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6 Concerns Selling A House with Tenants in Pennsylvania

By Nicole Sarrate

So you want to sell your house with tenants in the city of Brotherly Love, but where to start?!

 

Maybe you tell yourself, I need to sell my house fast, so you decide to go the most direct route by having your property posted for sale and show it yourself.

 

Standing at the door of unit 106, you can already hear the loud cries of a small child as you awkwardly smile at your prospective buyer. Your tenant protests, peaking through the door she’s barely cracked open, but finally lets you in for a quick tour. Then, you wish she hadn’t! You are immediately hit with a whiff of oh my…, as she chases the child throwing spaghetti all over the walls, profusely apologizing about the state of the home while a hoard of teenagers bulldoze you, fighting over a video game.

 

This is no exaggeration, this actually happened! If you want to sell a house fast in Philadelphia, you don’t want to be this seller!

 

Lucky you, here are 6 things you can do to avoid this situation and attract home buyers in Philadelphia.

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1. How to sell your house without a realtor?

 

Let me begin with the most important factor, consider why you are selling. This will help determine if you must sell with your tenant and if working with a realtor is necessary.

 

To be clear, working with a realtor has benefits, but if you’re wondering, how much does it cost to sell a house, or need to sell a house with tenants, working with a realtor may not be the best fit. Realtors will add an additional cost to selling your home. Also, many are reluctant to sell properties with tenants, so they may not give your sale the attention you need.

 

If you need to sell a house fast because of probate issues, or maybe you want to save on capital gains tax on the home sale by doing a 1031 Exchange, a realtor not focused on your property would hurt your bottom line.

 

Of course, you can always go the basic, for sale by owner, route. Post a sign outside the home, hold an open house, tell your friends, family and colleagues to help spread the word, but this may not be enough.

So, these are a few additional ways on how to sell your house without a realtor:

  • Lease to Buy – if time is not a factor, offer your tenant the opportunity to buy your property. This is a win-win as you won’t have to worry about trying to sell with the tenants in place and you won’t have to hire a realtor.
  • Off-Market Deal – you can put feelers out on your local Facebook real estate group or on a popular real estate website such as BiggerPockets Marketplace.
  • Online Buyers – like local Brotherly Love Real Estate!

 

Just remember, the most important thing is to consider your specific property and needs, to determine if you should sell your house without a realtor and the best way to do it.

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2. Can the laws help me sell my house fast in Philadelphia?

 

As a landlord, it’s important you’re always familiar with the national and local tenant laws. This is particularly true whenever making any changes, such as selling a property. Be sure to always consult an attorney during any transitions.

 

So the short answer is, yes. The laws not only help but are necessary to be aware of when you want to sell a house fast.

 

Some good resources to consult for general tenant laws in Pennsylvania are the HUD Tenant Rights, Laws and Protections, the Equal Housing rights, and the Landlord and Tenant Act of 1951.

 

These are just a few things you should consider when speaking with your attorney:

  • Do you have to notify the tenants you are selling?
  • Is tenant approval required before transferring the security deposit?
  • Is a lease termination due to sale clause legal in Pennsylvania?
  • Do tenants have to let potential buyers into the home?
  • How much time do tenants legally need to be given advance notice for access to the property?
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3. How can the lease help me sell my house fast in Philadelphia?

 

Remember, the lease is in place in order to help protect you and your property, just as much as is it there to protect the tenant. Be sure to regularly review your standard lease agreement and consult your attorney so that you are properly sheltered.

 

The best way your lease can help sell your house fast is to include a lease termination due to sale clause permitting you to end the lease if you sell. Remember, laws change, which is why, as suggested earlier, it’s advisable to consult with your attorney to see if this clause is legal when considering to sell.

 

Additionally, or alternatively, you can have all your tenants sign a month to month agreement instead of a yearly, or longer, lease. There are pros and cons for month to month agreements, but if you anticipate you may wish to sell soon, a month to month lease would be best.

Now, while these lease components will help you legally sell a house fast in Philadelphia, you will still need to send the tenant a Lease Termination Letter. There are many guides on how to write a lease termination letter, and you can certainly search sample termination letters. However, if you wish to take extra legal precautions, without having to suffer another attorney billable hour, there are also resources online, like eForms, that will provide you state specific standardized forms, usually for a lower fee.

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4. Are people buying a home in Philadelphia today?

 

Never forget, the market always matters. If you’re not currently up to date on the national and local market, be sure to do your research. Otherwise, you may just find yourself googling, tired of trying to sell my house, because your price is set too high or your property doesn’t meet local standards if you’re selling a house in bad condition.

 

The objective shouldn’t be to try to time the market, as that rarely works, but to analyze if you are in a good position to sell in the current market. Keep in mind that when you are selling a house with tenants, you’re already at a disadvantage, so it helps to have the market on your side.

 

You may become overwhelmed by the amount of resources and information there is available on real estate market trends. One good place to start is on Neighborhood Scout, which includes a good variety of information.

When you’re analyzing the market, some things to pay attention to are:

  • What economic cycle are we currently in? Are their signs the market is beginning to change?
  • Is the real estate market currently favoring sellers or buyers? The best time to sell a house fast in Philadelphia is during a seller’s market because it usually indicates high demand and/or short housing supply. During a buyer’s market, it may take longer to sell your property and you’re likely to receive many low offers.
  • What does your competition look like? Comparable properties are the best way to determine house sale prices. This is particularly important if you’re selling a house in bad condition, or selling a house with unpermitted work, because it can help you determine what repairs are necessary before selling.
  • Time of year. To sell a house fast, you will want to sell during spring and summer as those are the best season for home sales.
  • Bonus tip: if you are trying to sell your property during fall, make sure the front and backyard are not scattered with leaves so your property looks more presentable
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5. Why does having a tenant matter if I’m trying to sell a house fast in Philadelphia?

 

Now here comes the meat and potatoes! Tenants have a big impact on your ability to sell a house fast.

 

Here’s just a few reasons why!

  • They can have an unwelcoming home that discourages home buyers in Philadelphia, such as an unclean unit, strong unfavorable smells, or even just ugly furniture!
  • They can prove difficult by reducing/refusing access to their home.
  • They can become angry by the sale and damage the property.
  • Most importantly, many buyers are discouraged by properties with tenants. More on that to come….

 

Typically, it’s best advised to have your property vacant if you want to sell a house fast, especially if you have problem tenants. A common method used to get rid of these problem tenants is to offer a keys for cash exchange (also known as, cash for keys).

 

However, there may be reasons why you must keep your tenant while trying to sell your property. Maybe you can’t afford the vacancy cost, or there is no way to break the lease. Again, if you’re wondering how much does it cost to sell a house, money may be a very important consideration.

 

In that case, it’s important to remember that while this is your property, it is your tenants’ home. Most tenants are not inherently evil (although there are a few that certainly seem to have questionable motives! 🤔). Even in the example of unit 106, the tenant is not malicious, she is just overwhelmed by her own circumstances.

The most significant thing you can do to help you when selling a house with tenants is to be kind and considerate. Begin by telling them you are putting the house up for sale before they start receiving the “we buy houses in Philadelphia” flyers in the mail.

 

However, before approaching your tenants with the news, try to anticipate their concerns so that you can be a reassuring presence, instead of the awful landlord. The Covid-19 pandemic has unveiled many lessons, one of the which is how us landlords have the ability to be a resource for our tenants during difficult times.

 

Goodwill may be enough, but for those that need a little more motivation, being that resource usually helps us in the end as well. To butcher a phrase, let me help you, help me! 

 

I digress… here are some tips to help get the tenant on your side when you need to sell your property:

  • Explain the process. They probably have many questions so the better prepared you are, the less anxious they will feel about how the sale will affect them. Some questions you should think about in advance are:
    • Do I have to move?
    • Will this change my lease?
    • Will my rent go up?
    • What happens to my security deposit?
    • Does this mean you’re not going to fix that leaky faucet?! Side Note: remember your tenants yield great influence during a sale so be extra diligent on maintenance requests during this process.
  • If possible, offer solutions.
    • See if the tenant would be interested in purchasing through a lease option to buy or by offering seller financing if that is something you’re willing to consider. Technically, this is one of the best ways to sell a house fast in Philadelphia, as the house will be sold before you even have a chance to spread the word!
    • Do you have available apartments at another nearby location to help the tenant relocate? If not, do you know of other landlords/friends looking for a good tenant that can meet their housing needs?
    • Can you help with their search by providing resources of where to look such as Zillow or Trulia?
  • Think about ways, or, if you’re feeling bold, ask for ways you can make the process easier for them. Some examples are:
    • Find out when showings would be most convenient for them and try to work around that, if possible. If not, communicate that to them and try open houses to limit interruption.
    • Offer free cleaning and/or yard service. This one is a win-win because it also ensures the property is in presentable condition for those that buy homes in Philadelphia.
    • Offer incentives such as a gift card to a nearby coffee shop or their favorite restaurant. Pro tip: offer this incentive with the condition that they vacate the property during the showing as it’s best to conduct tours when the tenant is not present.
    • If extreme measures are necessary, you can also offer rent reduction throughout the sale, or help with moving costs, to sweeten the deal.
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6. Who are the home buyers in Philadelphia?

 

This largely depends on what type of property you’re selling.

 

Owners occupants, such as young couples, families, and the elderly, are more likely to buy homes in Philadelphia, within the single-family category. While investors, like those guys (and gals!) mailing your tenants the “we buy houses in Philadelphia” flyers, often target multi-family properties.

These are the main differences between the two when selling a house with tenants.

Single-Family Properties

Since most buyers looking to buy a single-family house expect to occupy the property, having a tenant often eliminates you for a large portion of these home buyers in Philadelphia.

 

You may be able to find a buyer who is willing to purchase now and wait for the tenants’ lease to end before they move in. It’s worth a shot! I’ll even make you a deal, you could try to sell your house in 30 days or we will buy it!

 

I’ll even help a couple steps further!

  1. This is a great article by Forbes on some tips to make the property more appealing to home buyers in Philadelphia.
  2. Below is a great video to help stage an occupied home.

Multifamily Properties

 

As they say in wrestling, or use to say, I don’t know; I gave up on wrestling after Dwayne Johnson retired (the first time). Okay, sorry, I’m back!

 

Let’s get ready to rumble!!!

 

As multifamily properties tend to attract investors, this is where the most opportunity lies for those selling a house with tenants. Even so, most investors prefer a vacant property, but don’t lose hope just yet! All you have to do is see it from their side to turn a negative, into an A plus!

 

What do investors who buy homes in Philadelphia care about? The numbers!

 

You would assume that having a tenant would help the numbers because there is immediate income for the buyer. However, every savvy investor calculates risk, and an unknown tenant proves to be a big risk.

 

Revisiting Unit 106, what would the buyer in that story have seen? If they were an investor, they probably would have seen walls that now need new paint, possible broken cabinets or other house fixtures, caused by rowdy teenagers, and even the potential for late or missed rent payments because the tenant has a lot of other things to worry about.

 

What does that mean for you? A huge reduction in the investor’s offer price to offset that risk.

 

The way to counterbalance the risk calculation is to prove you have a long-term quality tenant.

 

Here are some ways to do just that!

  • Provide copies of all leases and agreements.
  • Show evidence of on-time rent payments.
  • Pull up-to-date credit reports and background checks on your tenants, if still permissible through the original agreements. If not, you can always request the tenant signs any necessary consent.
  • Provide copies of maintenance records, to show the property has been well maintained by you and your tenant.
  • Ask the tenant if they are willing to speak with the buyer. This one’s tricky and should only be done if you believe the tenant will be favorable.
  • Provide copies of utility bills and expense statements for the past two years.

While that last one may not specifically pertain to the tenant, smart investors do their research and will ask you for detailed records. Many times the buyer investor will request your tenants verify the terms and conditions of the lease, through an estoppel statement, and may request an interview with the tenant nonetheless.

 

By making it easy for the buyer, providing documents before they even request it, they will be more inclined to believe your motives are sincere and willing to work with you.

 

If interested, this a brief example of how the Brotherly Love Real Estate investing process works.

 

To sum up, here’s a cute little breakdown of what’s been discussed here.

 

Selling a house with tenants