The sale of a property with tenants who are not willing to move is one of the most challenging transactions a real estate agent or broker can face. It involves dealing with leases for which no end date is available, unable or unwilling tenants and, above all, many unexpected hurdles. However, this does not mean that you should give up on such a deal and look for another property instead. On the contrary: if you are an experienced broker and have handled similar transactions in the past, there may be hidden opportunities here. Indeed, because so few agents are willing to take on these type of deals and most newbies shy away from them for good reasons, your negotiating position may be stronger than you think.
When selling a property with tenants, you face two major challenges: - Finding a buyer who is willing to move in during the current lease term and will be able to obtain the necessary permissions from the tenants. - Negotiating a price that is close to the asking price but at the same time meets the buyer's expectations. In both cases, your negotiating position is weaker than in the case of a normal sale. On the one hand, buyers (especially investors) will be reluctant to go through the complicated process of obtaining permission from the tenants to move in earlier. On the other hand, you will likely have to lower your price expectations accordingly. In addition, the likelihood of delays during the sale process is much higher in the case of a property with tenants. There are many reasons for this:
- When you are buying a property with tenants whose lease is expiring soon, the first thing you must do is to find out when their lease will expire. If you do not know this, the seller may be reluctant to sell to you. - If the seller is asking for the rent to be paid to him, it is very important to make the seller understand that you will be paying the rent directly to the tenants. - If this is a repossession deal, make sure that the seller has all the necessary documents for the repossession process. If not, the purchase may be suspended and you may be forced to look for another property. - If a bank owns the property, make sure that you have all the necessary documents for a bank repossession. Banks are more likely to be strict about these things.
- The very first question you must ask yourself is: “Why am I choosing this property?” - You may have negotiated a really good deal, but if the property is in a terrible condition, or in an area that is not desirable, your tenants may not be able to find a new place to live as quickly as they would like to. - You may have a great lease with very good tenants, but if the property is in a very undesirable area and you are unable to get a decent price for it, you may lose money even if you get the lease extended. - You may have a property that is in a very desirable area, but if the tenants are unwilling to stay and the lease is almost expiring, you have to take into consideration that the tenants may not be able to find a new place to live and may end up being evicted.
- Your first task is to do a complete property condition assessment and a thorough marketing process. - By doing a good job in marketing the property, you will be able to get a decent price even though you may have to lower your asking price. - The first step is to take pictures of the property, including the interior and the exterior, and then create a virtual tour of the property. - Upload the pictures and the virtual tour to your website and to all the major property portals. - Next, place a For Rent board in a highly visible place outside the property. - Then, start reaching out to letting agents in your area. - Also, make sure to invite tenants from your previous properties to post a review on your website. This is important as this will help you get more tenants and will also help you get better tenants.
- Next, you should invite all the serious potential buyers to visit the property and submit a written offer. - Before they visit the property, you should ask all the potential buyers to sign a Confidentiality Agreement. - This Confidentiality Agreement will prevent the buyers from sharing any information they see or hear while visiting the property with anyone else. - You must also sign a similar agreement. This will prevent the potential buyers from sharing any information they see or hear while visiting the property with anyone else. - This will help you to keep the sale process as private as possible and will probably prevent the other tenants from finding out that the property is for sale.
- Next, you should invite the potential buyers to visit the property and submit a written offer. - Before they visit the property, you should ask all the potential buyers to sign a Confidentiality Agreement. - This Confidentiality Agreement will prevent the buyers from sharing any information they see or hear while visiting the property with anyone else. - You must also sign a similar agreement. This will prevent the potential buyers from sharing any information they see or hear while visiting the property with anyone else. - This will help you to keep the sale process as private as possible and will probably prevent the other tenants from finding out that the property is for sale. - When you receive written offers, you should go through them carefully and defend your position in the negotiations.
The sale of a property with tenants who have no plans to move out is a challenging transaction. To succeed, you must be prepared to go above and beyond to help the tenants find new places to live. The most important thing is to keep calm and remain focused on your goals. By keeping your head cool and being prepared to face the challenges that come with selling a property with tenants, you will improve your chances of closing the deal successfully.
