You’ve made the decision to sell a rental property and the tenants are still living in the home. Now, you need to take the necessary steps to prepare the property for listing and potential buyer viewing. Here’s a guide on how to sell your property with tenants, while you prepare for closing the deal successfully with the new owner.
Step 1 Review the Lease Agreement
Typically, there are two types of rental agreements, each need to be reviewed for any contingencies to selling prior to the expiration date.
- Fixed term lease, usually from 6 – 14 months in length
- Month to month for short term leases
Step 2 Decision to Sell
- As a courtesy to the tenant, as well as your obligation to the lease as the landlord, a notice of intention to sell needs to be given to the tenant.
Step 3 Listing the Property with an Agent
- You need to select a realtor; they can help develop the listing schedule for showing and closing the property to prospective buyers.
Step 4 Marketing the Property
- Obviously, if you intend to sell the property prior to the expiration date in the agreement, there will be consequences. If the tenant’s been great, you may consider offering an incentive for early termination and ask for their assistance in preparing and maintaining the home for the realtor’s open house to other agents and prospective buyers viewing the property.
Step 5 Acknowledgement of Agreement to Sell
- Be sure to get everything in writing for the tenant, which includes all changes or amendments to the original lease agreement. It will avoid any misunderstandings or disputes down the road.
Step 6 Notice of Entry to the Property
- In most rental agreements, its standard practice to notify the tenant prior to entering the property. This is where the tenant’s help comes in handy, ensuring the scheduled showings happen smoothly for the prospective buyers.
Step 7 Showing the Property
- Whether the tenant is vacating or staying, as the landlord, you want to protect the tenant’s private property and ensure the rental property remains in good condition, leaving a satisfactory impression with the prospective buyers.
Step 8 Transfer of New Ownership
- Occasionally prospect buyers are looking for income property with established tenants. So the pre-sale notice to the tenant should include the intended date of sale and any advisement, requests or conditions from the new owner once the sale is finalized.
Step 9 Closing the Deal
- Congratulations, the sale of the property is a success and the final details have been completed. Your past tenant is happy and as the seller, you legally relinquish your rights to the property, transferring all obligations to the new owner.
Bottom-line, before you decide to sell, make sure you know the property laws in the area. Depending on the region and the terms and conditions in the agreement, you should understand your rights and well as the rights of the tenant. It’s always a good idea to speak with a specialist in the area.