DO NOT DISTURB THE TENANTS[1] © 2013 by Wayne D. Lewis, Sr.

Wayne Lewis also posted other Real Estate perspectives at:

http://makeyourbestoffer.blogspot.com/

Chances are that as investors, you own a single-family home that houses tenants.  The problem that arises when you get ready to sell the property is what to do with your tenants.  While some investors may have no fear of selling their properties with a tenant in the property, it remains a big challenge for other investors to be able to balance selling their property and keeping their tenants in the dark.  SPOILER ALERT: They know!  Tenants are very well aware of anything out of the ordinary when it comes to the sellers’ intent on the property that they live. 

http://www.nolo.com/legal-encyclopedia/renters-rights

Once you as a seller put the house on the market, it’s important that any potential buyers, or looky-lou’s don’t just walk their happy little feet up to the Tenants home and ask to see it.  When the house is on the market, Realtors ensure that everyone knows that there are tenants in the property and do not disturb the neighbors.  It is a simple request, but even the nosiest of neighbors will try to get to see the house without going through the agent.  This failure on the part of anyone adds to the challenges already in the sale of the single-family home, which is also an income-producing property,

http://www.ehow.com/about_6600385_louisiana-rights-laws-_amp_-protections.html

There are four important perspectives to be aware in the selling of a home that houses tenants:

1. The seller’s perspective;
2. The buyer’s perspective, and
3. The tenants perspective
4. The Realtor’s perspective

It is fair to assume that whomever you ask, whether seller, buyer, tenants, or Realtor, they each will proclaim their perspective matters the most.  But each perspective has value in the sale of an investment property.  We’ll discuss why in a couple of minutes, but let me explain why I am focusing on single-family homes versus doubles or a multi-family complex.  With one or two exclusions, one being the probability that the buyer may actually want to occupy one of the units on a multi-family property, it is fair to conclude that most investors who seek an income-producing property, are most likely to appreciate the fact that tenants are living in the property-producing income.  It is rare, but not extremely, that many investors want to live in one of the units in a multi-family unit.

http://ago.mo.gov/publications/landlordtenant.htm

In addition, between the sellers and the investors, there is concern about tenants moving our when a property does go on the market.  There is no hard and fast rule that once a property goes on the market a tenant has to move out.  But, between the sellers and the investors, it becomes a balancing act to ensure that tenants do not move out on an income producing property once the house goes on the market.  Now, let’s talk about those 4 perspectives.

http://www.ehow.com/info_7748150_louisiana-landlord-laws.html

• The Sellers’ perspective:  The Seller’s (Landlord) perspective on putting their home on the market is never in question.  The fact that the home has tenants is a very sensitive matter.  The Selllers can notify the tenants that they are selling the property.  But many sellers are concerned that the tenants will leave before the sale is completed.  Their concern as a seller is valid, but perhaps may add more problems than is necessary, generally speaking if they don’t speak with, or consult with the Tenant before the house is put on the market.  Sellers should not underestimate the perspective of the tenant, but we will get to that shortly.  While the tenant has rights protected by law, a seller, acting under the cover of law may sell their home, and needs to take the proper approach to notifying and seeking the cooperation of the tenant when putting the home on the market.  For example:
• Review the lease agreement as to how many days the tenant should have notice as to when the home is going to be put on the market. 
• Next, arrange an agreeable moment between sellers and tenant when the sellers can tell the tenant about their intentions.  It would be important at this point to stress to the tenant that the home is being sold subject to it remaining an investment property.  What that means is, that the seller is trying to find someone who is looking to acquire the single-family property as an investment property, with the tenants staying on board.  For the sellers, tenant and buyer, this would be a win-win situation.  But----
• The manner in which the sellers sell the idea of selling the home strictly as an investment property is important.  For the tenant, the idea of selling a single-family home only as an investment property is a challenge, because there are generally more home buyers than investors who are looking for a single-family home, and the tenants are possibly on guard, literally, to anyone who may come to look at the home.
• The sellers have to also agree with the tenant to respect their time.  Tenants work, go to school and have a family, in most cases, and do need the benefit of prior notification before strangers show up at their front door.
• Knowing that a sign is on the property may pose more questions and/or challenges than answers for many Sellers.  That’s why many Sellers choose not to put a sign on the property.  This obviously cuts down on the number of possible buyers, but it also keeps the tenants somewhat at ease because they aren’t reminded of the potential tentativeness of their housing

• The Buyer’s perspective:  Buyers who are looking for a single-family home have many choices from which to choose their next home.  Among those choices are homes that are vacant, occupied by not only homeowners, but also tenants.  Each set of properties offer their individual challenges, even vacant properties.  But we are focusing on those properties that are occupied by tenants.  It is important for buyers, even if they are investors, to appreciate any home that is occupied. People are living their lives as they might ordinarily would, but they maybe taking extra precaution when the property is on the market, even if they are tenants living in the property.  The buyers have to also be careful when viewing a property occupied by tenants.  Generally speaking, tenants are still on guard for anyone who may show interest in buying a home, whether from under them, or who may become their next landlord.  It is important for the buyer, whether they are buying to invest, or buying to take over the property to be extremely appreciative of the tenant’s perspective on the process of someone buying their rental home.  Here are some tips for buyers/investors:

• Always be on time for the showing-Tenants are easily disturbed by someone who has asked them to change or modify their schedule so someone can come “tramping” through “their” home;
• Greet and exchange courtesies with the Tenants, if they are at the property. It is greatly encouraged, as it softens the showing/touring of the property;
• Most often, Tenants are very accommodating-(sometimes too accommodating, but that’s neither here----nor there).  Tenants may want to show the perspective Buyer things that “aren’t working”, or things that the Seller “hasn’t fixed” in some time.  Just nod your head, and make notes, do not make any comments that can be construed as supportive or against either Tenant or Sellers
• Keep comments and questions reserved after the showing for the agent who is showing the home and they will share your comments with the sellers or sellers’ agent;
• Do not touch any of the Tenants belongings.  It is okay to look in closets, but ask first. 
• If the Buyer is interested in the appliances, inquire after the showing if appliances are included.  Some of the appliances could be for the Tenants.

http://www.ziprealty.com/blog/tips-buying-tenant-occupied-home

• The Tenant’s perspective:  No two Tenants are alike, anymore than any set of Buyers or Sellers.  With that said, there is an intent to paint a broad brush here, with good reason.  Regardless of the fact that a property is up for sale, the fact that a Tenant occupies the property does not diminish the value of the Tenant’s privacy.  The Tenants have rights, and those rights must be just as much respected by any perspective buyer as their rights have to be respected by the Sellers.  The broad brush ends here.  This is where Tenants show their metal when a house is on the market, based on their perspective of the process, generally speaking:
• Whoever is coming into their home needs to respect their home;
• Whatever maybe required of them as a Tenant, they need to follow the law, because every aspect of possibly being removed after the sale is a greater possibility if it can be determined that the Tenant attempted to prevent the sale of a property;
• The Tenant needs to always be mindful that “their home” is temporary, especially because it is a rental.  Whether it is an annual lease or month-to-month agreement, the Seller reserves the right to sell their property.  No reason necessary;
• Tenants should not intentionally sabotage a Sellers’ sale of their properties.  Any repair problems should be addressed directly to the Sellers;
• If the Tenants are greatly bothered by someone viewing their rental, they should allow the Realtor to show the property in their absence.  The Realtor will ensure that all goes well in the showing.  The Tenant can wait in their car, or on the porch, wherever is best, allowing for the showing to go without a hitch;
• The Tenant could also be working on an opportunity to buy the house that they live in, or attempt to invest in a property of their own.  There are a number of 1^st time homebuyer programs, some of which may require homebuyer’s training, that could lead to a down payment assistance of up to 3% or, closing costs assistance of up to 4%, depending on your area and program.  Consult your Realtor for details.

http://www.choiceofhomes.com/articles/sell-rental-property-vacant-tenant-occupied.htm

• The Realtor’s Perspective- Each of the above perspectives are relative, and even general in nature.  No one situation can be a measure of another.  The one perspective that wasn’t covered was that of the Realtor.  Let’s just say that as a Realtor, we have a perspective that must be flexible to each individual on any given day.  We do have to be careful not to paint with a broad brush every seller, every buyer or every tenant as we know from house to house, on any given day, we can meet the Tenant who will walk us through their home with pride, or one who may suffer from amnesia at the knock on the door.  It would not be fair, or prudent in facilitating a successful showing, let alone the sale of the property to go into any home that is under lease or rental without an opened mind. 

Conclusion-We have discussed four perspectives relating to marketing a home that is occupied by Tenants.  The time between when a home is listed to when it is sold is extremely critical to the sale.  Making sure that the Tenant is put at ease regarding the sale is very important.  From the onset, a Seller must be forthcoming with their tenant and let them know whether or not they need the tenant to move.  If not, the Sellers’ are going encounter unnecessary pushback that could complicate a sale that could be too close to closing, and then fall flat on its face.  It’s not a matter of letting the Tenant into your business, it’s just ensuring that the Tenant isn’t sabotaging your business because you, as a Seller, did not share with them what your intentions were.  Keeping their perspectives and concerns at the forefront when selling your home will be the key to a successful sale.

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[1] No part of this post should be considered legal advice.  Consult your attorney for any tenant/landlord disputes.

Showings-25, Offers-0: Your Home’s Scorecard on the Market © 2013 by Wayne D. Lewis, Sr.

It used to be exciting when your Realtor used to call you, as the seller of a home on the market, to announce that potential buyers would be coming by to see your home.  As sellers, you would more than likely abide by the Realtor’s request to take a walk, or go to the store for a couple of hours while potential buyers would visit your home.  What has become a common response from your Realtor is: No offers.  After 10 or more showings, as a seller, you decide to just sit in the backyard, or maybe go next door until the potential visitors (no longer considered buyers) leave.  What are your options?

First of all, always consult with your designated agent for their feedback.  If anyone is going to have a true snapshot of what buyers see or don’t see, it will be your real estate professional.  Expect to be told the truth about buyers are not comfortable regarding your home.  And then, prepare to take positive action to attract a qualified buyer.

Your Realtor will more than likely make several suggestions to help you sell your home, but it will always be up to you to make the best possible decision.  Here are some suggestions that your Realtor is likely to make:

1. Reduce the price
2. De-clutter your home.
3. Repair or offer to repair an appliance or item that maybe crucial to a potential buyer’s decision
4. Offer to pay 1^st month’s mortgage, 1 year of Homeowner’s insurance, or 1 year of flood insurance (where allowable)
5. Check the outside of your home for detractors such as a disabled car on blocks, an overgrown garden, a garage that has a non-working garage door (repairing should be considered)
6. Or, any combination of the above
7. Check with your Realtor for more advice

The point is that, when you have shown your house more times than you can count, it’s a good bet that you are so close to the reason why it isn't selling that you can smell it.  But as a homeowner, you have to divest yourself from being the homeowner, to being the home buyer.  Look at your home objectively.  Try to remember what you expected when you first bought your home.  Once you do that, then you’ll understand that selling your home can be better accomplished if you focus on those things that appealed to you the moment you walked through the door.

It should not take 25 showings to sell your home if it is properly priced, clean, and staged properly.  The market notwithstanding, showings are an indication that your home is priced within striking distance, but that something needs to be tweaked.  Consult with your Realtor for the best possible course of direction to sell your home.

 Make Your Best Offer!