We have all been there. You compete and earn a listing for a piece of property. You are excited to start the marketing. There is one complication though, it is currently rented out.
I try not to get involved with listings that have tenants unless they are on month to month tenancy or are a multi-unit dwelling that buyers will want stable tenants.
You can help yourself by working with the tenants and try to minimize the impact on their lives. This is their home and you at all times have to remember that you are adding a lot of stress in their lives.
I meet with the tenants and the seller and explain that the home, (usually a condo or townhouse) is being sold. We will do everything possible to make it as painless as possible.
There are three possible outcomes:
- They work with us to help sell the home. They can stay in the home during the sales process. If the buyer is an investor who wants them to stay, they can continue on with lives without having to move.
- They work with us and the buyer wants to live there, they will at that time receive a 45 day notice to vacate. They can move anytime during the 45 days with no penalty. I will work hard with them to help find them a replacement home.
- Should they choose not to work with us, they immediately get their 45 day notice. I will still help them to find another place. After all I got in this business to help people get a place to live, not to kick people out.
So we met with the tenants, they have pledged their cooperation and away we go.
Well maybe not so fast. I did remember to mention that there were tenants? In the real world tenants have a vested interest in delaying the sale of the property and they find many creative ways to that.
Tenants can make or break you. More times than not they may not break you, but they will at the least make you bend or twist. Here are a few of the things that I have had tenants do:
- Change the locks
- Move out and leave the place trashed
- Make showing appointments and then cancel at the last minute
- Not allow any showings during the week
- Leave dished I the sink all week long
- Not allow a lock box
- Tell perspective buyers about every negative and a few they made up
- I had one move out, and drop the keys off at my office. Unfortunately they were not for his condo.
- Move in family and friends with all of the personal effects
- I almost forgot; I have had tenants delay their move date causing the escrow not to close on schedule.
I had one who cooperated with me as long as I sprung for lunch and a movie every Sunday, so her and her daughter had something to do while I held open houses. I didn't mind, because she actually helped us sell the unit.
I have not only helped several tenants find replacement homes, but helped them move.
This is a people business and have found that every time I have gone the extra mile it has come back to bless me many times over.
I have just entered into a listing agreement for a duplex, with one unit (the larger of the two) occupied by long-term elderly tenants. The Seller has agreed with them that they will vacate their unit for inspections and for one broker tour. After that, she promised them that there would be no showings of their unit until a serious offer surfaced.
I have done my best to promote the listing within my real estate community to get agents there for the inspection and the tour, and to bring their clients if possible. We will also have a drawing of the floor plan of the occupied unit as well as photographs.
Did I miss anything?
In our area if the tenant has a lease, the new owner (as I understand the law) has to abide by the existing lease. I'm not sure what the situation is with this unit.
Randy...
Oh. Boy! You don't want me to get started on tenants.
Hmmm. Nope I better not. I think this topic has a 'vent' behind it :)
TLW...ROAR!
David & Tonya - We never know who is watching and who will be our next client. How we conduct ourselves makes an impression on others.
Kelley - I think you have it covered. The pictures are a big help.
Lysa - Here 48 hour notice is common with tenants. If there is a lease it goes with the property here in Hawaii and most places that I am aware of.
TLW - A vent and a lesson. It is fun when you get started.
When you have a good property management company, that includes provisions in the lease in the event of the owner selling, your problems become pretty much nil.
George - Thank you, in our market a lot of the rentals were converted to owner occupied. As the rental market gets tighter the tenants get even more defensive.
Joan - I try to be patient and nice. The last thing I want is a disgruntled tenant.
Christina - A good property manager can help. If you get the listing and not the property manager they can also be a fly in the ointment. The laws in Hawaii as many places give the tenant most of the cards. I have seen the greatest tenant on earth can become your worst nightmare.
The one thing that I dread is when I take a listing that is vacant and before the property sells, the seller decides to rent it until it sells. We've managed in the past to make it work, but it is not always easy.
Judi - In our listing agreement it states that they need to keep it vacant. That is not always possible if they need the cash flow.
Aziz - I am always will to go the extra mile for a motivated client.
Randy, I did a loan last year for a young kid who was buying his first Condo. There was a tenant in the Condo who also happened to be handicap. The loan was a CHFA Loan which has a 120 day rate lock. It took all 120 days to get the tenant to move out. It was a real nightmare.
I had one situation with tenants also...
They were paying below market rent for a great 3 bedroom 2 baths unit in an affluent neighborhood. When they were told that the building is being sold they at first was very welcoming and seemed to want to work with me. But when the first Sunday open house roll around, they would not leave the house vacant, and insisted that this is the only day off they have and the whole family had to stay at home and enjoy their family day together. They were watching TV, cooking, walking around, etc., while the open house was going on. So I have to cut it short and left early to prevent any prospective buyer being deterred.
Then it only got worst, I tried to contact her and give her a 24 hours notice to show unit during the week day. She will never answer the phone. So I was forced to leave her a message and not sure whether she got it or not. So every time I had to haphazardly enter the unit thinking that someone might be inside. Sometime they were and sometimes there weren't. And almost all the time when I was able to go in while no one was there the back bedroom door is always locked! So I have to call her again so many times to reschedule... Gosh! That has been the biggest nightmare I have had with tenants. Not to mention the back stabbing and trash talking the tenant was saying about me to the seller.
But what made it worst was not the tenants, but the sellers. They weren't very helpful and were actually being victimized and scared of talking to the tenants. The seller must have been bullied by the tenants for a long time already. Anyhow, make a long story short, my consistency and patience eventually paid off. When they were mad and nasty with me I just kept my calm and be better and nicer to them. There was no way to get mad at them as it only shows your weakness and they will win.
This is just my 2 cents with tenant, I hope you get something from it. But I would really recommend consult with a lawyer whenever you have any tenant / owner situation as that is not our best interest to be a part of it.
Gary
George - My worst was one where I represented both the buyer and seller. The buyer needed to close the sale which we did. It took a few more months to get the tenant out. My buyer was going to take a financial hit as a result. Without hesitation I pulled out my check book and wrote a fairly large check to cover her losses.
Michael - I don't always have that option. I have turned down a few because of the tenant situation.
Andrew - Fortunately we do not have heat or private water sources here on Oahu. Two less things we have to deal with. I always try to accommodate the tenants, but the reality is some will not work with you and you then need to go to plan B.
Adam & Sharon - I wouldn't want to get you started. LOL
Gary - You hit on a great point. When they have below market rents they will generally be less than cooperative.
Vita - The tenant could be given plan A and plan B.
"Plan A" is the nice way. He helps you sell it by cooperating and cleaning it up. You then do eveything possible to help him relocate if the buyer does not want a renter.
"Plan B" you get the eviction notice today, so we can sell the home. Either way the home is to be sold.
I find most tenants will work with you if you show a willingness to minimize their pain and inconvenience.