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How tenants cause your property to get a “C” in Sale-ability

By Pacita Dimacali

Real Estate Agent with Alain Pinel BRE 01367196

January 15, 2012 04:48 PM

How tenants cause your property to get a “C” in Sale-ability.

Seller lists house with you. You’re ecstatic. It’s on a great location, just 4 houses from the beach. Seller has made a lot of improvements. Should be an easy sale, right?

WRONG!

There’s a tenant who doesn’t want to move. Your first task is to speak with the tenant, assess the situation, try to “make nice” to get the tenant’s cooperation as you get ready to put the house on the market.

When you meet with them, they try to appeal to you to convince seller to let them stay because they don't want to move. So you ask them if they'd like to buy the house. They respond they will "never buy THIS house."

Okay....so they won't buy. And it looks like they won't move.

Signs tenant will make it impossible to sell Not for sale

Clutter. Tenants have mountains of stuff in the house, in the garage, in the yard.
Clean? What’s that? Tenants don’t want to do anything to make the house look neat and clean. This is the way they live, and they’re entitled to live the way they want.
Closed. That’s what this property might as well be because it’s show by appointment only. If they’re not available, they don’t want anyone on the property. Hence, no lockbox.
Chatty. Tenants talk about things pertaining to the owners’ financial situation. Where do they get this information?
Condemned. They belittle the property. It's "small", "needs too much work", "poor construction"....They keep talking about when repairs were needed even though the repairs were already done.

Seller might as well say that this house is NOT FOR SALE!

How tenants cause your property to get a “C” in Sale-ability

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Pacita Dimacali

Alain Pinel - Oakland, CA

Alameda/Contra Costa Counties CA

Fred --- we all have had our encounters with tenants from hell. Even "helpful" tenants can sink a deal.

Tim --- when I bought my duplex, the tenants kept grumbling about me throwing them out of their home. And when that tactic didn't work, they talked about someone hanging himself in the attic (it's impossible). And after I closed, they egged the house.

Michael --- some tenants are good to work with. But they're rare.

Jan 15, 2012 04:55 PM

Doug Bullwinkel

E Mortgage Capital, Inc. NMLS 1416824 - Roseville, CA

Mortgage Loan Officer NMLS #281609

Pacita: You just provided 5 excellent reasons why a tenant should be moved out prior to putting a home on the market. The added amount of marketing time and questions regarding the condition of the property, aren't worth the small amount of lost rents.

Jan 15, 2012 05:01 PM

Pacita Dimacali

Alain Pinel - Oakland, CA

Alameda/Contra Costa Counties CA

Doug --- in a brisk market where properties move fast, the lost rent can be made up by quicker sales, and if the house is prepared properly, higher than expected offer :)

Jan 15, 2012 05:03 PM

Carla Muss-Jacobs, RETIRED

RETIRED / State License is Inactive - Portland, OR

Yup, tenants sure can put the kibosh on a home sale. It's a tough situation for ALL involved, but more for the home owner who might have to sell but can't afford an empty property (needs the income).

Jan 15, 2012 05:06 PM

Pacita Dimacali

Alain Pinel - Oakland, CA

Alameda/Contra Costa Counties CA

Carla

Sellers are afraid to lose that monthly income...but it could be worse if they are underwater and the house is foreclosed because no one came close to writing an offer on it. At that time, a little lost revenue may look a lot better than a foreclosure on one's credit history.

Jan 15, 2012 05:08 PM

Marge Piwowarski

Phoenix AZ Horse Property - Phoenix, AZ

Phoenix AZ Horse Property, LLC

Pacita, There are tons of tenant occupied homes on the market here and they will never sell because the tenants will only show them at times buyers can't be there to look. Rent it or sell it but ya can't do both.

Jan 15, 2012 05:53 PM

Pamela Seley

West Coast Realty Division - Murrieta, CA

Residential Real Estate Agent serving SW RivCo CA

Pacita, this post should be read by anyone wanting to sell their home with tenants. I agree with Michael that a vacant home will sell better and faster than with tenants/renters.

Jan 15, 2012 06:10 PM

Pacita Dimacali

Alain Pinel - Oakland, CA

Alameda/Contra Costa Counties CA

Marge --- same here. California has one of the toughest Landlord/Tenant laws that seem to be more favorable to the rights of the tenants. It's made even more complicated by cities with strict rent controls.

Pamela --- definitely agree that a vacant home will be more appealing than having to deal with an untidy and uncooperative tenant

Jan 15, 2012 06:36 PM

Anja Kerstens, 669.270.8034

Compass - Morgan Hill, CA

GRI, NHCB, CDPE, CHS. Silicon Valley Homes

Pacita, another great post. Sellers are lucky if tenants even want to show the home. It is best to wait until tenants are out, but sellers can't always afford to wait.

Jan 15, 2012 06:49 PM

Pacita Dimacali

Alain Pinel - Oakland, CA

Alameda/Contra Costa Counties CA

Anja --

Thanks for the kind compliment.

As a realtor, one of the features that make me cringe is "tenant occupied". It is especially hard when the tenants are definitely not motivated to move and do everything they can to scuttle the sale.

Jan 15, 2012 06:52 PM

Wallace S. Gibson, CPM

Gibson Management Group, Ltd. - Charlottesville, VA

LandlordWhisperer

The TIMING of putting a tenant-occupied home on the market is key....if the tenant is on a month-to-month, then give them notice and THEN list and market the home. If the tenant has a fixed term lease; then notify them that their lease is NOT being renewed and offering to let them out of their current lease on 30 days notice if they locate suitable housing is another way to work the situation.

Showing and SELLING the home is not the tenants' responsibility,

Jan 15, 2012 09:52 PM

Ritu Desai 703-625-4949

Samson Properties - Chantilly, VA

Northern Virginia,Washington DC & Maryland Realtor

Pacita, it is soooo true. I have walked in to listings that the tenants have chatted about the issues they have, did not show well because it is a rental home.

Jan 16, 2012 12:34 AM

John McCormack, CRS

Albuquerque Homes Realty - Albuquerque, NM

Honesty, Integrity, Results, Experienced. HIRE Me!

Pacita I seem to be having more and more problems with tenants not wanting the home to show. Not a good time, kids are sick, taking a nap, having a party and even just NO. I normally call the listing agent making sure they are aware they have a problem tenant.

Jan 16, 2012 12:40 AM

Pacita Dimacali

Alain Pinel - Oakland, CA

Alameda/Contra Costa Counties CA

Wallace -- yes, it isn't the tenant's responsibility to sell the property. However, tenant should allow the landlord and/or the landlord's agent to show the property to prospective buyers. The trick is how to get it done. In California, there are specific guidelines to landlord/agent entry to the rental property: when selling, can show during normal business hours Monday-Friday, 8 am - 5 pm, with reasonable notice (24 hours is considered reasonable). Thanks for the reblog

Ritu -- tenants are not motivated to move, that's why they will do what it takes to prevent the sale. Thanks for the reblog.

John -- we can't blame tenants. Their lives are being disrupted. But our obligation is to the seller. And if the tenants are making it difficult to sell, the seller must be notified so that the sellers can take appropriate action.

Jan 16, 2012 04:23 AM

Chris Ann Cleland

Long and Foster Real Estate - Gainesville, VA

Associate Broker, Bristow, VA

Tenants will stall a sale as long as possible so they don't have to move. Once in a while you meet really great tenants that will cooperate with sellers. It's probably best for the sellers to approach the tenants with a business deal. Not pay a month's rent in exchange for cooperating with showing, decluttering and cleaning.

Jan 16, 2012 04:37 AM

Pacita Dimacali

Alain Pinel - Oakland, CA

Alameda/Contra Costa Counties CA

Chris Ann --- offering a free month's rent is a good idea for most people -- almost like cash for keys. Seller should be satisfied with the cleaning and decluttering, and should monitor the tenant's cooperation during showings.

Jan 16, 2012 04:53 AM

Jeff Dowler, CRS

eXp Realty of California, Inc. - Carlsbad, CA

The Southern California Relocation Dude

Pacita

Homes for sale with tenants can certainly run the gamut from a wonderful experience to a major nightmare. Some of the responsibility lies with the seller and how the sale is positioned. Sometimes providing an incentive to the tenant can work wonders. Other times I think there is nothing to be done, and buyers will either overlook the mess, etc. or not.

Jeff

Jan 17, 2012 06:34 AM

Pacita Dimacali

Alain Pinel - Oakland, CA

Alameda/Contra Costa Counties CA

Jeff

The relationship betweetn seller and tenant is so important in this process. Seller can certainly offer an incentive -- like giving the tenant a break during the showing, a promise of a substantial refund of the security deposit. But if the tenant is uncooperative, the seller may have to ask the tenant to vacate because selling the property at a good price may be a futile effort.

Jan 17, 2012 06:38 AM

AJ Heidmann ~ CRS

McEnearney Associates, Inc. - Alexandria, VA

YOUR Alexandria & Arlington, VA Real Estate Expert

It can be a nightmare if the tenant doesn't want to play nice. I agree with Wallace #14 that it isn't the tenant responsibility to sell the property, but they shouldn't actively work against the sale. The lease most likely contains verbiage that lets the tenant know about access/marketing at the end of the lease.

Jan 17, 2012 10:27 AM

Pacita Dimacali

Alain Pinel - Oakland, CA

Alameda/Contra Costa Counties CA

Time and time again, uncooperative tenants, or tenants with loose lips will cause the seller to lose the sale. How well we know!

Jan 17, 2012 11:06 AM