Selling Rental Houses to Tenants
If you own a rental home or investment property and you have decided it is time to sell, finding a buyer may be easier than you think, especially if you have a property management company overseeing the management of your home. The most ideal situation would be to sell your home to your current tenants.
Selling your property while tenant occupied can be very difficult. In most rental leases, the tenants agreed that at any time during their occupancy, if the owner decides to sell, they are required to comply. However, getting your tenant to clean up when showings are happening, or even allowing showings to happen is challenging. Understandably, it is frustrating to the tenant to have random buyers, inspectors, contractors, and appraisers walking through their house at any given time. This is what makes your tenant your ideal buyer.
If you do decide to sell your house, you should first contact your property manager. Most property management companies also have a sales division. They can provide you with REALTOR® services, as well as assign another in-house REALTOR® to the tenants. This transaction would be considered an intermediary sale and comes with lots of benefits. Because the agents work in the same office as the property manager, they will have easy access to maintenance records. This will come in handy when going through the inspection process.
The next step in selling your property will be determining a list price so that your tenant can get qualified for their loan. The tenants’ agent will send them to a lender and advise them through the process. Once your tenant is qualified, their agent will write you an offer to start the negotiation process. It is always advised to get an inspection report completed to release liability from yourself, even though the tenant is familiar with the home.
Once you reach the end of the option period, the period in which the buyer can withdraw their offer without losing their deposit, you’re almost out of the woods. Let your REALTOR® guide you, and you should have the expertise to get through the process fairly easily. Because of today’s technology, closing on your property when you are an absentee owner is easier now than ever before. Most documents can be signed electronically and those that can’t will typically be emailed to you by the title company with pre-paid postage for overnight return. They can even setup a mobile notary to come to you for a nominal fee.
If you choose to use your property management company to sell your home, you can rest assured that any maintenance issues will be remedied by contractors that you are already know and trust. Utilities will be transferred without having to think about it. You might be surprised how many homeowners forget to transfer utilities out of their name. Also, any remaining balances due will be paid out at closing.
You can always choose to go the traditional route when selling your home and finding an outside buyer. If you are concerned about putting your tenant out, in the state of Texas, the lease transfers with the sale of the home. This means your tenant will continue with the current lease and pay the new owner the same amount until the end of the lease term. Just remember, it is easier to sell to your tenant than to try to sell your home to a third party buyer while your tenant resides in the property.
Written by: Lacy Hendricks
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