How to Sell a Home with a Tenant Inside in 2021
Selling a tenant occupied home has never been trickier. A landlord must be aware of constantly changing local regulations, whether it be state, county, or city and at the same time keep an eye on federal emergency regulations. All of the above governmental agencies can override any existing lease between the homeowner and tenant.
Selling a Home with a National Eviction Mandatorium in Place
Right now we are still in a Federal national eviction mandatory that lasts until June 30th, 2021, and could be extended further. In effect, no homeowner in all 50 states can simply let their contract with the tenant expire or remove a tenant for issues like non-payment. If a homeowner evicts a tenant under Federal protections (and most are) they could face criminal charges. Tenants do have to qualify for the protection, but in reading the guidelines, the vast majority of renters in the U.S. will be covered.
So simply put, if you are a homeowner and want to or need to sell a home with a tenant inside, you cannot evict the tenant in order to put the home on the market vacant. The tenant can volunteer to leave and the homeowner can entice the tenant to leave by offering them money, but the tenant does not have to vacate. The tenant can only choose to do so of their own free will. Unfortunately, if the tenant will not leave, the research is clear that the home will sell for less money and will take much longer to sell – if it manages to sell at all.
Vacant Homes Sell 100% Faster and for More Money
In fact, in the Portland real estate market, tenant occupied homes hardly sell at all. We’ve been writing an annual report on this for years. In 2020, nearly 1 out of 2 tenant occupied homes that went on the public market for sale, never sold. They simply failed to sell at all. These homes sat on the market for months in one of the hottest real estate markets we have ever seen, then at some point the homeowners simply gave up and took their properties off the market. This in comparison with vacant homes, where only 17% failed to sell in 2020.
How are Tenant Occupied Homes Selling in 2021?
Tenant occupied homes in Portland last 60 days:
- Average time on market to pending: 60 Days
- Average ratio of list price to sold price: 101%
- Ratio of Sold to Cancelled: 52 Sold and 43 Cancelled, or 46% failed to sell at all.
Vacant homes in Portland last 60 Days:
- Average time on market to pending: 28 Days
- Average ratio of list price to sold price: 104%
- Ratio of Sold to Cancelled: 788 Sold and 145 Cancelled, or 13% failed to sell.
Nearly Half of all Tenant Occupied Homes will Not Sell
This is a historically hot sellers real estate market in Portland. Licensed since 2003, I can only think of two other times where the housing market in Portland favored sellers this strongly. Incredibly, even in a historically low inventory market, once again, nearly half of all tenant occupied homes that go on the public market will not sell.
This Research Article is not for Multi-family Property
Plexes, apartments, and any multi-family residential properties sell better tenant occupied than vacant. The buyer pool is not the same and is almost exclusively made up of investors, not home buyers looking to occupy their next property.
Don’t Expect the Tenant to Allow Showings
Tenants have the right to quiet enjoyment of the place they are renting. 24 hours notice isn’t enough to ensure compliance with property showings. Best practice is to get written permission from your tenant for showings, or don’t allow buyer showings at all, make all offers subject to interior inspection.
The Tenant goes with the Home
You have the right to sell the property, but in the U.S. right now you don’t have the right to break the tenant’s lease. Selling the home is no exception to this. The lease needs to be passed on to the new owner and the new owner must assume landlord responsibilities. Consult a local real estate attorney that focuses on landlord tenant rights if you have questions.
We’re ready to help you sell a home in any situation.
Though you might not be able to sell in the best time of year, or you might not be able to vacate the property before the sale, we are experienced and ready to help you sell your property in any situation. Our goal is to ensure your success, helping you obtain the highest price for your property with the least amount of hassle. Our max. commission is 4.25% to sell and our contracts are cancel anytime, no charge. See everything we offer home sellers here.April 14, 2021