HECK NO! Well, maybe that was too strong... Usually the answer is “no”.
The wrong tenant will cost you tens of thousands of dollars and might even cost you the sale. Because we help a lot of investor clients, we’ve seen it all….
A tenant typically does not have a vested interest in your sale and they sure don’t care how much money you make. On the contrary, when that house sells, your tenant often has a pretty big disruption to their life….
Your tenant usually doesn’t want you to sell.
Let me share some stories….
Tammy Tenant goes out of her way to be there for EVERY showing. She cooks a nice Salmon prior to the showing and it seems like it’s always dinner time when showings happen. She answers the door and makes it clear that it’s dinner time and the buyer’s agent is inconveniencing her and her family…. The buyer’s agent politely tells her, “we’ll be quick and sorry!” During the showing, the buyer’s notice that Tammy’s cat’s litter box is overdue for a change and they note the pile of laundry and dishes…. The house is anything but inviting. Before the showing concludes, Tammy goes out of her way to tell every potential buyer that the wiring is suspect and the tenant upstairs spends all day smoking pot because they got fired from their job 3 months ago. The buyers go down the block and buy a house for $20,000 more that’s owned by Sally Staged-house.
How about Robert Renter? Robert leaves for work with dishes in the sink, some thick blankets on the windows to make sure that no natural light penetrates his “man cave”, underwear on the floor and a fuzzy sink that showcases his robust beard growth... Your house becomes an example of what not to do.
Lastly, let’s talk about Tanya Tenant (no relation). Tanya is sweet, clean and has nice stuff. She’s a dream tenant…. Until your buyer asks for a 30 day closing and nothing else will do. This buyer needs a house asap and they’ll pay extra for their date. You ask Tanya if she can help you out and move a little earlier than expected. Tanya tells you “Nope! I know I said 30 days notice was fine, but I need proper notice… It’s my right!” Your buyer decides they don’t want to move twice so while your house was first choice, they settle on something they can move right into.
Like everything… There are some exceptions! When the only buyer is going to be an investor (multi-family buildings), or when the tenants add value to the property. Examples are a really tidy and polite basement tenant with nice furniture.
If you are selling as an investment here’s a few tricks and tips.
Update paperwork with your tenancies. Multi-family investors and lenders love a current lease at market rent. Month to month opens up a lot of uncertainty. Make sure your tenant files are complete with move in reports and any other related paperwork.
If a tenant is a problem, get rid of them before you sell. An investor won’t want to adopt your problem tenants without a deep discount to your price. Some of the best deals we’ve acquired over the years have more to do with bad tenants than bad properties.
Proactively have the conversation with your tenant to keep them comfortable. If you neglect this step, they’ll start looking and will likely move out on you. I like to tell them “nothing to worry about, we are marketing it as an investment property and we’ll make sure find a great new landlord for you…. The only thing that will change is who you write your cheque to”.
Keep your tenant’s in the loop and allow them to feel some “control”. For example, we’ll always tell our occupants: “We’ll always give you at least 24 hours notice”…. “I want to make this as comfortable as possible”…. “When are the best times to show / are there any times you don’t want us showing?”
Does your tenant want to buy the property? It’s worth asking. I’ve never seen it, but it happens.
Gently remind them that the people looking might be their new landlord. Your tenant’s are more likely to “be nice” if they believe that they might be talking to their new landlord…. I think a lot of them forget that. We’ve sold a number of properties where the buyers first comment is “I won’t buy unless we can get _____ in unit 4 out.”
Again not all tenants are bad, but consider your selling goals and timelines when selling a home with a tenant in place.
Steve Throndson
250-919-3366
Steve@ThrondsonRealty.com