How important is a tenant’s cooperation when selling a rental home?

After evaluating all your options, you’ve decided that selling is in your best interests. However, your relationship with your tenant has been shaky at best.

You can sell without their cooperation, right?

That depends. If you’re like most sellers, you want the most money the market can offer. Although most rental agreements state that the tenant must cooperate with prospective tenant or buyer showings, getting their cooperation is a totally different story.

Here are the options when selling an occupied home:

1. “Go direct” – this tells Real Estate agents that they can show the home without an appointment. While this is the obvious option if the home is vacant, I’ve seen this work with tenants who work during the daytime or work from home and aren’t inconvenienced by buyers dropping by unannounced. Having a published showing schedule works best for this arrangement. (i.e. – “Go direct between 10 am – 5 pm, Monday – Friday.)
2. “Call first, go direct” – this option requires Real Estate agents to call (or text) with a time of showing. It doesn’t require confirmation by agent or tenant. In most cases, the phone number provided goes into voicemail and agents leave a message.
3. “Appointment only” – you are now entering restrictive territory for agents. If the agent calls and there is no answer, they must leave a message and wait for a return phone call prior to showing the home.
4. “24 hour notice required” – as implied, showing the home on a whim isn’t possible. Agents must call at least 24 hours in advance and the tenant must agree.
5. “Drive by only” – this is the most restrictive of all options. Buyers aren’t allowed to see the inside of the home unless they have an offer accepted by the seller. With this option, the fewest amount of buyers are able to view the home.

The whole premise of placing a home on the open market is to allow as many buyers to view the home in hopes of reaching a deal with the party who’s willing to pay the most. When you restrict showings in situations like 3-5 above, you’re likely leaving money on the table.

When I work with buyers, a great deal of my showings are spur of the moment showings where the buyer saw something online, then texted the address to me a few minutes before our appointment time of showing other homes. These impromptu showings won’t work with options 3-5.

Why would some listing agents insist on a “drive by” arrangement?  

Unfortunately, drive by listings have become more prevalent in recent years. In some markets, it’s typical for a listing agent to “block” showings of buyers who are represented by other agents. This allows the unethical agent to make more money on the sale by representing both sides. Another reason comes from less work needed by the listing agent due to less phone calls from buyers agents requesting showings.

In both cases, the lack of the agent taking a fiduciary stance (placing the seller’s interests above their own) can result in either the home selling at a reduced price or not selling at all.

Ok….Options 1 & 2 are the way to go. What can you do to convince your tenant?

Give notice to terminate tenancy. If their lease agreement is expiring in 2 months or less, it would be best just to have give notice and inform the tenant that you will be selling. The notice would correspond to local laws and honor the current lease agreement in place. This will allow the home to be vacant and agents show by “going direct” as in option #1 above.

If a significant portion of the lease term remains, you can try to reach a mutual agreement with the tenant to amend the lease term. Sometimes, the tenant actually wants to move out and was only trying to hold up their end of the deal.

If mutual agreement isn’t reached, you can try adding incentives. You can try a variety of incentives, such as: a guarantee of full refund of the security deposit, volunteering to write a letter of recommendation, or even paying them additional money beyond their deposit.

In the case of the adversarial relationship with a non-paying tenant, you’ll want to complete the eviction or negotiation for them to move before placing the home on the market.

As you can imagine, some of these can backfire, so be careful when presenting any of these options to your tenant. If you’re thinking of having your Realtor approach the tenant(s), you’ll want to make sure they know what they’re doing and have the track record with rental homes to prove it. In my Real Estate career, I’ve dealt with a variety of situations and only one instance resulted in attempting to sell the home as “drive by only.”

Allowing showings is only one part of maximizing your sale. Preparing the home and marketing is next.