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Brian, Home Seller in 02129

Trying to sell condo while tenants still live there

Asked by Brian, 02129 Wed Oct 21, 2009

I own a condo in Charlestown that I am looking to sell, but will probably wait unitl Spring 2010. It is currently rented to 3 tenants. How difficult is it to show the unit while tenants are still living there? Would this seriously negatively impact the price? Any suggestions besides waiting until the tenants move out (which is Sept. 2010)?

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Unless your home is really unique, buyers will not want to purchase it subject to a lease (there are very few investors these days) and tenant occupied property is harder to finance. So having a tenant with a lease until later next year is a problem. One potential solution is to approach your tenants now and see if they would be receptive to adding a 30 day cancelation clause to their lease in exchange for a month or two of free rent.

The other problem which you raised in your question is whether the tenants would negatively impact price. In my experience, tenant occupied property NEVER shows as well as a home that is owner occupied or has been staged. The reason is obvious... tenants have no vested interest in helping. In fact, tenants are often angry that the home they are renting is being intruded upon, and seem to go out of their way to NOT put the home in the condition you would as a homeowner. If you don't believe me, go on a tour of condos with tenants in them (there will be some listed for rent) and see how they show. Again, you might be able to exchange cooperation for free rent but if you do, don't pay it all up front.

My advice is to meet with your tenants, explore their intentions (maybe they would be happy to leave if the option presented itself) and look at the condo quietly assessing how it shows. Then make a decision. If they don't have any desire to move out before next September and/or if the presentation is less than optional, you might consider waiting. Once empty, clean it up, stage it and list.

Best of luck,

Jenny
2 votes Thank Flag Link Wed Oct 21, 2009
Hey Brian,
Tenants do negatively impact the price, there is just no getting around it. It happens in 2 ways:
1) Quality - In most cases, a property with tenants is not shown in its best light. In the same rationale that staging a property with furniture and artwork can enhance a property's sale value and speed of sale, the tenants will do the opposite.
2) Time - It is more difficult to allow showings with tenants. If you were living there, as the seller, you would (probably) be as acomodating (sic) as possible. You have a stake in the sale. The tenants do not have any real motivation to be helpful. It is harder to get buyers in the property and, thus, slow down the sale.

If your property is going to be marketed at a low price to attract investors, tenants are no problem. In fact, they will be a bonus to an investor. But you will need to sell at a lower amount if you want to attract these buyers.

I hope this helps.

Cheers,
Bill P.
0 votes Thank Flag Link Fri Feb 26, 2010
Hi I have sold a number of properties while tenants are in them. Best to place it on the market about 3 months before expiration of the current leases. I have not found working with tenants difficult. Its all about how you start off with them. Sometimes an offer to get their places cleaned professionally can be a nice ice breaker. Working out the most convenient times to show their places is also a way to show respect for their tenancy. I have been selling in the Charlestown market for almost 25 years.
Web Reference: http://www.frankceleste.com
0 votes Thank Flag Link Fri Feb 26, 2010
Hi Frank, What do you do when one of the tenants is bedridden and can't leave for the showing. And also has an odor? Their lease is to expire in 2 months and I'm putting it back on the market this week.
Flag Tue Jul 31, 2012
The market is RED HOT right now due to the Tax Credit which will expire in the next few months, low interest rates and the depleted inventory. I would not wait to sell. This may be the best time to get the best price. Coordinate specific times and days with the tenants for showings and only allow the realtor to conduct showings then.
0 votes Thank Flag Link Sat Feb 13, 2010
As a condition of listing a property occupied by tenants, I make the homeowner work out an agreement with the tenants where they pay them $10 for every business card they collect, so long as they allow agents to show on an hour's notice. Often, they're working weekdays, so that makes the showing easier.

And, no, I'm not worried about fraud. Make it $25 a card in a slow market, for Goodness' sakes!

The alternative is to give them a big cut in the rent, and they'll still not have any incentive to perform on a daily basis!
0 votes Thank Flag Link Tue Feb 9, 2010
Hi Brian,

I work with tenants and landlords on a daily basis for my company and have sold properties with this current situation before. Honestly, it all comes down to your relationship with the tenants. If you and the broker you hire are up front and cordial and a strong landlord/tenant relationship is already in place then you won’t have a problem.

However, if you have a strenuous relationship with the tenants or they’ve been known to complain it might not work out so well. If you do decided to sell, with tenants still occupying the condo, then the best solution is to make sure the agent you hire always accompanies buyer’s agents on showings. Otherwise tenants won’t leave because they are uncomfortable with strange people wandering around.

Also reiterate to the tenants that they are not being forced out and that the terms of their lease will be honored. Also selling in May doesn’t look like it will be a problem for Charlestown. I just ran some numbers and the average days on market for condos sold in Charlestown is 115 days which would put your closing somewhere in late August if you list in the second week of May. Of course, this all assumes you price the property correctly.

Any questions feel free to email or call.

Hope this Helps,
- Jim

James Morrison
NextGen Realty
JamesM@NextGenRealty.com
617.894.0305
0 votes Thank Flag Link Tue Feb 9, 2010
I feel this is a negative. Tenants usually are not pleased with the inconvience of showings. Many times the property is not kept in showable condition. Other times they do not make the property available for showings. I have seen several times where they will not leave during a showing which makes buyers uneasy. Many realtors will avoid a property with tenants due to tenants rights, etc.
0 votes Thank Flag Link Sat Nov 14, 2009
I own investments properties can either be pro or con depends on their lfestyle. If home shows well great homes staged with furniture show better than vacant property.

Are tenants willing to comply with showing NOT decline

Confer with lease agreement of terms sale and show condo.

GREAT QUESTION

National Featured Realtor and Consultant, Texas Mortgage Loan Officer, Credit Repair Lecturer
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Lynn911

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0 votes Thank Flag Link Fri Oct 23, 2009
Brian,

From a selling stand point, it isn't the home's value that provides the greatest concern but th accessability of the property. It is normally difficult getting the tenant's permission to show the property as it creates a huge inconvenience for them.

Some landlords are able to enjoy some relief from this problem by offering their tenants a slight discount of their monthly rent for their cooperation and willingness to be inconvenienced on occasion. This can result in a win-win situation and help the agents show the property in its best light.

Good luck
The Eckler Team
0 votes Thank Flag Link Fri Oct 23, 2009
Hi Brian, do you have a written lease in place? Often times a lease will spell out the amount of notice you have to give your tenants to show the property. If the unit is clean and presentable, it should not negatively impact the price, though a vacant, clean, nicely staged property certainly is preferable.

If you decide to sell, I would recommend just being forthright with your tenants and let them know that you will be showing the place. You might want to consider picking a day or two each week to do set showings so that their lives are not continuously disrupted. Give them enough notice.

The other piece of this is that a buyer will have to be a landlord until Sept. 2010 so you may have a more limited pool of buyers i.e. investors.

Jim Lambert
Sales Consultant
CondoDomain.com
jim@condodomain.com
(617) 780-8139
Web Reference: http://www.CondoDomain.com
0 votes Thank Flag Link Wed Oct 21, 2009
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