Fab Real Estate Blog: Should You Rent Your Home While Selling It?

Should You Rent Your Home While Selling It?

There's a running joke in my house - how often can I be quoted in the press as a real estate expert?

It happens.  It's fun.  And, so far, they've always spelled my name right.  That can be a feat unto itself.

The latest article pertained to whether or not sellers, when they've already moved and their house is vacant, should rent their house out to tenants while it's on the market for sale.

View the article:  Renting is an Option when House Won't Sell

My view:
If you're selling a vacant home, should you rent it out while trying to sell it?  Absolutely not.

A clean, vacant home typically shows much better than a home with tenants.  It is always available for viewing.  It is always in top show condition.  There are no worries about messes or tenants not allowing prospective buyers the opportunity to view the home.

If the house doesn't look great vacant - then stage it.  Hire a professional stager and rent some furniture.  It will show like a model home.  And, once you've moved out, it is then much easier to give the entire interior a new paint job.

Of course, there are exceptions.  If the home is one that will appeal primarily to investors, then having tenants in place may be a bonus.  This can be especially true for multi-family homes and homes in vacation areas.

You may say:  But the house is vacant and is costing me money. I'm paying two mortgages.  It won't sell.  I need tenants.
This is a situation that needs to be looked at further. 
Why won't the house sell?  Is it the price?  The condition? 
Let's make this house sell.  It can be done, even in this current market.
Or consider, keeping the home and locating long-term tenants. 

Talk to your real estate professional.  Determine the best route for you to either sell your home or rent it out for the long term. 

Don't fret over the situation.  Work with your agent to find the solution!

Don Fabrizio-Garcia, REALTOR
Connecticut Real Estate & Appraisals
Keller Williams CT Realty
203.746.1199
Connecticut Real Estate and Homes for Sale

Comment balloon 7 commentsDon Fabrizio-Garcia • March 24 2008 05:35PM

Comments

Great post I agree 100%, renters make selling a home more difficult to sell.  I vacant house never has a bad odor, never is unable to show becuase of sickness, and never tells the prospective buyers the bad things about the house.
Posted by Optimum Real Estate Group over 10 years ago
As an investor purchasing a tenanted property is never a benefit. We want our own selection of tenants, tenancy agreement and our own terms. We usually ask for the tenants to move before the possession date.
Posted by Todd and Danielle Millar, Fifteen years of excellence! (Glenn Simon Inc.) over 10 years ago

Craig - you know I agree with you completely.

Todd - Interesting viewpoint, and I do see your point.  However, most investors I've worked with prefer when a place is already rented.  They won't have to worry about immediate vacancies.

Posted by Don Fabrizio-Garcia, Owner/Broker/Trainer - Fab Real Estate (Fab Real Estate) over 10 years ago
Don, I am in full agreement and I hope this helps sellers understand that a leased home is very difficult to sell vs. a vacant staged home.
Posted by Mark Organek, On a journey to accomplish one huge goal. (And the United States of America) over 10 years ago
Mark - you got it - tenant-occupied homes can be difficult to sell.  That's the issue.
Posted by Don Fabrizio-Garcia, Owner/Broker/Trainer - Fab Real Estate (Fab Real Estate) over 10 years ago

Greetings Dan,

This is brilliant site!

Allow me to ask a question.

I just leased a three bedroom home.

However my intentions where to sell it.

Now...here is where the drama unfolds.

I just found some one who is ver interested in my house.

So interested infact that they are willing to close A.S.A.P.

However the buyer does not want tenants, the buyer wants to live in the house.

What should I do?

I do want to sell the house.

What are my options?

Respectfully yours.

Leo

Posted by Leo over 9 years ago

Hi Leo,

It's difficult to tell you what you should do, as that is really your decision.

But, here are some things you need to consider:

1.  The buyer does not want tenants.  Do your tenants have a lease? If so, they have the right to remain in the home until the end of the lease.  If the tenants are month-to-month, then you may be able to have them move-out with 30 day notice from you.

2.  You say you have a buyer that is interested in buying the home.  Has this buyer seen the home since the tenants moved in?  If not, is the home in the same condition as when this buyer last saw the home?

3.  Is this buyer approved for financing?

4.  Does this buyer have to sell a home before closing on their purchase of your home?

5.  Will your tenants cooperate to allow the buyer and their inspectors and appraisers in to the home as needed?

Keep in mind that if you sell the home, and evict the tenants prior to the home closing (which seems to be a requirement for this buyer), then you run the risk of having the deal fall apart, and owning a vacant home.

You will want to consider wording the contract between you and this buyer very carefully.  Perhaps have a 90 day closing period.  All contingencies must be removed within 45 days (I don't know where you are located, so I do not know the customs of your area and if this is possible).  Once all the contingencies are removed, then you give the tenants 30 days notice.  In this scenario, the tenants will be out 2 weeks prior to closing, giving you time to fix up any tenant damages.  Also, once the contingencies are released, it is relatively safe to assume the buyer will proceed with the closing.  Of course, there is no guarantee of this, nor is there any guarantee that the buyer will agree to remove contingencies so far in advance of closing.

I have to recommend you speak with a local real estate agent to determine what will work in your area.  Also, please consult with a local real estate attorney to determine if it will be possible to remove the tenants and proceed with the sale.

Good luck!  Let me know what happens.

Posted by Don Fabrizio-Garcia, Owner/Broker/Trainer - Fab Real Estate (Fab Real Estate) over 9 years ago

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