Selling A House With Tenants In California
Selling a house under normal conditions in any real estate market is difficult enough. Everything that you add to the equation just complicates the process and narrows the potential universe of buyers even further.
When you consider that most homes being sold in today’s market are occupied by the owner, most buyers are accustomed to walking into house with someone else’s furnishings in place. It is no big deal… it is presumed that they have a vested interest in cooperating with any potential buyers or buyer’s agent to make sure that the house is presentable and ultimately sold.
It only stands to reason that when the occupant is not the owner, but a tenant that has a legal right to be there, the list of potential buyers is going to shrink considerably. Most people wanting to buy a house are not investors looking to buy a rental property. Even seasoned real estate investors or cash home buyers would prefer to have their own hand selected tenants occupying a house rather than inheriting them from the previous owner.
It is important to keep in mind that there are only so many buyers in any market and the things that you can do to turn them off are pretty much unlimited. Last week’s yard clippings on the side of the house, the color or condition of the front door, the carpet or flooring, the lack of updating in the kitchen or bath, or even the way that the furniture is arranged can send a Buyer packing to the next house.
The last thing you want is an angry tenant to greet any potential buyers. They can sabotage a sale before it even begins. Ask any real estate agent about the pitfalls of showing a house with renters in place. They are not the best sales people and in fact have no vested interest in seeing what they consider to be their home to be sold.
But if you are intent on selling your occupied rental property, make sure you do everything by the book and give the tenants at least 24 hour notice if you need to show the house. As ridiculous as it may seem, you may have to offer them a cash incentive for cleaning up and leaving the property presentable prior to a showing.
Do My Tenants Have To Co-Operate When I Sell?
It is not up to the tenants who you sell to, but they have more of a say than you think.
First impressions are important and while you can sell your property to anyone that you choose, keep in mind, that your tenants don’t need to help you in that process. Also keep in mind that the lease agreement will remain intact as well. A lease is a contract and cannot be breached just because you’re looking to sell. Tenants will have to be given at least a 24 hour notice before someone enters the property and tenants must give reasonable access to the property, but tenants don’t need to be nice and/or cooperative.
What if I don’t have a written lease agreement?
If you don’t have a written lease agreement, it is assumed that the lease is month to month. If this is the case, you’re required to give at least a 30 day notice to vacate if you want your tenants gone before you sell or close. If the tenants have been occupying the property for more than 1 year, this notice may increase to 120 days depending on the jurisdiction. Check with the local courts that handle evictions otherwise known as “Unlawful Detainers” if you’re not sure.
How to get Tenants To Cooperate When Selling A House
Selling a house with long term lease and tenants is a negative and will affect the property value.
Existing Tenants are going to be viewed as “in the way” or a liability by the buyer. Convincing someone else to purchase your problem is harder that you might think. It’s not just all of the negative things they could tell a potential buyer if they are inconvenienced about having to show the place. It’s about the disruption to their life and to the sales process that rarely has room for a third party intervening.
Even good tenants pose a problem for most potential buyers as you can be certain that they will in some manner affect any negotiated sales price. Also note that 99% of the interested buyers will not want to take possession of a house or close escrow with tenant still in the house. I have first-hand experience in both buying and selling a house while going through an eviction and it is both costly and time consuming.
One last thing to remember, tenants are notorious for unpredictable exit scenes and can cause a lot of damage. It is better to give someone an incentive to behave than take the risk and just let the destruction occur. In the case of evicting a tenant create a positive exit strategy that gives them cash for keys as an alternative to eviction.
How to Sell A House With Tenants In California
The best way to sell your house with a tenant is to try to get the tenant on YOUR side. There are a number of ways to do this.
- Ask them how you can make the process easier.
- Make sure to give tenants at least 24 hour notice.
- If a buyer wants the property delivered vacant, offer moving compensation to the tenants.
- Offer some type of bonus or cash for good behavior for leaving the house in great shape. (Half off rent, $100 gift card)
- If the tenant is really stubborn, offer them cash to leave the property.
- Ask them what times they are able to show the place.
- Offer to compensate tenant every time there is a scheduled showing, and let them know you will pay once the property is sold.
Good Tenants or Bad Tenants… Not dealing with them right away will cost you a lot of money. Be honest with them about your intentions and build a contingency plan if they become uncooperative.
Hire a Real Estate Agent or Sell to a Cash Home Buyer in California?
If you hire a real estate agent dont expect a lot of open houses or a lot of results. Real Estate Agents spend all of their marketing dollars in attracting buyers of single family homes to live in. The savvy real estate agent is going to take your listing and shop it to the We Buy Houses Company’s like mine and you are going to pay the 6% commission.
You can avoid that commission and the paperwork associated with a real estate agent and well as the closing cost by calling a cash house buyer yourself. Not only will you save on the commission but you will save the closing cost as well.
Time is money, and the faster you get the house under contract with a buyer and sold, the sooner you can get on with your life.
My name is Peter Westbrook and I am a cash home buyer in Sacramento, Stockton, Modesto and Manteca CA. I am the owner of Westbrook REI and I have been in the real estate investment business for for many years.
If you need to sell your house in California (that has tenants) and are looking for an offer … Fill in the quick form below or call us at (209)481-7780 or visit our website and we’ll deal with the existing tenants for you! If necessary we’ll honor the existing lease, offer a cash incentive for them to move or start the eviction process.
We have years of experience and we are here to help.