag for most prospective buyers. They start to wonder what condition the property will be in when the tenant moves out. Will they take things with them that are supposed to stay with the property, like the washer and dryer? Once again tenants don’t have skin in the game, so the condition of the property when they vacate isn’t always a top priority. Sure they want their security deposit back but if they already know they won’t be getting it back due to the condition they probably won’t care how the property looks when they leave.

So before a landlord decides to list a tenant-occupied home they or their Realtor need to meet with the tenant, discuss showings and walk through the property to see the condition. If the home doesn’t show like a model or there is a sense the tenant isn’t going to be cooperative it may be best to wait until the tenant moves out prior to listing it for sale.

3. Availability

Another thing to consider when listing a tenant-occupied home is when the lease is up and the property will be vacant. While a home can be sold with a tenant in place, the new owner will have to take the lease over, unless otherwise agreed to in writing. So for those wondering “can landlord evict tenant if sell the property?” the answer is usually no. In most states, the new owner will have to honor and fulfill the current lease.

If the tenant’s lease doesn’t end for several months the buyer pool may be narrowed down to investors, who are always looking for a great deal. Someone who plans on buying the property to rent it out themselves. In that instance, the new owner may be willing to keep the current tenant in place if they want to stay. However, not many buyers who plan on moving into the property are going to purchase it with the tenant in place or wait an extended amount of time until the lease is up.

Now, if the lease is up in a month or 2 it probably won’t deter too many buyers. With that being said at that point it might be best to list the property for sale after the tenant moves out. This way repairs can be made, the home will show in its best light and it’ll be easy to show with zero restrictions.

Final Thoughts

Selling a home with kids, tenants, or pets can be challenging. It’s highly unlikely a tenant is going to jump through hoops to sell someone else’s home.

In my experience, tenants don’t care if they lose a showing or if the house isn’t cleaned for a scheduled appointment and if they don’t want to move they may intentionally sabotage the sale. These same considerations apply to listing a home for rent as well. Listing a home for sale or rent with a tenant in place can complicate things and ultimately cost the owner time and money.

While not all landlords can wait for the tenants to move out before they list their home or can afford to cover the expense of having it vacant but listing the home for sale under less than ideal circumstances could cost more. So before making a decision, it’s important to weigh all of the pros and cons of listing a tenant-occupied home.

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About the Author

Top Wellington Realtor, Michelle Gibson, wrote: “3 Reasons Not to List a Tenant-Occupied Home for Sale”

Michelle has been specializing in residential real estate since 2001 throughout Wellington Florida and the surrounding area. Whether you’re looking to buy, sell or rent she will guide you through the entire real estate transaction. If you’re ready to put Michelle’s knowledge and expertise to work for you call or e-mail her today.

Areas of service include Wellington, Lake Worth, Royal Palm Beach, Boynton Beach, West Palm Beach, Loxahatchee, Greenacres, and more.

3 Reasons Not to List a Tenant-Occupied Home for Sale