Selling a house with tenants in the Bay Area?
There are several things to consider, so let’s walk through your options.
Selling a house is already a nerve-wracking process in itself, but adding tenants to the equation makes it even more complicated.
There are several reasons why you might want to sell your rental property. Some of your reasons might include:
1. I need or want the cash.
2. My rental house is under-performing and I need to cut my losses.
3. I am relocating soon.
4. I am planning to buy a new house.
5. I am tired of dealing with tenants.
6. My tenants aren’t paying me!
7. I am doing a 1031 tax exchange.
Whatever the reason you might have, you’re free to sell your rental property any time you wish. However, selling a house with sitting tenants is not as simple as selling a vacant house.
If you plan to sell a rental house, the tenancy shouldn’t be affected.
While you can terminate a month-to-month tenancy by giving the tenant 30 or 60 days’ advance written notice, you cannot terminate an ongoing lease simply because you want to sell the house. Typically, you have two options:
Option 1: Wait for your lease agreement to expire.
Since selling a house with tenants can be quite a tricky situation, most real estate experts advise homeowners to wait for the lease to expire before proceeding with the sale. Tenants can make or break a sale, so some just opt to wait it out and sell the house vacant. Although this option is not always practical for the your finances, waiting can be your best bet especially if you have disgruntled and difficult tenants.
If your tenant only has a couple of months left on the lease and you really need to dispose the house right away, then you can try to negotiate a settlement to get your tenant to vacate your house. However, your tenant is not obligated to agree on your terms. If the other party disagrees, you have no choice but to wait for the lease to expire. Tenants in the Bay Area are also privy to buyouts and the asking price usually isn’t cheap, especially in areas such as Berkeley and Oakland where rent control laws are strong.
Option 2: Sell your house while the tenancy is still ongoing.
If you have a good relationship with your tenants, selling your rental house while they’re still there can actually be beneficial for you. Selling a house with tenants in place is a practical idea if you rely on rent income to pay the monthly mortgage. Also, since the house is already furnished with your tenant’s belongings, you don’t have spend and make an effort to stage it. Your tenants can even help you show the house to prospective buyers, provided you have given them proper notice in advance.
On the downside, opting to sell a house with an ongoing lease will greatly limit your prospects. It’s difficult to find buyers that will let the tenants live in the property until their contract expires.
Handling a month-to-month tenancy
According to Landlordology, if your tenant is on a month-to-month agreement, all you need to do is give your tenant proper notice. This involves mailing or delivering a letter to your tenant 30 days before you’d like them out.
The required notice period varies from state to state, so be sure to look up your state’s policy here.
You don’t need a reason to terminate a month-to-month agreement, hence why it is called a “no cause” termination. You don’t have to tell the tenant why they need to vacate unless you want to. These are the easy situations.
So, what’s the best way to sell my house with tenants?
Professional real estate investors buy houses with tenants, so they can be your best option if you need to sell the house quickly. Selling to an investor such as Skye Homes should be the first thing you consider as many new or beginner landlords are not buying new property here right now because the numbers don’t make sense.
We will buy your house with the tenant still occupying the home and will work with the tenant to either continue renting as-is or offer.
If you can afford to do so, you may consider a tenant buyout, also known as “cash for keys” if comparable housing is available and they desire a move. Sometimes this can be difficult if they are behind on rent or if there is bad blood.
If your tenant is on a month-to-month lease, you may decide to give them notice and list with an agent. If time is on your side and you want to pay real estate commissions, that may be your best bet.
What Will Happen Once Your Tenanted House Has Been Sold?
Once your rental house has been sold, your buyer now becomes the new landlord. Should the new owner wants to occupy the house or use it for other purposes, then they should work with the tenant in good faith.
If you need to sell your rental house with tenants, give us a call at 877-210-6460 or fill up the form below. We at Skye Homes can offer you a fair, no-obligation estimate for your property. We buy houses all around Bay area regardless if it has tenants or not. Learn more about how Skye Homes helps house sellers like you through this process.