The strong sellers’ market of these past years has prompted homeowners across the country to consider listing their homes or investment properties for sale. But what happens to owners who want to sell their rental properties currently occupied by tenants? Can they still sell and take advantage of the rising home values if they have what is called, “tenants in place?”
“Absolutely,” says Vici Prodromitis Broker/Manager, Coldwell Banker Realty. “By understanding and following a few tips, landlords can maximize their profit in almost any strong market. New Jersey is no different.”
Understand your rights and responsibilities. The kind of lease you hold will determine if you can simply give notice to the occupying tenants or if the new owners will buy the home with a lease in place. (Only month-to-month leases can be terminated unilaterally with proper notice.)
Disclose the lease terms to any buyer. When you have tenants, who will remain in the home after the close due to their lease, the new owner will be legally obligated to abide by the lease. In a strong market, you may find a buyer willing to wait for the expiration of the lease, even if they intend to occupy the home.
Meet with the tenants and discuss the situation. Explain your reasons for selling and assure them that you want to make the selling situation as easy as possible.
Says Prodromitis, “If you own a rental property, working with your current tenants upfront during any potential sales transaction usually makes for a better experience for all involved parties.”
A good practice is to offer to sell the home to renters first, then discuss any future plans they may have. If they can’t or don’t want to buy the property, you may be able to offer them money to move.
Prodromitis adds, “Your goal needs to be to have the cooperation of your tenants so they will help you sell by allowing buyers in for showings. You also want to have goodwill to inspire them to maintain the property, so it is presentable for the marketplace.”
Selling with tenants in place doesn’t have to be difficult. Do your homework, understand your obligations and be transparent with the renters and potential buyers. This way, you make it easy on all parties and can reap the reward of high home values.
