Introduction

If you are a landlord, you understand how stressful dealing with a bad tenant can be. You might consider selling the rental property and getting out of the landlord business. It is no longer just about you when it comes to selling your home.

Remember that the tenant has rights, and the process may be difficult. The sale of a property with renters in residence is governed by strict laws. Before you proceed, it is critical that you understand what the law says about you and the tenant.

These few pieces of advice on selling a rental property with a bad tenant will get you started.

What Are Your Alternatives?

There are two options to consider when selling a rental property with a bad tenant. You can either wait for the lease to expire or sell while the tenant is still living in the house. Each option has advantages and disadvantages.

Waiting for the Lease to Expire

If you decide to wait until the lease agreement expires:

  • You’ll have plenty of time for updates. You can make cosmetic improvements to the property, clean it thoroughly, and generally spruce it up before selling it. This will help you get a higher selling price.
  • If you’re selling in a hot market, selling while the tenant is still living there may cause you to miss out on reasonable offers. It may be difficult to get the tenant out on time, depending on federal regulations and the lease agreement.

The disadvantage of waiting for the lease to expire is:

  • You will have to deal with the bad tenant for a longer period of time.
  • You will still have mortgage payments to make if you do not sell the property as soon as the tenant vacates. It means dipping into your own pocket to make the payments. Preparing the property for sale, listing it, accepting an offer, and closing the deal all take time.

Selling With the Tenant In

The staging process is more natural in this case. Buyers can imagine themselves living in a furnished house, which can help them make a decision faster. If the tenant takes good care of the house, it will look more appealing to potential buyers.

Selling a rental property while the tenant is still present saves the buyer the hassle of finding a tenant. It becomes your most powerful selling point.

On the negative side, a tenant can make it difficult to sell. When staging, a disgruntled tenant will make things difficult for you. They may be unable to accommodate showings, and their unpredictable nature may have a significant impact on the sale.

In such a case, you may be able to persuade your tenant to cooperate. You can best accomplish this by offering them lower rental rates for the remainder of the lease term. You could also offer to cover their moving expenses in exchange for a clean house during the showing.

Tenant’s Legal Rights

You must take the tenant’s rights into consideration. In such a case, your options are limited. As long as they have paid rent, selling a property where someone else lives may require their permission.

It makes no difference what kind of tenant you have. Remember that they have a right to peace and quiet. It simply means that you cannot pressure or harass them into leaving. Any coercion from you could result in a court fine, and the tenant could be granted legal permission to stay.

When the tenant is informed of the impending sale, he or she may decide to vacate your premises. The uncertainty of the terms in the next lease negotiation may cause them to seek alternative housing. You cannot prevent them from leaving if these were the terms of the agreement.

If the tenant breaches the lease agreement, they may face significant penalties. If there was no agreement regarding the lease’s premature termination, this would be the case. Whatever the circumstances, selling a rental property while the tenant is still present can elicit strong emotions.

Keeping communication lines open with the tenant may be the simplest way to sell the property. They will appreciate that their rights were upheld throughout the process.

Final Thoughts on Selling a Rental Property

You have the right to sell your house whenever you want, regardless of the type of tenant you have. You should not be concerned about a bad tenant because you own your home outright. It is critical to exercise caution when dealing with them during the process.

Many landlords decide to sell due to the stress of dealing with a bad tenant. You don’t want to aggravate the situation by being too hard on yourself. Sometimes you have to make a concession and accept a price that is slightly lower than the market value.

You will not only sell quickly, but you will also be able to move on to the next chapter.

You should also seek legal counsel at each stage of selling a rental property. Check that your tenancy facts have been verified and that the lease agreement does not contradict anything you do. Avoid getting involved in an ugly court battle with the tenant.

Greg Bilbro

Greg Bilbro is the CEO and co-founder of Fair Property Buyers. After 20 years as a residential Realtor, Greg founded Fair Property Buyers, a nationwide group of real estate professionals committed to helping homeowners sell their problem properties quickly and easily. Fair Property Buyers helps people across the U.S. sell their homes for a fair cash price, without the hassles. Prior to starting Fair Property Buyers, Greg was a Series 7 and 63 securities and registered investment advisor with New York Life and NYLife Securities, where he was named “Rookie of the Year,” and named the youngest Partner in the U.S. Greg is a native of Texas and holds a Bachelor of Science degree in Biochemistry from the University of New Mexico. He currently hangs his hat in Scottsdale, Arizona with his sidekick Frenchie, “Bity".

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