How to show a leased home
A tenant still lives in the condo you want to sell? Here's how to ensure the place remains attractive to potential buyers.
© Mark Leibowitz/Masterfile
Q: I want to sell my condo, which has a pretty responsible tenant with seven months left on his lease. Can and should I evict him? And if he stays, how can I make sure that he keeps the place in good condition while it's being shown?
— Freehold, N.J.
A: The first thing you should do is to read your lease, whether you used a boilerplate version from the Web or used a professional to help prepare it. Its terms govern your agreement with your tenant.
So does state law, which provides your renter with important protections. (Bing: What's the eviction law in your state?)
New Jersey's anti-eviction law states that you cannot evict a tenant without court approval, even after the lease expires. Moreover, you must have grounds, defined as one of 18 different causes for eviction. These include not paying rent or paying it late, disorderly conduct, damage to property or engaging in illegal activities.
If your building or house has three or fewer apartments, however, and you live in one of them, you can evict the tenant at the end of the lease for any reason.
Because it's difficult to evict a well-behaved tenant, it's likely a good idea to give him incentives to leave voluntarily or to cooperate with the showings. Talk to him about his plans and goals so you can tailor the offer to his needs.
For example, if he agrees to move out early, you might motivate him with a rent rebate or reduction, subsidized utility or moving costs, use of a storage unit so he can keep his valuables off-site or simply cash.
- On our blog, 'Listed': It's a good time to buy, but is it a good time to sell?
If he decides to stay until his lease ends, you could buy him a gift card for a meal at a fancy restaurant if he keeps the place in pristine condition. Or you could take the maintenance burden off him by underwriting free maid service — and perhaps a complimentary visit from a decorator or home-stager — while the home is listed.
Article continues below
Most standard leases give landlords the right to show property to buyers with 24 hours' notice to the tenant. But be considerate and limit how many showings you inflict on your tenant during a week. Also, though the tenant doesn't have a right to be present during a showing — and buyers' agents will discourage him from hanging around while their clients visit — understand that it could happen anyway. Make sure that your tenant doesn't have a reason to bad-mouth the condo, its maintenance, the neighborhood or you.
- MSN Money: When debt settlement makes sense
Although renters may not have the best furnishings, the place will likely sell faster if is kept tidy than if it were vacant and empty. It also will appeal a broader range of buyers, as many investors prefer homes that have good tenants in place.
Of course, you can avoid all of this trouble and expense if you can persaude the tenant to buy the condo from you. Sweeten the deal by offering to credit all or part of the rent he has paid toward the purchase price, and see what happens.
We did everything in this article and more, but you will always have one tenant who can be a real pain.
What really makes my blood boil are the realtors who do not care and completely disregard the showing instructions. We had one realtor show up unannounced with clients (perspective buyers) for our property and because they knew the lock combination proceeded to gain entry. This same realtor and her clients had three rambunctious young children in tow. These kids were running through the dirt, salt and general mess left after a snow storm in the Northeast. We just happened to be at the property making sure that the sidewalks were clear and keeping up with the landlord chores.
Thankfully, I thought to ask if she had cleared this showing with the listing realtor and the tenants. She told me no, and I was not to worry because she had been here before and knew the rules. I pointed out that if she knew the rules, she knew that my tenants wanted proper notice and expected the place to be kept clean and not messed up by perspective buyers and their damn kids. I told her that if she (the realtor) did not lock this apartment (we were selling an apartment building and she was going to drag these kids through each unit) that she had just opened and leave the property with her clients and these bratty kids, we were calling the police and having her and her clients arrested for trespassing. After a brief moment of sputtering and stammering, the embarrassed realtor quickly gathered her party and left. I told her as she went to close her car door that the listing realtor would notify her that under no condition was she to be permitted back to our property!
All of the complaints that we had received from our tenants appeared to be the direct result of indifferent and uncaring realtors who have no regard or respect for other people and their property. I told my tenants that if they discovered another realtor in their unit who had not been cleared by the listing agent or us (the landlord/property owner) to call the police and file charges for trespassing. This happened over 10 years ago and it still makes me angry at the attitude and lack of respect that many realtors seem to have towards tenants and property owners. To this day, we will not allow a lock box again. If you must bring kids to look at a house, I would suggest that the parents take turns looking at the house while the kids REMAIN in the car.
You can do everything by the book and more, but with realtors like this no wonder so many tenants are upset by having their lives disrupted with perspective buyers and their realtors. To make matters worse, these people were looking for a house and could not afford to do the conversion back to a home so the realtor had no business even showing the property.
I'm a property manager and Realtor - what I've always highly recommended to the Sellers is to give the Tenants a discount on the rent - say 10%. It isn't a lot but it is something - it is a bit of gratitude and recognition that the Tenant is being put through something above and beyond and that their private space is being invaded - plus they have to keep that space neat and tidy. While most states do require notice- not all Realtors will observe that - I warn the Tenants that we do not have control over all of them. I let them have my personal contact information if something negative comes up. Respect is the key word.
An observation - with 7 months left in the lease it may well be difficult to get showings if the prospective buyers wish to move into the condo themselves - especially in this market. We usually recommend the last two months of a lease so there is an end in sight - but it seems in NJ there is no end in sight. If there are investors interested - they will want to keep a good tenant.
cctxcc has a good idea too. Others have recommended a per showing "payment" - which is easily done with today's high tech lockboxes. In general though, the theme is the same. There are those Tenants out there though who are so comfortably in place that they simply will not cooperate because they do not want to move. Good luck there.