Is selling a house with tenants even a possibility in Seattle, WA?
The good news is: Yes!
Houses and apartments with tenants in them sell all the time. But it’s not as straightforward as selling an unoccupied house or owner occupied house.
If you have a lease in place with your tenants (whether implied or written), whether it’s month-to-month or a long-term lease, you still have to respect the tenant’s rights.
Typically this means working out some sort of agreement with the tenant about how potential buyers will gain access to the house for showings.
It can be complicated, and that’s why we’ve written this guide to selling your house with tenants in place. Let’s see how we at HomeProAssociates.com can help you sell your Shoreline, WA house with tenants in place – without ruffling any feathers.
Can You Sell Your House With Tenants?
Selling a house with tenants has gotten really tricky in the Seattle area, especially during COVID when tenants were granted even MORE rights than usual, because of the emergency situation.
But, yes, you CAN sell your house in Seattle, WA with tenants. In fact, selling the house was one of the few available ways for landlords to dispose of property with tenants who weren’t paying during the worst of the lockdown years (when financial evictions weren’t possible).
Here are some questions to ask yourself about how you want to proceed, and a lot will depend on the relationship you have with your tenant and the terms of the written lease you (hopefully!) have in place.
Questions To Ask Before You Decide To List & Sell Your Rental House With Tenants Still Living In It
- Do you want to let the tenants stay in the house after it is sold (e.g. the new buyer becomes a landlord) or do you want the possibility for the new buyer to move into the property when the tenants will have vacated?
- Are you going to let your tenants know that the house is for sale, or only tell them after the fact? (e.g. Surprise Them?)
- Are your tenants in a position to purchase a property from you and keep living in it as home owners? This can be an ideal solution if your tenants have the desire and financial strength to pull it off. It may be worth employing a real estate agent to help you with the paperwork and negotiations with the tenants to make it happen.
Click here for more information about why Investors Should Consider Selling With A Real Estate Agent.
Click here for more information on Selling Your House As-Is.
You May Get More Money From The Sale If The Tenants Move Out First
If you want to keep the tenants in because you really like them, or just don’t want the hassle of evicting them and cleaning up the place, recognize that there may be a trade off regarding the profits you make from the sale.
Personally, I have owned over a dozen rental properties and sold many of them. However, in most cases, when I know I am putting the property up for sale, I almost always vacate the tenants first. This is usually the best way to open up the house to the broadest number of buyers and get top dollar for your home for sale.
Think about it – real estate investors who will be the ones most likely to consider buying a fully leased property – are the type of people who want a “deal” and that means they will negotiate harder with you on the condition of the home and the price and terms of the sale.
In addition, the tenants can be an unknown factor – a wildcard – and the buyer may wonder how responsible they are when it comes to paying rent on time and taking care of the property.
Third – usually we don’t renovate property when tenants are occupying it, and truthfully, some landlords let things get a little run down. The property may not look good and show well with a tenant in place. (Not to mention, if you have a messy tenant that won’t help; and if your tenant is cross about showing the unit, that won’t help either.)
What Are The Logistics of Selling Your House With Tenants In Place?
If you’ve decided to sell the property with tenants in place, here’s what you need to get figured out:
- Are you going to give the tenants a notice to vacate? This is usually easiest if their lease is coming to an end, or if they are on a month-to-month lease. Read your lease to see what the boilerplate language says about how you can terminate the lease outside the normal bounds, especially in the case of sale.
- Consider who you would like to sell the house to – an owner-occupant or a landlord – and talk with your realtor about how to market and position the house accordingly.
- Work on any fix-up and repairs that you can to make sure the house is looking its best, even if you do plan to sell with the tenants in place.
You can have a home inspection to find out what needs to be done. Many landlords do this annually anyway. Then get after that punch-list. Landscaping is another area where you can make improvements without significantly impinging on the tenants experience.
Your best course, then, is to work closely with a premier agent like Emily Cressey at HomePro Associates from the beginning of the process. To discover more about this, just call (206) 578-3438.
What To Say To Your Tenants Before Listing & Selling The Home They Rent
Typically if you sell to owner-occupants, you will have a greater pool of potential buyers than if you sell to landlords. However, in some areas there are lots of rental properties, and landlords might welcome the opportunity to acquire a property that is fully leased and making money from day 1.
To sell your house to tenants, you must carefully consider your options for ending the tenancy before taking any drastic steps.
- Is the tenant a month-to-month tenant?
If so, you are well situated. Just end the tenancy in accordance with state law and then sell the house.
- Does the tenant have a long-term lease?
In this case, you’ll have a tougher time ending the tenancy. Your best option here will likely be to try to negotiate with the tenant. A common tactic involves offering the tenancy a sum of money in return for modifying the lease to allow for an earlier move-out.
But negotiating an early move-out does carry some risk. “If the tenant ignores the renegotiated terms and remains in the property beyond the closing, the new owner can be put in the situation of having to evict the tenant. I have been through an eviction of my tenants and taken them to small claims court before to get them out. Seattle doesn’t make it easy. If you have negotiated with the new buyer that he will have possession on a certain date (free of tenants) and you are not able to make this happen, he could have the right to take legal action against you, so be careful.
So it may be best just to wait until the lease is up before selling your house. In any case, to avoid legal ramifications, you should consult an experienced Seattle real estate agent at (206) 578-3438.
How To Market Your Home For Sale When It Has Tenants In It
If you decide to move forward and sell your house with tenants in it, you’ll need to consider your marketing strategy, and how you’ll sell the house with the tenants in place.
Listing The Home On The MLS
Most properties for sale with tenants are listed on the NWMLS, just like any other property, but with a few caveats given the rental situation.
Typically the real estate agent must disclose that there is a tenant living in the property and the sale will take place without infringing on the tenants’ rights. Often the tenant’s phone number will be listed in a field called “Phone To Show” and the tenant will get a text or phone call in advance of when they need to be gone for showings.
Other times, if the house doesn’t show well, or the tenant is disagreeable, the real estate agent will have some interior pictures of the home and list a comment that says the inside of the home can only be seen after mutual acceptance.
Obviously, this is a big disincentive for most “normal” buyers who want to come and see the home in persona, and “fall in love with it” before they make an offer. Usually it’s not a big deal for landlords though, who are more interested in the numbers. That’s why it’s important to know your target market before deciding on your marketing strategy.
Keeping The Home Sale A Secret From Tenants
If you are not informing your tenants of the sale, the listing may include remarks like “drive by only, do not disturb tenant.” or “No sign in yard – tenant is not aware of sale.”
Be aware, however, some neighbors love looking at neighborhood real estate activity. They may see the home is listed and chat with your tenants about it. That can be an unsettling surprise, so consider how to walk the line between “keeping it a secret” and bringing the tenants into the conversation.
Show Off The Home In Its Best Light
The more marketing collateral you can collect for the property – such as great professional photos, an interior video tour, or a 3-D Matterport schematic and interactive model, the more buyers will feel confident and clear in what the house has to offer, even if they cannot personally view the interior. You can collaborate with your realtor and/or a professional photographer to make sure these materials are collected with the minimum amount of intrusion for your tenant.
Tricks For Showing The Property With Tenants In Place
Make showings as easy on the tenant as possible. “Let the agent marketing the property know that the tenant needs at least 24 hours notice for showings (or whatever time is specified in the lease for entry).” Also, “[l]et the agent know if there are times that the property cannot be shown due to the tenant’s schedule.”
Ask the tenant to leave during showings. “No buyer, investor or otherwise, likes to be followed around by a resident – especially one who may be grumpy about the impending move. The buyer should be able to view the property freely.” One thing you could do to make the tenant more amenable to this is to “offer the tenant a gift card to a nearby coffee shop to use while the property is being shown.”
Keep the property in good condition, and make it easy for the tenant to do so. “Offer to hire a cleaning or yard service for the time when the property is on the market. Since a tenant doesn’t have a stake in the sale of the property (and may even be in the process of moving out), it’s important that you, the seller, take some responsibility for keeping the property in show-worthy condition.”
Make sure the tenant is current with rent payments. “If the tenant is staying on and is behind in rent, it’s time to take action. A delinquent tenant is not a good selling point. One option may be to forgive the delinquency in exchange for the tenant moving out. If the tenant cannot pay rent, court action and eviction are also an option.”
The main thing to remember here is that an unhappy tenant can break a sale, especially if they prevent showings or decide to stop cleaning.
No Properties Yet, But Thinking About Becoming A Landlord?
Real estate investing is not an easy occupation. I got started 20 years ago, right out of college. There were some ups-and-downs and I learned a lot along the way… especially from my tenants in those early days!
It’s not for the faint of heart, but you learn something with every property and if you’re in the position to weather the storms, it can be a rewarding experience and a powerful wealth-builder over time.
Work With a Good Agent to Market Effectively
If you want to make it easier to sell your house when you have tenants, it’s almost necessary to work with an experienced agent, preferably one who has experience with tenants, landlording and investment properties in Seattle, WA.
A good agent can get your house in front of the right buyers, the target market who will actually be serious about buying a house with tenants. So when you’re ready to sell your house, be sure to contact Emily Cressey at (206) 578-3438 for a custom-tailored marketing plan.
