Buying or selling a property often comes with different challenges. One of the common situations that many property owners have had to contend with is how to handle the sale of their property while it is still tenanted.
On the other hand is the realisation that most purchasers prefer properties that are vacant or untenanted. This preference among buyers is due to the unfortunate experiences of some property purchasers who found it difficult to take possession of their property for a while due to the resistance that they faced from some stubborn tenants. This is an issue that you must deal with either as a buyer or as a seller.
There are pros and cons to selling a property while it is tenanted. Selling a property takes time and you can never tell how soon or how long it could take. If you decide to evict your tenants in preparation for a sale, you are going to lose rental income during the waiting period.
On the other hand, having tenants in a property that you want to sell could present you with some challenges that could scuttle your intention to sell the property. Some tenants are hostile in such situation due to the additional costs that they know they will incur as well as time in securing another property, removal cost, and fees. In some instances, some of these tenants are in arears of rent or already in court as a result of their non-cooperation with the property owner.
The process of selling a property also puts additional pressure on the tenant. The agents who are marketing the property for sale are likely to place a signage in front or on the property. There are several strangers that the tenant will be asked to allow to inspect the property. During this period, the tenant’s privacy will be briefly infringed upon. This will also put more pressure on the tenant to look for an alternative accommodation whilst considering the appropriate schools and other conveniences for the family.
In order to make the process smooth it is best to start by notifying your tenants of your intention to sell the property personally. Respect, it is said, is a two-way street. This is far better than the approach of keeping the sale a secret from the tenants or taking them by surprise. It is okay to offer them the property if they can pay for it. I believe that most sellers will not mind selling to their tenant if they get a good deal. If the existing tenants cannot afford it, they will appreciate the gesture and will be more co-operative with the process. This is also a good time to inform them that you or your agent will inform them ahead of property inspection times.
There are several incentives that you can give to your tenants that will enable them to be more supportive of the process. If they are on a fixed term tenancy, you can inform them that you are open to an early release or termination of the agreement. If they have paid in advance for the term you can give them a proposal for reimbursement of rents paid. If they are already searching for another property, you can provide them with a good reference letter which could help in getting them another accommodation.
Whatever the situation, ensure that you follow the law. It might be a good idea to give the tenants notice to quit depending on the length of time and the mood of the market. You will need to discuss this option with your lawyer. The fact that you have commenced the process of getting them out of the property could be an attraction to the buyer.
This saves you time if any of the tenants decides to be difficult. It also helps if you are upfront with the buyer by providing him or her with the details of rent payments and the tenants. He could decide to retain them and sign a new lease or rental agreement with them.