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A colleague and I had a listing in Zephyrhills, Florida that was a rental home. When we first took the listing it had some deadbeat tenants in it and it was a mess. We entered it on day one, and when we came out we were covered with fleas! After a fumigation and a complete emptying of the home (a lot done by us), a total cleaning was conducted, a lockbox placed on the door, and the home was "on the market".

Unfortunately, in our current market this type of home draws more buyers who want to use FHA financing, something that is hard to work out with this home due to its age, wiring, etc. The seller would have had to spend a lot of money and do a lot of work to bring it up to HUD standards, and he was not able do that. But the home was shown a number of times, and we had hopes that an investor using cash or conventional financing might come forward to purchase it. That. we thought, would be the most likely outcome.

However, several months later, the owner said he could not afford to have it vacant any longer so he rented it to some tenants who promised him that there "would be no problem when the home needed to be shown". As often happens, what is promised is not what is done. And it does not seem to matter if the rental property is a basic house or a $500,000 home.

On many occasions I called to arrange showing appointments, but with no cooperation from the occupants. One time they did agree to a time, but when the agent and buyers arrived the tenants would not open the door. The agent could hear them inside, but they refused to answer the door. After that, they stopped answering their phones and did not return voice messages that we left. So for all practical purposes, this home was off the market since it could not be shown to any buyers.

When the listing period ended we did not renew it since it made no sense to continue to spend time and money on a property that we had no chance of selling. No one is going to buy a "pig in a poke". The seller, who went through a divorce and needed to sell the home, was up the creek. However, there is nothing we could do. He had effectively tied our hands.

Sellers of rental properties need to:

1. Make sure that they and their tenants clearly understand each others rights when it comes to showing the homes to potential buyers.

2. Landlord sellers need to know federal, state and local laws that regulate when and how a property can be shown. These can vary greatly from area-to-area. Your lease with the tenant should clearly state what both parties' rights are under the law. You as the owner need to make sure that the tenants comply so that your agents can do their jobs. Agents cannot initiate a legal action since they are not parties to the agreement between the landlord and the tenants.

3. Landlords also need to clearly inform their real estate agents about any special restrictions that may apply due to contractual agreements between the tenants and the owners. For example, state law may mandate a 24 hour notice before a showing, but an owner may have been more lenient and given a promise of 48 hours. Your REALTOR® needs to know this.

4. Be aware that a vacant property is MUCH easier to show, and therefore, may sell much more quickly than one that is occupied. Easy and immediate access is a big plus. Delays and hassles are NOT! So if a property is already vacant, you may want to think long and hard about putting a tenant in it.

5. Often new tenants will convince you that they will cooperate completely when you need to show the home. But once they are in, you will be amazed at the excuses that some of them will come up with and the roadblocks they will put up to prevent entry. You need to be clear from the onset that problems of this type will not be put up with and that if necessary, appropriate and swift legal action will be taken. You might also remind them that when they do eventually move, you want to be able to give them good references. Remember, you are only asking them to obey the law and your lease, just as you have done. Of course, if you are not a very good landlord and have not adhered to the law or lease, then you will have a problem convincing your tenants that they should. So be a good landlord.

6. Tell tenants, if the law allows, that the property will need to be shown whether or not they are at home or not. Otherwise, trying to coordinate showings with all of their schedules will be nearly impossible. Trust me.

7. If you allow tenants with unfriendly dogs to rent the property, keep in mind that even if the tenant will let your agent and buyers to enter the house or apartment, they may hesitate to do so due to the danger or perceived danger that exists. If the renters have indoor cats, you will likely have odor issues that could cause a buyer to reject your property.

8. Do not blame your agent if your home languishes on the market due to uncooperative tenants. Your agent has a contract with YOU, not the tenants. The occupants' contract is with you, and it is your responsibility to make sure they comply with contractual obligations in regard to access for real estate agents and prospective purchasers.

Both landlords and tenants have rights AND responsibilities. The better both parties clearly understand these, the more likely it is that the landlord will be better able to market his property.

If you have any questions or need more information about this topic, or real estate in general, please feel free to call me at: 813-783-4444 or e-mail me at: jelwell1@tampabay.rr.com

I also invite you to visit my website where I think you will find a lot of useful information. To get there just click on the following link: www.jelwell.century21bnr.com

John Elwell - REALTOR

CENTURY 21

Bill Nye Realty, Inc.

813-783-4444

Licensed in Florida

 

 

50 Comments on Will Tenants in Your Listing Doom Your Chances for a Sale??

MAY
22
2010
1,480,497 Points 275 Featured Posts Localism Sponsor Outside Blog Attended Rain Camp Called Shot Master

John, every seller who says they'll just rent their home if they can't find a buyer should read this. 

Fleas?  Ugh!  That'll scare off buyers.

10:29pm • #1
283,856 Points 5 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

John, 

We handle a lot of executive rental homes.  It is critical that they work with you, or showing, even for the next tenant can be difficult.  The good news, is that there are actually, good reasonable people out there who will work with you to allow the house to be shown. 

Having said that, a lot depends on what the agreement is.  We typically only show a home at the end of a 12 month listing period, say the last 60 days.  If someone has just moved in and really doesn't want to move back out, it doesn't make sense to think that they will be ok with moving again two months after they move in.  

Good point to understand what is going on!

All the best, Michelle

PS I agree with Patricia- fleas - YUCK!

10:38pm • #2
349,256 Points 5 Featured Posts Attended Rain Camp Called Shot Master

Best way to deal with tenants in short sales = Bribes for helping you out in getting the deal closed.  Works almost every time.

11:58pm • #3
MAY
23
2010
278,466 Points 7 Featured Posts

Great post John.  I agree with Pat, everyone who says they're going to rent their home if they can't sell it should read this. 

12:11am • #4
1,545,555 Points 416 Featured Posts Localism Sponsor Attended Rain Camp Called Shot Master

The answer is YES! 

Sometimes I just tell buyers who have an interest in tenant occupied property after trying in vein to show it, "That home will sell when it's vacant and on keybox.  It's not going to sell with those tenants in it."

6:35pm • #5
339,582 Points 65 Featured Posts Localism Sponsor Outside Blog Called Shot Master

John, Thanks. I'm bookmarking this. Super helpful.

11:23pm • #6
MAY
24
2010
1,007,488 Points 36 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

I have found that a number of tenants are just not helpful about allowing buyers to see a home.  It's easier when they've moved out.

12:47am • #7
2 Featured Posts Outside Blog

This is always a potential issue.  It is important that the lease clearly state the terms relating to showing during the lease period.  For a variety of reasons, it is generally a waste of time to attempt to show a "leased"  property until the last 60 days of the lease term.

9:32am • #8

Great post. Tenants need to put in writing that they will allow home to be shown. The realtor can give them 24 hour notice. But if at all possible they need to leave the home staged and vacant while on market. Tenants are usually upset that they will have to move when home sells. And then the property may be trashed in the meantime.

9:37am • #9

As noted, this is a common problem.  It's very easy to get caught up in the "lousy tenants won't let me show the property" mindset, but one has to remember that even in a rental situation, we're talking about someone's home.  Our homes are usually our havens, our source of stability, the place where we can escape the troubles of the world.

When that's threatened i.e. a Realtor wanting to show the property - even though we've moved in knowing the house is still on the market - it puts people into defensive mode.  They are not in control of one of the most basic & important aspects of their lives - their homes.

I've had both landlords and other Realtors say negative things about tenants in front of the tenants, and in what those tenants consider to be their own homes.  It's demeaning and rude, and sets up tenants to be uncooperative.

Granted, there are people who are just plain entitled or slobs or whatever - and the landlord should address the issue as soon as it arises; it's not very profound to state that ignoring a bad situation will only make it worse.

As a Realtor, property manager, former rental subsidy administrator, and landlord (both residential and commercial), my advice is to make any lease on a property for sale very short (i.e. 3-6 months), with a clear statement that the property is for sale and that disallowing access by a Realtor who has given proper notice is tantamount to breaking the lease, and may be cause for eviction.  Get the maximum security ahead of time that's allowed under the law (2 months in Maine), and do not allow any pets. 

And, use a property management company to reduce the emotionality that can arise, and to assure legalities are followed.  The owner/seller may balk at paying a leasing and property management fee, with the complaint that they desperately need the money from the rental since the property hasn't sold yet, but how many owners/sellers in this situation can maintain the professional distance needed when some of the situations described above happen?  Let a professional take care of it.

Linda Snyder
9:52am • #10
Outside Blog

John, 

Very good example of how this business can throw you a curve ball.  With any luck maybe our president will create a "Tenant Czar" then they can keep tabs on the happenings of renter / landlord activities.. ;)  ha ha

In all seriousness there should be a clear contract in place between Seller / New Tennant / Realtor, explaining this is what has to be done, and showing the property is how we have to do it.

 

Brent,  http;//www.Clearwaterbeachwaterfronthomes.com

 

10:01am • #11
339,000 Points 27 Featured Posts Localism Sponsor Attended Rain Camp Called Shot Master

I currently have a listing that is rented - the tenants have restricted showings to just 3 afternoons a week and Sundays.  The sellers don't want to make the tenants mad, so they go along.  I can't bear to think of the showings we've missed because of this.

10:08am • #12
160,344 Points

This dilemma is often a double edged sword.  Some investors want to have tenants in place for the financing when they purchase and some would rather pick their own.  I agree that the safest way to sell is without the restrictions that tenants put on sellers.  Even when tenants are cooperative, they have no incentive to be clean......................chris

10:16am • #13

Try this when trying to gain the cooperation of a tennant.

Arrange with the owner and tennant a predetermined day of the week the home can be shown. Let's say Saturday afternoon. Maybe 2Nd Friday afternoon and third Saturday afternoon. These are the ONLY times this home can be shown. Real estate agent or citizen, the home can only be viewed at these predetermined times. Send the tennants to the movies or a gift card to the mall to go spend some of your money. Then prepare to manage these show dates the same as an Open House.

Be aware, an improperly priced home may cost you a lot of movie tickets. If owner does not have control of the tennant, the odds are not in your favor.

Honey or vinegar
10:34am • #14
115,031 Points 2 Featured Posts Outside Blog Called Shot Master

In a word, yes...

 

After you show enough homes that are leased you will get to a point to where you realize its better off empty.  We all know the truism that empty homes sell for less and take longer to sell.  You have to compare that to have the tenants dog bite you, threaten you, scream at you and in general be difficult.  This will keep agents away and we all know that means it keeps offers away. Best advice is to get the tenants out and have it staged...

(and yes those events all happened to me and some I won't post...) 

10:40am • #15

Having a listing with tenants, is typically like having no listing at all. 

10:40am • #16
122,759 Points 1 Featured Post Attended Rain Camp Called Shot Master

John:

Great info. I put an active rain blog out a couple weeks ago about a tennant that I had in my sellers listing that the day we put the sign in the yard found our sold magnetic sign that had fallen off the top of my car and put it on the sign.

Good luck, most tenants could care less cause that means they have to find somewhere else to move their stuff.

10:42am • #17

I manage rentals as well as list, and a couple things have worked well for me:  We charge a hair below market for rent to make the home attractive to the tenant even though it's listed.  We write a detailed lease that includes specifics as to tenants allowing access, when and how it can be shown (24 hour notice, etc) then I enforce that 100%, making sure we are able to show and making sure we show with notice.  We never allow last minute showings and the tenant is always assured they will get their notice - it helps keep them happy and cooperative.

We also write in a 45 - 60 day termination clause, at the owner's sole option, so that the lease can be terminated if an offer is accepted, but part of that clause includes a payment to the tenant for moving expenses (usually around $500) so thay are getting consideration and a hand in moving.  It helps that we have a lot of vacant properties in our market and new rentals are not difficult to find, so the tenants don't usually worry about finding a new place.

We try to control keeping the place neat in the lease and that can work OK if you are clear upfront and in writing, though that is the most difficult part due to the subjective nature of clean.  Overall the stratagy works well, but you have to be even handed and advocate for the tenant as well as the owner.

11:05am • #18
119,767 Points Localism Sponsor

Ugh, tenants.  Yes, I've worked with a couple of good ones, but there have been some that have been just terrible to work with. 

11:22am • #19
814,738 Points 7 Featured Posts Localism Sponsor Outside Blog Called Shot Master

I had problems like this before.  I think it is cheaper for the owners in the long run to just get the tenants out before selling.  Of course each issue is case by case.

11:33am • #20

It's tough having tenants unless you are marketing to investors, then it's a plus.  I have some inexpensive properties that have tenants in place and it does attract investors, especially if the property cash flows.

11:34am • #21
113,522 Points 3 Featured Posts Attended Rain Camp

I deal with a ton of properties in the Boston area that have tenants both good and bad.  When you get one that does not allow access, it's like not having the listing at all!  Such a pain!  I find the best way is be as nice as possible to them and make them think that they are doing you a favor that you will pay back with ample notice and flexible scheduling.

I've thought of the bribe tactic but have not tried it yet.  I will have to the next time I get a bad tenant.  If the tenant is staying with the property, they are just shooting themselves in the foot by no appearing cooperative.  The new owner will want them out ASAP.

David in Boston

11:36am • #22
Outside Blog

I tell my Seller that they are no longer IN CHARGEof their property...the tenants are!  They decide when and if the property can be shown.  They don't keep it in show condition most of the time and if they do they require at least 24-hour notice.  They don't want a lockbox on the house for easy access by agents.  Most of the time they do not leave during showings and somehow feel it is their responsibility to tell everything that they perceive to be wrong with the house.

All good points you make John!  Better off vacant.

11:38am • #24
109,714 Points 8 Featured Posts Called Shot Master

I understand from the seller's perspective, but as an agent my job is to sell houses, NOT fight with tenants.  A huge waste of time!

11:41am • #25
Outside Blog

I find it a deterent for me personally to show a listing with a Tenant unless the listing agent promises me that they are great tenants who care for the property...I have a buyer who has looked at many properties...and likes a Floor plan in one of the communities...one came on the market, great lot location, nice view, tile floors, granite...all the things this buyer is looking for...when I showed her the property she just said no...it didn't feel to her that the property was being taken care of...discussions about inspections and the seller correcting things wrong still did not help her to see past the Tenants things...while the property was right, the image of the interior was less then desirable...and some buyers are just like that...in this case, if it were empty, I would have had a contract.

11:44am • #26

John,

Great article and unfortunately happens on a daily basis. Since you are in the Tampa Bay Area, I wanted to introduce myself and share some details about Showhomes. Homeowners use this as an option instead of tenants because the monthly utilities are now being paid by someone else and their home is well cared for. All of the above issues are resolved and the most important thing, the home sell faster and for more money.

Homes will be accessible for showings seven days a week.  Our Home Managers will open blinds and curtains and turn on lights to ensure that your home is in perfect condition when a buyer arrives.  Buyers will see a perfectly maintained, tidy and clutter-free home.

Home Managers who have contracted to keep your property looking like a model home. Furnishings and accessories that are appropriate for the property are owned and provided by the Home Manager and Showhomes supplements these as needed to make the property look its best. 

Nominal Set-Up fee when Home Manager occupies the property, No monthly fees. Staging fees are paid at closing when the home sells.  In the end, everybody wins! www.showhomesstpetersburg.com 

11:55am • #27

Great post John. Whats it like being covered with fleas?

Bob Walton
11:56am • #28
115,880 Points 2 Featured Posts

In my local market, tenants will most likely doom the house to not even being shown.  On the last one I tried to show, I got confirmation that it was OK, but when we got there the tenants refused to let us in.  When the listing agent asked for feedback, I told her the tenants refused access and she said to "try again".  My buyer said no thanks.

12:09pm • #29
989,629 Points 3 Featured Posts Localism Sponsor Outside Blog Attended Rain Camp

Every time I list a tenant occupied property I swear I will never do it again. I'm a slow learner, I guess!

12:27pm • #30
144,559 Points 2 Featured Posts

I wouldn't show my own rental houses with tenants still in them, why would I take a listing with tenants in the house.  Makes no sense to me.  

12:30pm • #31
124,149 Points 4 Featured Posts Outside Blog

Nice post with so many of the hassles spelled out.  It can be dificult to deal with tenants when selling, and many of the fixes described can minimize the horror stories.  Hard work!

1:16pm • #32

Tenants can absolutely kill any potential of selling a home if you let them. We avoid that problem by putting on a lockbox. If the tenants are cooperative, they'll allow showings with a reasonable notice (we try to give them 24 hours). If the tenants don't answer when agents call, we instruct the agent to leave a message with a time they'll be showing the property- no need for the tenants to even call back. If the tenant does call back then they can arrange an alternate showing time if need be, if not the agent is free to go in at the time stated on the message since reasonable notice was given. This essentially forces the tenant to participate. We've only had one issue with a showing set up in this manner- it generally works.

2:29pm • #33
Called Shot Master

Yikes,

I have a tenant in a property. She has tried to be cooperative, but her definition and mine are different.

No showings unless she's present. She won't even let me be there to let another agent in. Lockbox? Hah!

24 hour notice. We tried for set days...something always came up and ...

Sorry, that's inconvenient.

The Seller will let it sit empty when she leaves in November ... or I won't be renewing the listing with him.

Frustrating? Heck, Yes.

On the other hand, I was a tenant a long time ago, and I can understand how intrusive it must feel. Also, pride of "rental ship" dictates that you want it to look nice for the showings, and yet you gain nothing from your efforts but being kicked out.

From the beach,

Lisa

2:57pm • #34

In Florida, The tenant must allow access to the property with reasonable notice. Of course "reasonable notice" is a loose term and hard to define but 24 hours seems sufficient. If they don't allow showings once reasonable notice has been given the owner can evict the tenant, and we'd suggest that if such was the case.

3:08pm • #35

For repairs, reasonable notice is 12 hours... 24 is plenty I'd think. Of course, we try to make things as easy on the tenant as possible BUT we will enforce then and evict if necessary.

"The landlord may enter the dwelling unit upon reasonable notice to the tenant and at a reasonable time for the purpose of repair of the premises.  "Reasonable notice" for the purpose of repair is notice given at least 12 hours prior to the entry, and "reasonable time" for the purpose of repair shall be between the hours of 7:30 a.m. and 8:00 p.m." 

A second idea: most landlords don't like to do this BUT we have suggested the landlord pay the tenant an agreed upon sum when the house sells. That gives the tenant some incentive to participate and help the home sell. Again, the problem with that is most landlords don't feel they owe any money to the tenant and won't pay but evictions are expensive and an upset tenant is never a good thing.

3:20pm • #36
392,071 Points 4 Featured Posts Called Shot Master

I discourage buyers from viewing tenant-occupied homes. They just never show well. The tenant's not motivated.  Owners should think about what would make their tenants feel motivated.

3:26pm • #37
1 Featured Post

Number 6 is important.  I had tenant claim he was filing charges and suing, because I entered his home when his wife was home and he was not.  I reminded him that I stopped by the previous day I told him I would be showing the house to a potential money investor at 4:00 pm and he said it was ok.  It seems he did not tell his wife, and since she did not know, I was at fault and he was suing.  I told him the law was 24 hour notice and to have his lawyer call if he wanted.  Needless to say, I need not hear anything about it again.

Aaron

4:15pm • #38
321,286 Points 3 Featured Posts Outside Blog Called Shot Master

Great job John!  Trying to show property with tenants is often times horrendous. 

Thanks for your post,

DeeDee 

5:02pm • #39
329,844 Points 20 Featured Posts Attended Rain Camp

I only show rented properties to clients who are limited to a specific (low) price range or are investors looking for deals on rental homes. Either way, we usually go in with offers that are much lower than the listed price.

9:29pm • #40
MAY
25
2010
307,374 Points 32 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

There are many tricks to both listing and showing homes with tenants in them but most always it is difficult. There is one tenant profile that consistently has cooperative tenants with excellent furniture, but they are a protected class, so I won't mention it here. I don't even know that class exists. Other than that, leaving the renters in a place costs you 5-10% of what you could get with the home cleaned out and staged. 

12:20am • #41
372,622 Points 43 Featured Posts Called Shot Master

Oh yes, tenants. Some are wonderful but others... One told me I could show the house, but the dogs would be inside and they bite. Other times we had appointments and arrived to find the doors locked and no one home.

But the most "interesting" was a young man who always kept a neat and tidy house - unless he knew a day ahead of time that we were coming. Then the bed would be unmade, dirty clothes all over the livig room, dirty dishes in the kitchen - and the toilet not flushed!

Did I ever mention how glad I am that I just write about real estate these days and don't have to deal with these issues? Oh yes, I think I did mention that a few times...

12:31am • #42
124,262 Points

Its a challenge there is a property management company here in Denver that handles it.  Tenant gets below market rent, place is kept clean, and must have availability for showing in under 30 minutes.

12:57am • #43
457,017 Points 22 Featured Posts Localism Sponsor Attended Rain Camp Called Shot Master

I agree with Allison #9 that the rental agreement should include that the tenant agrees to cooperate with showing the property if it goes up for sale during their tenancy.  Even so, if the tenant feels he will be evicted as soon as the sale takes place, he will be reluctant to help you sell it. 

Showings may be difficult, but even if the tenant agrees to show the property, it may not be in showing condition.  He certainly won't be eager to rush around and sparkle up the place if it means he will lose his home.

1:27am • #44
161,132 Points 13 Featured Posts Localism Sponsor Outside Blog Attended Rain Camp Called Shot Master

Great post and a good reminder to landlords when putting their home on the market. I know of some instances where a bonus was offered to the tenant if the property was sold within a certain timeframe.  That way, they had a financial incentive to get the property sold.

6:17am • #45
706,500 Points 24 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

CASH for KEYS * They had NO intention of cooperating with the showings when they entered into the lease.  a GREAT reason to hire a professional property manager to SCREEN, QUALIFY and DEAL with residents

6:39am • #46
111,024 Points Outside Blog

We all do what we think is in our own best interest.

Think about the tenants' point of view: In order to cooperate with the showing they must clean up the place and possibly rearrange their schedules.  And we all know how tenants hate to clean (but that is another subject).

Then if the buyer likes the house and buys it, the chances are good that at a minimum there will be a rent increase comming, and at a maximum they will be given notice to move as soon as the rental agreement allows -- never mind that they had planned on moving out -- without notice -- next month anyway (but that's another subject also).

So the tenants do not feel that they have anything to gain but a lot to lose by being cooperative.

I offer tenants a $500 or $1,000 moving allowance if the property sells while they are in it. This works wonders as attitudes really improve.

8:55am • #47
180,573 Points 12 Featured Posts Called Shot Master

John, state laws vary on tenant-landlord laws, but generally, most standard leases have a clause stating something to the effect of "tenant agrees to allow landlord/associates reasonable access to property, with notice, to inspect or show home to potential sellers, etc., etc."

Many people renting out properties don't fully understand the laws of it.  It's important.  And like someone said above, if you don't know, it's better to find a qualified, preferably referred property manager to successfully manage the property for you.

5:25pm • #48
MAY
26
2010
3 Featured Posts

In Ca the lease agreement states that tenants must cooperate with a sale or risk being in breech of the agreement. Only 24 hours notice is supposed to be given(written) and then a landlord may enter the property(or other party) without cooperation from the tenant.

1:43pm • #49
JUN
11
2010
186,349 Points 2 Featured Posts Called Shot Master

Houses with tenants in them are very hard to sell. Sometimes it helps if the Landlord offers an incentive for cooperation from the tenant, such as a reduction in rent of $20.00 for each showing.

11:57pm • #50
MAR
09
3 Featured Posts Outside Blog

Every listing I've had with a tenant (well, almost every one) has been a nightmare.  They may not "doom" the sale, but they sure make it difficult.

12:33pm • #51

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John Elwell

Zephyrhills, FL

More about me…

CENTURY 21 Bill Nye Realty, Inc.

Address: 34619 State Road 54, Zephyrhills, FL, 33541

Office Phone: (813) 715-6810

Cell Phone: (813) 783-4444

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Real estate news, opinions, and listings from Zephyrhills, Pasco County, Florida and the west central region of Florida in general. Licensed in Florida.


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