Selling a house can be a daunting task, especially if it’s currently occupied by tenants. Many homeowners wonder if they can sell their property as-is, without having to deal with the hassle of asking tenants to vacate or making significant repairs and renovations. The short answer is yes, you can sell your house as-is even if it’s tenant-occupied, but there are several important factors to consider before taking this route.

Review the Current Lease

First and foremost, it’s crucial to review the terms of your lease agreement with your tenants. Depending on the terms outlined in the contract, you may have certain obligations to fulfill before selling the property. Some leases include clauses about giving tenants a certain amount of notice before showing the property to potential buyers or requiring them to vacate upon sale. Understanding these terms will help you navigate the selling process smoothly and avoid any legal complications.

Most leases have an auto-renewal clause. Usually, it is month to month but it could be 12 months of lease renewals. If you are in the middle of that term, you have a legal contract with that tenant and will not be able to sell your house as-is for cash. A lot of tenants like going month to month after the term of the initial lease because they like the flexibility of being able to move. But they don’t realize that also gives the landlord or homeowner that same flexibility. They can ask the tenant to leave in short order as well.

Communication is Key

Communication with your tenants is key. Selling a property can disrupt their lives, so it’s essential to be transparent and keep them informed every step of the way. Let them know about your intentions to sell the house and discuss how it might impact their living situation. Being considerate of their needs and concerns can help maintain a positive relationship and minimize any conflicts during the selling process.

There is usually a clause in the lease about the amount of time in advance needed to break the lease. If the lease is month to month, it can be used by the homeowner or the tenant. Usually that timeframe is 30 or 60 days. If you have a lease that is month to month, but the lease says you must give 60 day’s notice to break the lease, you would have to give 2 month’s notice that you were moving, even though the lease is month to month. 

Most leases also outline how to communicate between homeowner and tenant. Any communication should be documented versus a verbal conversation. Email and text messages are a good way to document the exact communication between homeowner and tenant. The lease may spell out that any communication must be done via direct mail or fax. With technology what it is today, usually email and text is sufficient. But I wouldn’t make any agreement verbally without written confirmation.

What is the Condition of the Property

Another important consideration is the condition of the property. Selling a house as-is means that you’re selling it in its current condition, including any maintenance issues or repairs that may be needed. While this can attract buyers looking for a fixer-upper or investment property, it’s essential to manage expectations and be upfront about any known issues. Conducting a thorough inspection and disclosing any problems can help prevent surprises and potential disputes with buyers down the line.

Cash home buyers who would be open to buying this sort of property are going to look at the big-ticket items. These are things like the foundation, the roof, the HVAC system, the water heater, and the appliances. Depending the cash home buyer who is buying the property as-is plans to do with the property, they may look at the finishes, like kitchen cabinets, countertops, paint, flooring, and bathrooms. If they are buying it with a tenant in it, there is a good chance they will continue to rent the property so they may not be as picky with the finishes.

For more information about repairing a home, here is our blog on Can I Sell my House Without Making Repairs?

Find the Right Buyer

In some cases, selling a tenant-occupied property as-is may limit your pool of potential buyers. You are probably going to be limited to cash home buyers who will buy the house as-is, with then tenant. Some buyers may prefer vacant properties to avoid the hassle of dealing with tenants, while others may be hesitant to purchase a property with existing rental agreements in place. However, there are investors and buyers specifically looking for tenant-occupied properties, so it’s still possible to find interested parties.

I will put a clause in here about morality. I have a house that has been rented to the same family for 9 years. I get offers every month from people wanting to buy the property. The property has doubled in value over 9 years and if I did sell, I would make out pretty good. However, the family renting the house has 5 kids and I’ve only raised their rent once as property taxes went up to cover the difference. If I kicked them out and sold, they couldn’t afford to live in the same school district, and I would be upending a family with 5 kids for no reason other than greed.

Now, I could sell the house to another cash home buyer, walk away, and let them end the month to month tenancy, and evict the family with 5 children. But that would be like the cash home buyer doing my dirty work for me and I don’t feel right about that. The property continues to appreciate as it’s in a very desirable area, so I keep the rent to where they can afford it and their kids got to a very good school. My kids go to the very same school. If you have good tenants and you don’t need to cash out of a property, I would be hesitant to kick out good tenants and sell, even if they are month to month.

Now that being said, if you have horrible tenants and you are tired of dealing with them, then selling to a cash home buyer can be a great option. A cash home buyer will come in, evict the current tenants, and do the dirty work so you don’t have to. In that scenario, a cash home buyer makes a lot of sense. You wash your hands clean of the situation, walk away with some cash, and the cash home buyer gets a property they can renovate.

If you’re considering selling your tenant-occupied property as-is, it may be beneficial to seek guidance from a real estate professional with experience in this area. They can provide valuable insights into local market trends, legal requirements, and strategies for marketing and selling your property effectively. Additionally, they can help you navigate negotiations with buyers and ensure a smooth closing process. However, as the previous paragraphs mention, your pool of home buyers is going to be significantly smaller for this type of home sale. You can look around your local area and talk to several cash home buyers. Here is an article about how to find cash home buyers in your area How to Find Reputable Cash Home Buyers in Your Area

In conclusion, selling a house as-is while it’s tenant-occupied is indeed possible, but it requires careful planning, communication, and adherence to legal obligations. By understanding your lease agreement, communicating effectively with your tenants, addressing any maintenance issues, and seeking guidance from real estate professionals, you can successfully navigate the selling process and achieve your goals as a property owner.