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Are Your Tenants Serious About Buying Your Home?

By
Real Estate Agent with Long & Foster Real Estate, Inc.

You rented your home a few years ago, but now you're interested in selling it.   Selling a tenant-occupied property has challenges, however, because you must rely on your tenant to keep it show-ready both inside and out (de-cluttered, clean, etc.) and to provide access to prospective buyers.  This co-operation is critical to selling the property.

When you mention "selling" to your tenants, they may express an interest in buying the property.  You'll probably think, "Wow, that's too easy to be true!"

In my Home for Saleexperience, it IS too easy to be true.

I can't tell you how many times sellers have contacted me about handling the sale of their home and told me they already have buyers - their tenants.  Unfortunately, tenants rarely purchase the home they occupy; an arm's length transaction is much more likely.

Food for thought:

  • If your tenants are qualified to purchase a home, they'd probably already own one.
  • If your tenants truly wanted to own a home, chances are they would not be renting now.
  • If your tenants do make an offer on your property, it's likely they will offer less than fair market value (you know... because this sale will be so "easy"...).

 

One way to find out if your tenants are serious about purchasing your property is to offer them ten days to submit a written offer prior to marketing the property to other prospective buyers.  This is ample time for them to get pre-approved for a loan and to prepare an offer with their own agent.

If they do submit an offer during that time-frame, your REALTOR® will advise you during each step of the sale to your tenant and advocate for your best interests in negotiations.   Once this reserved period passes, however, you and your agent will know that it's time to focus on selling your property to someone else, without looking back.

Posted by

This infoMargaret Wodarmation was provided to you by Margaret Woda, an Associate Broker with Long & Foster Real Estate in Crofton Maryland. Contact Margaret today for general real estate information or to learn how she can help you buy or sell a home in Annapolis, Bowie, Crofton, Davidsonville, Gambrills, and Odenton. 

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Comments (53)

Patricia Aulson
BERKSHIRE HATHAWAY HOME SERVICES Verani Realty NH Real Estate - Exeter, NH
Realtor - Portsmouth NH Homes-Hampton NH Homes

Why not give it a try.  No harm in asking ......right.

 

Patricia/Seacoast NH & ME

Apr 12, 2011 05:16 AM
Margaret Woda
Long & Foster Real Estate, Inc. - Crofton, MD
Maryland Real Estate & Military Relocation

Marte - It's good that the sale went through, but I do understand your frustration!

Ellen - Maybe a blog topic for another day?

Cheryl - I is a good idea.  Right now I have lisings occupied by tenants.  They were offered the property up-front but no time-limit, and I came into the picture later.

Chuck - That sounds like every seller's dream tenant/buyer.  Congratulations!

Fernando - I think the odds of the tenant ruining a listing are lessoned if they have some special consideration up-front.

Apr 12, 2011 06:31 AM
Margaret Woda
Long & Foster Real Estate, Inc. - Crofton, MD
Maryland Real Estate & Military Relocation

Richard - You're right!

Morgan - When the home sells, the tenant will have to move.  No wonder they're not inclined to be co-operative.

Ed- Granted, it would be easier for landlord and tenant if a fair market value sale could occur, but...

Margie - I've had some of those because I sometimes list rental properties occupied by tenants in College Park, MD - The issue of online pictures becomes really tough with these...

 

Apr 12, 2011 06:38 AM
Margaret Woda
Long & Foster Real Estate, Inc. - Crofton, MD
Maryland Real Estate & Military Relocation

Charita - Thank you!

Valerie - Thank you!  It's usually a good professional way to handle the situation, but sometimes the landlord is too emotionally attached to his tenant...  That's a problem.

Mark - Thanks for the comment.

Scott - So true!

Michael - The time limit is good for both the landlord and tenant so they can both move on.

Patricia - Right!

Apr 12, 2011 06:46 AM
Robert Hammerstein -
Christie's International Real Estate - Hillsdale, NJ
Bergen County NJ Real Estate

Margaret - An excellent idea on the 10 right to refusal.. It's a win win..

Apr 12, 2011 07:46 AM
Virginia (Ginger) Schott
Cabins & Canoes - Port Jervis, NY
Assoc. Broker, CBR, CHMS

I'm currently in a situation where the tenant expressed an interest in purchasing the home.  The owner had given him 14 days to get a pre-approval.  She had told him several months ago that they were going to put the house on the market and at that time the said they wanted to purchase it.  After several months, we listed it.  Well as soon as the sign went up the owner received a call from the tenant asking why is it on the market you agreed to sell the home to me!  The owner stated you have had several months do get a mortgage, and I've had no communication from you that you had even tried, (they had not) and were told then 14days then it's out. 

I was worried that they would make getting into the home impossible (access is thru them), they have been accomodating, but they keep the house untidy and have 3 dogs that must be contained.  So they are either in the basement or the back yard.  The yard works fine as we can still show the yard from the deck, but when in the basement, buyers cannot inspect the basement and the systems.  The owner will not get rid of them as their rent pays the mortgage on the home.  But having them there is hindering the sale of their home.

 

Apr 12, 2011 07:50 AM
Thom Abbott
MyMidtownMojo.com |770.713.1505 | Intown Atlanta GA Condo Living - Atlanta, GA
Midtown Atlanta GA Condos For Sale

Margaret...been there, done that! Anytime I've ever had a tenant occupied property, it's never been easy to show. Never.

Also never had a tenant express an interest in buying, but certainly might be a good idea to check with them.

Good suggestions all around!

Midtown Atlanta Condos For Rent

Apr 12, 2011 09:13 AM
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

It is great if they can buy it, but they need to decide if they are going to Fish or Cut Bait

Apr 12, 2011 09:16 AM
Rosalie Evans
Meritus Group Real Estate - Sioux Falls, SD
The Evans Group, Sioux Falls, SD Homes For Sale

I also rented with an intent to buy.....fully intending to buy.....but then I decided not to due to issues with the house that would not have been remedied, neighbors and the fact that I determined that the option price was too much. That is just my experience. Thanks for the post!

Apr 12, 2011 09:28 AM
Evelyn Kennedy
Alain Pinel Realtors - Alameda, CA
Alameda, Real Estate, Alameda, CA

Margaret:

Great idea to give the tenants 10 days to make an offer on the property.  Thanks for sharing your good idea.

Apr 12, 2011 09:31 AM
Steve Ewing - Keller Williams Realty
Keller Williams - Stockton, CA

Margaret - In this area there are a lot of renters that "lost" their property due to short sale or foreclosure.  By getting these people qualified by a lender, now that a period of time has passed, they now become the new buyers we are always looking for.  Thanks for the blog.

Apr 12, 2011 12:58 PM
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

Great post . . . and yes, it's not always a perfect match, EVEN with tenants living there.  And sometimes, they are the most difficult.  They know each imperfection -- might not be a material defect, but something for them to complain about.  Annoying.

Apr 12, 2011 04:49 PM
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

No doubt it makes for an easier transaction when the tenant wants to step in and buy!

Apr 13, 2011 12:19 AM
Kasey & John Boles
Jon Gosche Real Estate, LLC - BoiseMeridianRealEstate.com - Boise, ID
Boise & Meridian, ID Ada/Canyon/Gem/Boise Counties

Going to the tenants first and giving them the ability to make the offer first is a great idea.  We have been fortunate and had a number of tenants or their family members purchase our listings so the tenants could stay in the home.

Apr 13, 2011 03:26 PM
Kathryn Acciari
Central One Federal Credit Union - Shrewsbury, MA
Mortgage Loan Originator

A timely post, Margaret.  I am helping an owner with just this type of situation.  If the owner does not put a time limit on the tenant, they stand the chance of not being able to move forward.  The tenant should be able to get qualified and make a decision within a week.

Apr 18, 2011 12:35 AM
Robert Courtney
Lihue, HI
Century 21 All Islands, RA, CDPE, MCRE, CIAS

Margaret - It never hurts to ask.  I like the idea of a time frame for them to consider buying.  It may give them some incentive to jump into the market or at the very least make showing the listing a "Little" easier.

Apr 18, 2011 07:32 PM
Bob & Leilani Souza
Souza Realty 916.408.5500 - Roseville, CA
Greater Sacramento Area Homes, Land & Investments

Margaret, you are absolutely right! I can't even remember all the times I've heard tenants say they were interested in buying the home...and none of them have so far. Thanks for this post, I re-blogged it. :)

Leilani

May 02, 2011 07:05 PM
Margaret Woda
Long & Foster Real Estate, Inc. - Crofton, MD
Maryland Real Estate & Military Relocation

Lisa and Robert - The owner has to be able to move on, and so do the tenants.

Ginger - Sounds similar to the situation which inspired this post.

Thom - It usually turns out to be a nightmare, doesn't it?

Gene - So true!

Rosalie - I think many option prices are too high, given the decline of property values.

 

May 03, 2011 07:43 AM
Margaret Woda
Long & Foster Real Estate, Inc. - Crofton, MD
Maryland Real Estate & Military Relocation

Evelyn - You're welcome.

Steve - You're welcome

Carla - Tenants in a "for sale" property can make it very difficult.

Bill - Have you ever had that actually occur?

John and Kasey - I think you're the exception... most agents (and sellers) aren't that lucky.

May 03, 2011 07:49 AM
Margaret Woda
Long & Foster Real Estate, Inc. - Crofton, MD
Maryland Real Estate & Military Relocation

Kathryn - I hope it works out for you!

Robert - In theory, it should solve the typical problems with a tenant in a home that's on the market.  It doesn't always, but it's probably the best strategy for minimizing their resistence to showing the property.

Leilani - That's been my experience, too, unfortunately.

May 03, 2011 07:57 AM