Many investors are faced with a common scenario: they’re itching to sell one of their investment properties — but it’s occupied. Some people find themselves in this situation because they decided to lease when a property couldn’t sell. Others have decided to sell off some of their portfolio. In either event, selling an occupied home requires a bit more work.
Selling an occupied home requires you to meet the needs of your current tenant, while also orchestrating the sale. Scheduling showings and locating a buyer who meets the unique requirements of financing an occupied property can get particularly tricky. These tips will help you overcome the challenges.
Treat your tenants fairly.
Let’s face it. No one enjoys being disturbed by strangers touring their home when it’s for sale. You should show some compassion for your residents when you speak with them about your intentions to sell and when they should expect tours. Give them advanced notice and be flexible with the tour schedule to ensure it’s convenient for them and the prospective buyer.
You’ll run into problems getting residents to cooperate if you don’t have consideration for their daily routines or privacy. They may deny entry on tour dates or not keep the property in an appealing condition. Recognize you need their help to sell your property and communicate with them accordingly.
Be aware of the financing needed to purchase occupied property.
Homebuyers usually expect to put 5 percent down on a property, but that’s not a possibility when they purchase a home occupied by a tenant. Since they can’t take possession of the property within six days of the purchase, they’re required to put down significantly more than 5 percent.
At minimum, the buyer must bring 20 percent to the table, plus have verified reserves including six months of mortgage, tax and insurance payments. That’s a hefty sum of money for some buyers, so you’ll need to be upfront on the conditions of the purchase to weed out those who can’t meet the constraint.
Understand the tenant’s (lack of) motivation to help you sell.
Always understand there is zero motivation for tenants to help you sell a property.
Sure, you can force them to do what you need, but that’s an unpleasant situation for everyone involved. You’ll have greater success getting them on board with sympathy and understanding. And a happy tenant on your side is one you’ll want to be the face of your property.
Tell residents you’ll make a concerted effort to pre-qualify potential buyers to reduce the amount of showings. Avoid doing tours until you have the impression that a buyer is serious or they’ve submitted an offer that you accept.
Scrutinizing buyers to accommodate your tenants also helps you weed out prospects who aren’t serious or who are under qualified.
Beyond that, like any other house sale, selling an occupied property requires good pictures, a top-notch listing, great condition and the right price point. With those items, and the tenants on your side, you’re golden.
Need help selling a tenant occupied property? Contact us today!