Brenda Kellen: Selling a house with a renter
September 19, 2008
Q. Can I sell my investment property if I have a renter living there? What about the lease?
A. Yes, you can sell with a renter in place. A few small concessions will likely allow the experience for both landlord and renter to flow more smoothly. Understand the renter might not really want to the property to sell, it is their home. Nobody likes the unsettling feeling of possible homelessness.
Find out first and foremost if the renter might be a possible buyer candidate for the property and if there is interest, work to get the renter pre-qualified for a loan as soon as possible.
Offer a discount on rent or utilities to thank the renter for accommodating realtors and buyers during showings. Clearly convey your expectations as to the condition of the property during the listing period. Provide the renters contact information to the realtor for showing alerts. Be sensitive and understanding of the renter’s frustration with the listing of the property.
Review the lease carefully to be clear on the consequences for the renter in the event of a sale. If the lease does not specifically address the possibility of a sale during the rental period with a well-defined move-out clause, the lease terms will supersede the sale terms. If a renter has a signed long-term lease with no move-out clause, the new owner is subject to honoring the terms of this lease. For example, lease term is July 2008 – June 30, 2009. The new owner cannot take possession of the property until the terms of the lease have been fulfilled.
For an investor, this may be a positive selling aspect. If the renter is in good standing and the amount of the monthly rent is acceptable, the investor may be thrilled to save the trouble of finding a suitable renter. For a buyer hoping to live in the property, a standing lease may not be a good fit.
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A move-out clause will state the timeframe for when the renter will be required to vacate the property if a sale occurs. The rub for a seller is getting a sales contract, giving move-out notice to the renter who will immediately begin searching for a new home and then the buyers contract to purchase falls through. Now the seller is left with a vacant investment property and no sale. Sometimes a seller will negotiate up-front on the sales contract to offer possession 31 days after closing.
For more insight into the current real estate market, please contact me directly at (970) 485.1115, visit my website at http://www.gokremmling.com, or e-mail me at email@example.com. I have been selling with Omni Real Estate for over 10 years and help buyers and sellers in both Grand and Summit County.