Best Practices for Selling Renter-Occupied Homes

Selling a property that’s occupied by tenants can present some challenges, specifically when it comes to coordinating showings and encouraging renters to keep the home looking presentable to buyers. Here are some tips that will help agents and their sellers successfully navigate the process.

Sell the Home When It’s Vacant

If this option is available to the seller, your best bet is to hold off on listing the property until the tenants’ lease is up and they have moved out. This gives the seller flexibility in staging the home and showing the property. However, it is important to help your client evaluate average days on market in the region and give him or her an idea of how long they’ll have to go without rental income.

If the renters are on a month-to-month lease, follow your state laws about providing proper notice to end the tenancy. Most states require you to give a renter between 30 and 60 days in a notice to vacate without cause. But if the renters are on a fixed-term lease, that lease does not simply go away just because an owner decides to sell the property. Your seller will need to honor the rental contract unless the owner and renter can come to a mutual agreement to end the lease early, if state law allows it. One option would be to offer the tenant a move-out settlement, which could include the rental rate times the number of months left on the lease, moving stipends, or a deposit and first month’s rent on another rental. But your client cannot pressure tenants to accept such an offer.

Sell the Home While It’s Occupied

Your seller may not want to wait for a lease to expire or lose rental income by keeping the property vacant while it’s on the market. In such cases, the agent will need to approach the selling process with the renters living in the property.

It will be the agent’s job to coordinate with the property manager or the owner (if the seller self-manages the property), as they will be the ones communicating with the renters. Open and active communication will go a long way in making this a smooth process.

Remind the seller that they need to have a conversation with their renters about the selling process and encourage the renters’ cooperation. Additionally, they should check the lease agreement for any clauses that relate to a renter’s cooperation during showings. Not all leases include this language, but it will be helpful if it does.

Showing a Renter-Occupied Home

Homes can remain on the market longer than necessary if the condition of the property is less than ideal, so work with renters to keep it in pristine condition. This can be tricky, especially if the renter wants to avoid a costly move and, therefore, doesn’t want the home to sell. Again, keeping an open dialogue and regular communication can help to smooth over these conflicts.

Follow State Laws and the Lease

State laws will dictate how much advance notice you will need to give renters before you can enter the property for a showing, inspection, staging, taking pictures, maintenance, or repairs. Most states require a 24-hour notice to enter a property for a nonemergency issue.

Understandably, the renters might feel frustrated at the lack of privacy. Try to empathize with them about the inconvenience a home sale might be on their lives. A great way to encourage tenants to accommodate showings is to offer incentives. The seller can offer a renter the following options to make the sale process easier on them, though it will cost the seller some money.

• Rent discounts: This is an excellent monetary reward for helping an owner sell a rental property. Renters would receive a reduced rate as compensation for the inconvenience brought on while the property is on the market.
• A weekly or biweekly cleaning service: This will keep the house show-ready and encourage the tenants to keep the place tidy. It may even help tenants get their security deposit back.
• Restaurant gift certificates or movie tickets: Get tenants out of the house during showings by offering to pay for fun activities.
• A hotel room during an open house weekend: Tenants will appreciate a nice place to stay for the whole weekend to make up for the inconvenience.

Taking steps to include tenants in the selling process will be beneficial for a smooth property sale. Make sure the seller understands the importance of communicating with their renters so that the process is easier for everyone involved.