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How Do I Sell a Property While Tenanted?


Selling a tenanted property is a challenging issue for investors.

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What Do You Need to Know When Selling a House with Tenants?

The simple answer is that properties are easier to sell empty, without tenants. However, there are both pros and cons to selling tenanted or occupied houses:

The cons of selling an occupied house:

  • The law in most states requires your agent to give 24-hours’ written notice whenever you want to show the house to a potential buyer.
  • Your tenants could make the property less attractive by leaving a mess or being difficult during showings.
  • With a tenant in place, you lose some control over how your property is presented.
  • If your buyer wants a vacant possession of the property, a tenant in place could be seen as an inconvenience.

The pros of selling a tenanted house:

  • If you have a tenant, you are receiving rent.
  • Some properties are more likely to attract investors than buyers (who intend to make it their primary residence) – an investor will be pleased to take on an existing tenant at settlement and start receiving rental payments straight away.

Look after your tenant…

Once you have made the decision to sell your property; make sure to ask your agent to advise the tenant straight away. It is common for the agent and tenant to work out a reduction in rent for the duration of the sale period. For example, you may offer $50 or $100 less rent per week if the tenant ensures that the property will be kept clean and vacates the property during the planned viewings. Another strategy is to offer a week’s free rent after the successful exchange of contracts with a buyer.

It is not uncommon for tenants to decide to move out when they find out their rented home is being sold. In some states, like NSW, if you didn’t advise the tenants when they signed the lease of your intent to sell, they have the right to break the lease, even a fixed term one.

If you want your tenants to stay, be proactive and co-operative. Reassure them and encourage your agent to keep them happy and make sure they stay in place. Keep in mind that the sale period can be just as stressful for them as it is for you.

Also remember that tenants have rights, so consult with your property manager or real estate agent to ensure you are acting legally throughout the process.

Can I ask my tenant to leave?

If you have a tenant in place but prefer to sell the property vacant, it can usually be arranged. Each state has its own laws, and your agent will be able to advise what your situation is.

Generally, the basic rule is as follows:

If your tenant has a fixed term lease, you cannot make them leave until the fixed term is up. You also have to give them 14 days’ notice. If you can’t wait for the end of your fixed term lease, then you’ll have to ask your agent to try to negotiate with them. You could offer a period of free rent in exchange for their agreeing to break the lease.

If the tenant has already been in place past the end date of your fixed-term lease, they have what’s called a continuing agreement tenancy. You may end this lease by giving 90 days’ notice. Or, you can give them notice of your intention to sell when you start the process and then give them 30 days’ notice once your buyer has signed a contract. Just be sure your settlement dates comes after the tenant’s last day in the property.

What comes next?

Now that you know what’s involved, it’s the perfect time to register your property on our free service that allows you to compare fees, commissions and profiles on local real estate agents in your area.  It’s easy, obligation free and impartial.  During the registration process, you can leave a note for agents to let them know that the property has a tenant in it.  Find out more information here.

LocalAgentFinder View all articles by LocalAgentFinder

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