Selling a property, whether it’s your home or an unwanted rental, is a significant event. The sales process remains the same even if you’re unloading a rental property. This already complex real estate transaction becomes more challenging when you have a tenant.

You and your real estate agent must address questions like, “How does your lease agreement impact the sale?” or “Will having a tenant negatively affect potential buyers?”

Ignoring these considerations and hoping for a quick eviction or an immediate tenant move-out is unrealistic.

Here are some factors to consider and how to navigate selling a house with a tenant to achieve your desired outcome.

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Selling a House with a Tenant

You can technically sell your home with a tenant living in it. However, several factors may influence the process when you have tenants.

Notifying Your Tenant of Your Intent to Sell

If your lease agreement is month-to-month, you only need to provide 30 days’ notice. However, you must still follow the legal process for terminating the tenancy, including mailing advance notices, adhering to timeframes, and handling deposits properly.

Ideally, you can reach an agreement with your tenants to have them move out at a specific time, avoiding prolonged periods without rent or leaving your tenants without housing.

In Texas, tenants have rights regarding eviction, and an eviction process always extends the time the tenant can stay on the property. Therefore, it’s in your best interest to work out an arrangement.

One downside to terminating a month-to-month lease is the potential loss of rental income. If your house takes a long time to sell, this loss can be significant. Keeping tenants and cooperating with them can ensure continuous revenue.

A fixed-term lease complicates the process, as you must observe specific timeframes and procedures outlined in the lease (e.g., early termination clause, security deposit). However, there are options available to make the process smoother.

Wait Out the Lease

There are several reasons why it’s advantageous to wait until your current tenants’ lease has expired before putting your house on the market.

First, waiting until the lease ends helps you avoid potential conflicts with tenants whose rental agreement is being terminated prematurely. Ending a lease early can disrupt their lives, complicating your selling process. Allowing the lease to run its course makes it easier to inform tenants of your intention to sell.

When notifying tenants about selling a tenant-occupied property, you must follow the proper notification procedures outlined in the lease. This ensures an organized schedule for both you and the tenant, leading to a smoother sales process. You’ll also need to arrange details like how to show the home to prospective buyers.

Additionally, making capital improvements is much easier without tenants present. Holding open houses and conducting necessary renovations are simpler when the property is vacant. Providing tenants with notice to vacate allows you the freedom to make these changes without inconvenience.

You can also offer incentives for tenants to vacate early, giving them ample time to organize and move while facilitating your sales process.

Can You Sell a House with a Tenant in It?

Regardless of your approach, the ideal outcome for everyone involved is a negotiated departure.

You might even arrange a lease extension with the new buyer if they plan to keep the property rented. Allowing settled tenants to stay is often cheaper and easier than renovating the interior and finding new tenants.

If your tenants are hesitant to end the lease early, consider offering creative incentives. Some options include:

• Returning the security deposit, even if it’s not warranted
• Buying the tenants a gift card for their new place
• Letting them live rent-free for the last month
• Covering their moving costs

These incentives can encourage tenants to terminate the lease early. While some may seem excessive, consider the impact of selling the property on your tenants.

Can You Sell the House to Your Tenant?

Another option that has a few different alternative ways of doing them is to sell the property to the tenant. This works best with single-family homes. There are several benefits to this approach:

• No eviction
• No sales processes
• Streamlined negotiations
• No real estate commissions

How you structure the deal is up to you. A flat-out sale using a mortgage lender might require hiring a real estate lawyer that knows the process.

If you are not looking to reinvest quickly, you could explore rent-to-own options. Rent-to-own works well if you have a good relationship with the tenants and they love the property.

Can You Sell the House to Your Tenant?

Selling the property to your tenant is another viable option, especially for single-family homes. This approach offers several benefits:

• No eviction required
• Simplified sales process
• Streamlined negotiations
• No real estate commissions

The structure of the deal is flexible. A straightforward sale with a mortgage lender might necessitate hiring a real estate lawyer to manage the process.

If immediate reinvestment isn’t a priority, consider exploring rent-to-own options. This works particularly well if you have a good relationship with the tenants and they love the property.

Landlord Rights When Selling a House with a Tenant

When selling a house with a tenant, landlords retain the right to evict if the tenant has violated the lease. If a tenant breaches the lease agreement, you can ask them to leave without adhering to the original lease terms, though you must comply with state law.

Reasons for terminating a lease and evicting a tenant include:

• Damaging the property
• Causing disturbances
• Failing to pay rent
• Prohibited subleasing
• Providing false information on the lease or rental application
• Engaging in illegal activities on the property

It’s important to remember that local and state laws typically require more than a few hours or days’ notice to vacate. If tenants contest the eviction, you may find yourself in court, which can be a lengthy process. Consider offering incentives for the tenant to leave voluntarily before pursuing eviction.

The potential downsides of evicting tenants include:

• Risk of breaking the law
• Lengthy court processes
• Complexity of legal proceedings

Landlord-tenant laws vary by state, with some favoring landlords and others providing more leniency to tenants. Depending on where you live, the eviction process can be stringent and time-consuming. Mistakes can cause delays, and tenant resistance can prolong court battles for months.

Consulting a real estate attorney before attempting eviction is crucial. An attorney can ensure compliance with the law and manage the court process, making it easier than handling it yourself.

How to Sell a House with a Tenant

Selling a house with active tenants can be costly for the property owner. One option is to sell to a real estate investor. You can follow the traditional route of selling to a property management company or explore alternatives like cash home buyers in Texas.

Both types of investors often prefer properties with tenants already in place, as it saves them the hassle of finding new tenants. Additionally, depending on the real estate market, you might be able to negotiate a better sale price due to the quick and straightforward nature of the transaction.

Selling your house as an investment property is a practical option, especially if you’re selling without a realtor or looking to sell quickly in Texas. By selling to a property investment company, you can avoid providing written notice to your tenants or dealing with lease termination processes and tenants’ rights.

However, the downside is that your pool of prospective buyers is limited. There may not be any real estate investment companies interested in buying in your area.

Selling a Home with Tenants Can Be Successful

While selling a home with a tenant might seem challenging, it doesn’t have to be problematic. Sellers have several options, including facilitating an arrangement between existing tenants and new owners.

Key to a successful sale with tenants is flexibility, willingness to compromise, and exploring alternative sales methods.

We can assist cash home buyers in Texas in getting the best prices, no matter their location. Interested in selling a house quickly in Dallas – Fort Worth? Give us a call at (214) 296-2343!