Selling rental property with tenants in Baltimore can be tricky. Though some owners wait until the lease ends to sell their rental property, others cannot afford to have their house vacant while it is on the market. Selling the house vacant can be costly but selling it with tenants provides its own logistics headache. When selling your house it is critical that it shows well to give buyers the best impression. Even the best of tenants can be unreliable in keeping your property is show ready condition day in and day out. On top of this you’re relying on your tenants to be accommodating with showings. This demand on your tenants can create unnecessary tension in what should be a positive relationship. The last thing you want when selling your house is an angry tenant meeting potential buyers. Communication and careful planning is a necessity. A happy tenant can be a great asset in the selling of your property.
Here are some tips for selling a rental house with tenants.
- Check your local tenant-landlord rules.
Before starting the selling process you should research the local tenant-landlord rules. These rules can vary from state to state and will tell you what you can and cannot do in regards to selling a house with tenants in your area. A licensed real estate agent can be a great resource or consultant when selling a rental property with tenants.
- Before listing your property, meet with your tenants.
When meeting with your tenants it’s best to do it in person. When discussing your intentions with your tenants always consider their point of view. Approach the conversation as a discussion about their needs and expectations. It is important to show that you understand their situation. Now is not the time to make demands. Be transparent and show that you have their interests in mind. Explain your reasons for selling and have an open to how the sale will affect them and their family.
Speak honest about how this will affect them and their tenancy.
- Is there a lease and when does it expire?
- Do you plan to ask them to move early?
- Are they interested in purchasing the home?
- Will you sell the home with the lease intact?
Keep in mind that you are asking them to adjust their lives in the short term for your benefit. Regardless of how cooperative they are planning to be, this sale will cause significant disruption in their lives. You are asking them to keep their home in perfect condition around the clock. They will need to vacate the property and allow strangers to view the on short notice and at various times of the day and evening. They will need to be intimately involved with the planning of the sale so that they do not feel as though their needs do not matter.
- Set up guidelines for how and when the house will be shown.
Communicate guidelines early for how and when the property will be shown to potential buyers. Don’t be surprised if some tenants may be hostile. They likely do not want to move and see this as a threat. A uncooperative tenant can make the process a lot more difficult, especially when it comes to showing the property. Layout the hours that they house can be shown in writing and have each party sign an agreement. This keeps the expectations clear so that there are no misunderstandings. Whenever possible, be present at the property for showings. This displays to your tenants that you care about their tenancy. It ensures them that you’re doing everything you can to make the process as smooth as possible.
- Provide incentive to get tenants to cooperate.
Money talks. Many tenants feel taken for granted if they’re burdened with the restrictions of the sale process without being compensated. Providing some sort of incentive will encourage your tenants to cooperative. Here are some ideas:
- A fixed amount of payment every time the house is shown.
- An additional financial bonus every time you get feedback about the condition of the property.
- You may offer them 50% off the monthly rent while the property is on the market and they’ve agreed to cooperate.
- Perhaps you align their interests by offering them a percentage of the final sale.
- Go out of your way to make the process as easy for the tenant as possible.
Remember, for the tenant, the property is their home and not a commodity. They know that the sale will likely require them to move and you are requesting that they keep their home clean and vacated during open houses and showings. It is important that they tenants feel as though you’re putting as much effort as possible into selling the house as quickly as possible. If offers are slow then it may be time to go above and beyond to show the tenants your appreciation. You may provide them a gift certificate for dinner during times when the property is being be shown. If you have an equivalent property available for rent you may want to offer them a discount on rent for the first year and pay for their moving costs.
Joann’s Story of Selling her Rental Property
Joann contacted us at the end of June after receiving a postcard from us. She wanted to sell her rental property with tenants on Edwards Rd in the Annapolis, a neighborhood in Anne Arundel County outside of Baltimore. The 4-bedroom, 3-bath split foyer had been rented by the same tenants for years. The renting family was made up of a single mother, her two children, and her mother who had moved in years prior. While they were respectful tenants, they lacked the time, resources, and knowledge to maintain the older single-family home.
Over time the condition of the house began to deteriorate. The wood panel walls were scuffed from children playing, cabinet doors were falling off their hinges, and a mishap with the well water caused a yellow discoloration in the single piece shower found in the master bathroom. While it was located in a great neighborhood, the house no longer showed like the move-in ready house it one was.
The owner, Joann, was getting ready for retirement. While she enjoyed managing her rental it was time for it to be sold so she could move onto the next stage in her life. She cared about her tenants and wanted to make sure the buyer would respect her tenants and make sure they were treated fairly. She could have waited for their lease to expire and sold the property to an owner occupant, but understood the amount of work the home required to become market ready. As a real estate agent with over 30 years experience she knew how difficult, time-consuming, and risky a full scale renovation can be. Unlike those who fall for the HGTV flipping shows, she had first hand experience watching those on the market attempt to renovate houses and walk away with no money in their pockets.
After speaking with Joann on the phone we decided to set an appointment to see the property later that week. After verifying the condition of the property, we made an offer. Joann thought it over, taking into consideration the time and energy she have to invest renovating the house on her own and the costs associated with listing a property. She decided it would be easier and more cost effective to sell to Dependable Homebuyers, a decision that would allow her to retire months early.
The Details of Selling Rental Property with Tenants in Baltimore
Knowing how to sell rental property with tenants in Baltimore, MD is complex. You must follow both the state, county, and city regulations for purchasing tenant occupied properties. You must oblige by the Tenant’s Right of First Refusal rules in Baltimore City. This right of first refusal is mandated by Subtitle 6 of Article 13 of the Baltimore City Code.
Dependable Homebuyers has extensive experience working with homeowners who must provide the tenants with a first right of refusal. Because this series of steps can be intricate, we had our experts, at our cost, handle the entire process. This ensures that everything is completed within code and that the transaction is simple for you.
Selling rental property with tenants presents a unique challenge. Understanding that this is not a normal sale and involving all parties in the plan can help make the situation easier for everyone. If you elect to work with a real estate agent, choosing one who has experience working with tenants is critical. Their offer advice is key to creating a solid working environment that benefits everyone. When that landlord, buyer and tenant are educated and communicating you can look forward to a positive and rewarding transaction.
We Even Buy Houses With Nightmare Tenants
A cooperative tenant can be key to selling your property quickly. They provide a neutral third party who can educated the buyers on the benefits of purchasing your property. On the contrary, and uncooperative tenant can ruin a sale and cost you thousands of dollars in profit.
Betty had a family home on Grey Haven Rd in Dundalk that she wanted to sell. The property needed a number of repairs, but that wasn’t the worst of it. She and her sister had inherited the house 15 years earlier from her father. She had always put family first and had agreed to allow her sister and her sister’s family to live in the house for a small fee each month to cover property taxes, repairs, and utilities. At first things were going well. Her sister was paying rent on time and everyone was happy. Eventually, though, the sister stopped paying, forcing Betty to pay the costs of owning the property out of her pocket.
In addition, they hadn’t taken care of the property and now it was falling into decay. That was the final straw for Betty. She couldn’t allow her sister to take advantage of her anymore.
Betty spoke with Dependable Homebuyers and scheduled a home visit. During the walkthrough we were able to confirm what repairs were necessary to make the property livable again. We agreed on an offer price and Betty wanted to move forward immediately. We ended up purchasing the property about a week later, freeing him from her freeloading burden. We are able to buy properties without you doing any repairs!
Situations like Betty’s are not uncommon.
What If Your Tenants Won’t Cooperate?
Denise called on a Thursday afternoon, frantically hoping to sell her house as fast as she could.
Years ago, Denise bought a house in the Lakeland neighborhood of Baltimore MD for her son. The newly purchased home needed a lot of repairs, so Denise took care of them before her son moved in. Unfortunately, within a few years her son moved to another city. Denise wanted to sell the home.
After 6 months on the market she didn’t receive any offers. The bills were beginning to added up and without any income this was starting to dig into Denise’s bank account. After many weeks without a showing she finally received confirmation that one was scheduled for Tuesday evening. Unfortunately, it didn’t work out the way she expected. That evening she received a frantic call from her real estate agent. Upon arriving at the property, the buyers found it occupied.
Denise’s heart sank into her stomach. She had not given permission for anyone but real estate agents to enter the property, but now she had a family living there as squatters. These are individuals who claim that they have occupancy rights to the property without any formal documentation. To remove these individuals she would have to go through the full eviction process. This would take a minimum of 6 weeks and most likely over 3 months!
All this time that the property had sat vacant had allowed for squatters to take occupancy, making the house into her worst nightmare. She was no longer thinking about getting top dollar, but instead wanted to sell as fast as possible. She didn’t want the liability of the occupiers and was sickened by the idea of paying their utility bills until they were finally removed. She had already put out so much money for the property that another 3 months of payments would hinder her financially.
Martina could no longer afford to put any more money into the house. Although her pride was hurt, she needed to stop the bleeding. After speaking with Dependable Homebuyers about her situation she felt better than she had for months. We were able to provide her a quick purchase on her terms. Walking away from the closing table she felt a weight off her shoulders. She could continue on with her life without the dread of legal liability for the squatters at her property.
Time is Money When Selling Rental Property with Tenants
The quicker you can sell your house, the less time and money you are wasting. Though it may be easier to wait until the lease expires to put your home on the market, this is rarely the most cost effective approach.