Selling a rental property has a slightly different process than selling a primary residence. When there are other people currently living in the house you’re trying to sell, it adds a new dimension. If done properly, both the landlord and tenant will leave the transaction happy. You as the landlord have several options on how to handle the sale of the home with your tenants, but the biggest advice you should follow is clear and upfront communication is absolutely necessary. Second, make sure you understand the Tennessee Rental Laws before enacting anything. Carefully review the lease you have in place with your tenant to ensure you won’t be violating the agreement made between both parties.
Now with that out of the way, here are some tips for how to sell a house with tenants…
How to Sell a House with Tenants
How you go about selling a rental property ultimately depends on the type of rental agreement you have in place. The two types are month-to-month and fixed term lease.
The landlord has a little more flexibility with selling their rental property in a month-to-month lease. You can terminate the lease with 30 days written notice to the tenants (Tennessee’s law says 30 days, but it varies by state. Find each state’s rental laws here). Ideally, you will wait for the tenants to vacate the property before putting the house on the market and begin showings. This gives the tenants time to move their belongings out of the property and gives you the time to inspect the property and get it in top selling condition.
Fixed Term Lease
If the lease agreement has a fixed time period (1 year, 6 months, 2 years, etc…) the best option for selling your rental property is to wait for the lease to expire. This way, the tenant is allowed to stay in the home through the agreed upon time period and the landlord doesn’t have to work around the tenant to show the property. It’s definitely to the landlord’s advantage to have more control and flexibility with home showings, and waiting for the lease to expire allows that.
For various reasons, you may not be able to wait for the lease to expire to sell the property. The other two options are to sell the rental house with an active lease or pay the tenant to vacate early.
Selling the home with an active lease allows the tenants to finish out their lease. This might be a good option if there is still a substantial amount of time left on the lease and you have to sell the house quickly. Unfortunately, this also shrinks the group of potential buyers who could purchase the property. The house is great for an investor, especially since it’s already occupied by a tenant, but not so much for a single family.
The final option if you need to sell a fixed-term leased property quickly is to pay for the tenant to vacate the property early. This option can be costly. The amount ultimately depends on what you can afford, but you need to make it fair for the tenant. Some good options to consider are paying the rent amount multiplied by the remaining months on the lease, security deposit for the next rental, and moving costs for the tenant. Being honest with the tenant and having open communication are also very important with this option.
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If you’re considering selling you rental property, we are here to answer any of your questions and help guide you through this process. A great place to start is a free home valuation. Our team offers an instant home valuation for free right on our website! Simply type in your address below. Give us a call at 615.469.1412 and tell us what you thought of your home’s estimate.