Taming the terrible tenant part 1

By Joel Persinger
YourRealEstateDude.com

This past week has seen my phone ring off the hook with a number of clients who are planning to sell rental homes that are tenant occupied. Among other burning questions has been, “How do I get my tenant to cooperate with the sale”?

Selling a home or condominium is best done when prospective buyers have the opportunity to visit the home. Buyers like to walk through the home, hang out in the yard and generally get the feel of the property. They like to imagine themselves living there to see if it fits their needs and desires. This requires the buyers and their agents to have access to the home.

There are several ways to grant access to buyers, but the best and most efficient comes in the form of a “lockbox”. A “lockbox” is essentially a little safe in which your real estate broker places the key to your property. The safe is attached to the home on a doorknob, gas meter or some other secure location and is only accessible to real estate professionals who have a computerized access card and PIN. Using a “lockbox”, an agent can get to the key and show the property even when nobody is home. When you’re selling a home that’s vacant, providing access to agents and buyers is no big deal because nobody is there to be inconvenienced by agents showing the home. But, when you have a tenant living in the property, you need that person’s cooperation in order to make the property available for showing. If the tenant is unwilling to cooperate, selling the property can make your life very interesting.

Unlike you, your tenant has no vested interest in your property being sold. In fact, the reverse may be true. Your tenant may not wish to move and may take every opportunity to sabotage your efforts to sell. It is quite common for tenants to refuse to allow buyers to see the property or to make it so difficult to see that it might as well be nailed shut for all practical purposes. Tenants who are willing to allow the property to be shown often leave it in such disarray that any buyer visiting the property would swear that a natural disaster had struck. In many situations tenants keep the property from selling simply by being rude to every buyer and agent who comes along. Regardless of the tactic used, it is quite possible for your tenant to make your life miserable and keep the property from selling or force you to sell it for less just to get rid of the problem.

One answer to this age old dilemma is often found in my grandfather’s old philosophy he called, “everybody wins.” Grandpa Charlie liked situations in which everyone came out a winner to one degree or another. If selling your property is going to benefit you, then you must find a way that selling your property will benefit the tenant as well. If you want the tenant to cooperate, then you must provide a reason to do so. I advise my clients to put themselves in the tenant’s shoes and consider what the tenant will need in order to find a place to move. Three things come to mind almost immediately: the return of the tenants deposit, a good reference and money. Following this revelation we devise a “tenant compensation plan” which offers to provide the full return of the deposit, a favorable reference and some extra money if the tenant will cooperate with the sale by keeping the home presentable, permitting a “lockbox” to be placed on the property and making it easy and convenient for agents to bring their buyers. The tenant agrees to this in writing and only receives the full reward if and when the property sells. Taming the terrible tenant is not always easy and not every tenant will agree to such a plan, but it has been my experience that the odds of gaining the cooperation of your tenant using this kind of arrangement are pretty good.