Selling a Rental Home With a Tenant

Selling a rental home with a tenant is often a PITA. It’s not that I am anti-tenant because many of my short sale clients in Sacramento have turned into temporary tenants. In fact, I myself, in my own crazy life, was many years ago, a tenant. It’s that I am pro-Sacramento real estate ownership. Which is not all that together surprising given the fact that I am a Sacramento real estate broker whose living depends on buying and selling homes, which are mostly occupied by owners. It’s why the National Association of REALTORS is so deadset against the banks bundling truckloads of once owner-occupied homes and selling them in bulk to investors. It dilutes home ownership in neighborhoods. When blocks of owner occupied homes turn into rentals, pride of ownership dissipates and property values tend to diminish.

Still, that doesn’t stop some tenants from behaving as though the home they occupy belongs to them and not to the landlord. I’ve got a Sacramento listing in which the tenants have pretty much trashed the home. It looks like a teenager lives there. Crap from one end to the other. They have also acquired a couple of pets, which are not allowed in their lease. See, this is yet another reason that I am not a landlord. I would hate to tell a person they could not enjoy the company of a pet if he or she wanted to adopt.

The seller is pretty close to closing escrow and we received short sale approval from the bank. This means it’s time for the buyer to do a home inspection. Somehow, the tenants believe they can choose the date and, because the home inspection time period falls outside of a time that the tenants deem to be convenient, that it is the tenant’s right to louse up the seller’s transaction. They don’t want to give the landlord access to the home. They are talking about changing the locks. They accused the owner of purposely putting the home on the market at the wrong time for the tenants. They say they do not trust the landlord to enter her own home. Wha? See? You can’t make this stuff up.

I offer yet another valid reason why many real estate agents are in favor of selling a rental home as a vacant home. The government, in its infinite wisdom, has offered the tenants $3,000 in this HAFA short sale to cooperate. That doesn’t ensure cooperation, though. The fact the new owner will become their landlord doesn’t seem to mean much, either.

Fortunately, not all tenants behave in this manner. I just closed a short sale in the Pocket that was occupied by one of the loveliest tenants I have ever had the pleasure to meet. Robin was polite and sweet. She kept the home immaculate, cooperated with showings and cleaned the home from top to bottom when she moved. Everybody in that transaction would have moved heaven and earth to accommodate Robin’s wishes.

Rest assured, however, that if you need to evict, your Sacramento real estate agent will wait for you. No future sale is that urgent. Think about this before you put your home on the market. If your future buyer will be an investor, selling a home with a tenant in place can be advantageous, but it’s not if the tenant is the tenant from hell. If your future buyer is an owner occupant — and remember that home owners tend to pay more than an investor will pay — a tenant in place is probably not your best move.