How to sell property with tenants
How to Sell a Tenant-Occupied Listing - Kevin Ward
hey there it's Kevin I got a great
question here from one of my coaching
members actually what should I do when a
property is occupied tenant occupied and
the owner is interested in selling the
property problem is it's occupied by a
tenant can't be staged and the owner is
interested in selling but if it doesn't
sell they would continue renting out to
the same tenants when I asked him about
his motivation he said it is hi it's an
expired listing so what do you do when
you have a tenant occupied property and
the people want to sell the property so
number one it's an expired listing the
most important thing always always
always forever is motivation why do they
want to sell how high is his motivation
he says it's high well high is relative
right i high how high is your motivation
to make a million dollars well it's high
well how high are you willing to do
whatever it takes or is that just a big
wish so first thing you got to decide a
decipher or determine is how strong is
the motivation why they want to sell
what I'm going to do with the money are
they are they making money on the
property are they losing money are they
breaking even do they have other plans
for the equity is there equity all of
those are important questions so the
first thing is do they want to sell or
not if they want to sell they can sell
so let's say they're motivated to sell
so here's the challenge with a tenant
occupied property more than anything
else the problem is it's occupied by
somebody who's probably not interested
in it selling this is somebody who lives
there and if it doesn't sell he's
they're going to keep renting it to the
same tenants which means the tenants
probably don't want to move so when the
tenants live there and you show the
property that tenants aren't really
interested in being cooperative so the
real key is if you got motivated sellers
and they want to sell is you have to
work with the tenants directly and treat
them with the same level of respect as
if they are the owner you literally have
to do that so let's just say that
sellers definitely motivated sell they
want to sell they list it so here's how
you do it
you have the seller obviously has to
give notice
to the tenant but I'm going to be the
one that controls setting up showings
and all of that kind of stuff so first
educate and kind of instruct your to
your seller how to make an arrangement
with the tenant to do this get the
tenants cooperation how do you get the
tenants cooperation well by
incentivizing them with a rebate on
their rent at closing now here's how it
goes that the seller requests that the
tenant and the tenant buy unless the
leases sum out written weird otherwise
the tenant has to cooperate they have to
allow the property to be shown typically
and so forth so this the landlord the
seller has to give notice to the tenant
then the tenant supposed to cooperate
the tenants don't really cooperate they
may not be there but they don't make up
their beds they don't clean the kitchen
it's a mess it stinks there's a dog
whatever it is so what needs to happen
is the seller agrees to reimburse or to
rebate the tenant for a portion of the
commission so let's just say it's $1,000
a month rent and they agree at closing
forth from the time the property is
listed until it is no longer showing
however long that is they're going to
rebate them 30% 40% 50% of the rent at
closing now you don't you don't you
never you the seller should never tell
the tenant well while it's on the market
you only have to pay me $700 a month in
rent because then the seller the tenants
going to pay $700 rent and the place is
still going to be ugly so it has to be
an incentive and it's a rebate based on
this one
that this the tenant gives a with with a
one-hour notice the tenant cannot deny a
showing under any circumstances between
you know 9:00 a.m. and 6:00 p.m. or 7:00
p.m. depending on the time of year and
what the norm is in your market they
cannot deny a showing and they must keep
the kitchen the sink empty of dirty
dishes the sink must the kitchen must be
clean house must be clean beds must be
made no animals in the house
when there's a showing that's got to be
the case if the feedback comes back from
an agent that the property didn't what
the property was a mess or the tenant
was in this asleep in the bed or
somebody was watching television or
whatever like that then there's no
rebate or that nega have a conversation
now that's the leverage your job is now
to have a conversation with the tenant
to say look I know the pain in the net
for you and I talk to them I say so at
first as you know the sellers are in the
process of selling property they've
hired me to help but I also know it's
where you live and so I really want to
be respectful of you and I want to I
want to work directly with you to make
this as smooth and easy for you as
possible if you treat the tenant like
they're the enemy like they're a
nuisance or they're a problem they're
going to be a nuisance and a problem but
if you treat them with respect and with
dignity as if they are they are a major
player in the success of this
transaction and you collaborate with
them then they're going to be more
likely to be respectful and cooperative
so you got to treat them with that
respects they look so here's what we
need to do is we've got to set up the
way the best way for showings to happen
so that the house shows well and that
you guys are able to know it's come in
and be prepared and have you not beat
yet so that nobody's here because the
house nobody needs to be here when this
when buyers come when the house is shown
so we need to set that up and I can do
either a 30-minute notice or a one-hour
notice which should be better for you
one hour notice okay perfect and what
only it's only going to show between
like nine nine o'clock in the morning
and six o'clock in the evening or seven
or whatever and that's and that's
totally legit is totally fair if there's
a pet you got to do with the pet and ask
them how they're going to you know take
care of the pet if there's a showing and
so forth the key is number one seller
motivation number two getting the tenant
cooperation and you have to understand a
tenant occupied property tends to not
show as well so intends to not sell as
well now there's one exception and that
is the property is a great rental
property and it could sell for as much
to an investor who would keep it as a
rental property in that case you just
need the house to look good and the
tenant can stay and so forth
the other one other thing really
important find out by talking to the
tenant are you once you get the listing
why don't you guys buy the property and
there's a lot of times they they are
like you know we thought about it we've
talked about it I don't know if we can
qualify whatever lent to it let me hook
let me hook you up with my lender let's
have a conversation let's just take a
look and see what it would take for you
guys to be able to own this property and
then you you wouldn't have to move and
you would own it so every month you'd be
paying yourself and building equity
rather than paying somebody else and
there's a lot of situations where the
tenant will actually end up being the
buyer you just double into the
transaction so use common sense be
respectful of everybody
straightforward conversations tell the
truth and stay on top of everything and
if the sellers are motivated and you
work well with the tenants it'll always
work
