Can I Sell My Arizona Home With Tenants Living in It?
The short answer is yes. But selling a home with tenants can be more complicated than most homeowners realize.
One of the questions I get from Arizona homeowners is whether they can sell their rental property while tenants are still living there.
The answer is yes. You do not have to wait until the tenants move out to put your home on the market.
But here's what many sellers don't know: Having tenants in the home can greatly reduce the number of buyers who can purchase it. And that can affect how much money you walk away with.
Let's talk about why.
First, When Does the Lease Expire?
This is one of the first questions I ask when someone wants to sell a home with tenants.
Why? Because in Arizona, selling a home does not automatically cancel an existing lease.
If your tenants have six months left on their lease, the new owner generally must honor those six months.
You cannot simply sell the property and expect the tenants to move out because someone else bought it.
There are exceptions, such as when a tenant breaches the lease and the landlord has legal grounds to end it. But simply wanting to sell is not one of them.
That brings us to something even more important.
Your Tenants Could Be Keeping Buyers From Qualifying for Your Home
This is the part that surprises many sellers.
Most people shopping for a home are looking for somewhere they can actually live.
And many buyers purchasing a primary residence use a mortgage that requires them to move into the property within a certain amount of time.
For many owner-occupied mortgage programs, that means moving into the home within 60 days of closing.
Now imagine your tenants have six months left on their lease and have no interest in leaving early.
A buyer who plans to live in the home may not be able to meet the occupancy requirements of their mortgage.
That means your home may no longer be an option for that buyer.
Instead, your potential buyers may be limited to investors, certain second-home buyers, or cash buyers whose plans and financing allow them to honor the existing lease.
And here's the problem.
Fewer qualified buyers can mean fewer offers, more time on the market, and potentially a lower sales price.
In a buyer's market, where sellers are already competing for attention, reducing your buyer pool can be an expensive mistake.
What About Showings With Tenants Living in the Home?
Even if the lease is ending soon, there are other challenges to consider.
Think about what it's like to sell a home when you're living in it. You have to keep it clean, make arrangements for showings, and sometimes leave on short notice.
Now imagine you're being asked to do all of that for a home you don't even own.
Your tenants may work from home. They may have pets or young children. They may have schedules that make it difficult to leave for showings.
And let's face it, they may not be thrilled about having to move.
Even tenants who are cooperative may not keep the home in the condition we'd like for professional photos or buyer showings.
That doesn't mean they're bad tenants. It simply means their priorities may be very different from yours.
As a seller, you want the home to look its best and be available when buyers want to see it.
Your tenants just want to live their lives.
Those two goals don't always work well together.
Arizona landlords must also follow the state's rules regarding notice and access to the property. A home being listed for sale does not remove the tenants' rights.
Professional Photos Can Be Another Challenge
Another issue sellers don't always consider is that we may not be able to use current interior photos to market the home.
Many tenants are understandably uncomfortable having photos of their furniture, personal belongings, family pictures, and valuables displayed all over the internet.
And even if a tenant agrees, photographing and publicly advertising their personal belongings can create privacy and potential liability concerns.
That puts us in a difficult position because professional photography is one of the most important tools we use to attract buyers.
In some cases, we may be able to use older photos of the home, provided they accurately represent its current condition and meet MLS rules. Otherwise, we may have to market the property with limited interior photography.
And when buyers are scrolling through dozens of homes online, a listing without interior photos can easily get passed over.
This is another reason selling a home with tenants can affect not only who can buy it, but how effectively we can market it.
Can I Ask My Tenants to Move Out Early?
Absolutely. You can ask.
But if they have a valid lease and have not breached it, they generally do not have to agree.
Sometimes sellers and tenants can work out an agreement that benefits everyone.
For example, a seller might offer to help with moving expenses or provide a financial incentive in exchange for the tenants agreeing to end their lease early.
This is sometimes call.
ROVER REALTY.
Angela Tauscher at Rover Realty expertly guides your Arizona buying, selling, or renting journey, maximizing results through dedicated, constant communication.
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