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Real Estate Marketing

Strategies for Selling a House with Tenants: What to Do and What to Avoid

When you're the owner or landlord looking to sell a home with tenants, it can get a bit complicated. Beyond the legal and practical considerations, having current tenants in the property might not be appealing to potential buyers. There's also the risk of tenants feeling pressured, leading them to seek legal advice and potentially create challenges. Regardless of your situation, here's a guide on how to ensure a smooth sale when dealing with tenant-occupied property.

What is a Sitting Tenant?

A sitting tenant is someone renting a place that the owner plans to sell. The rules in the lease, along with local laws, decide if the tenant can keep living there even after the property is sold.

Can You Sell a Rental Property With Tenants?

This is a common question for landlords. Turns out, yes, you can sell a property while the tenant is still there. In many states, including Illinois, tenants usually have the right to stay even after the property is sold, as long as the lease is still valid.


1. Be Honest with the Buyer

When selling a house with a tenant, be clear in your listing that someone is already living there. Share details about the lease agreement so the buyer knows what to expect. This is not just about doing things right – it could attract investors who like the idea of a home with a tenant already in place.

2. Fix Things Up

Just like with any house sale, the condition of the property matters. Plan a visit with your tenant to check the home, and then bring in professionals to do any needed repairs. If the place needs cleaning, consider hiring a cleaning service while it's up for sale. It's an extra cost, but it might help you sell the property faster.

3. Provide Your Tenants With a Chance to Own the Home

If your tenants really enjoy living in the house, give them the opportunity to buy it. This eliminates the need for dealing with staging, showings, and listings. You can even explore options like a lease-to-own agreement or seller financing. Moreover, tenants-turned-buyers might be willing to pay more for the home and will incur fewer purchasing costs.

4. Use Good Tenants to Help Sell Your Home

Just like you, many buyers are in search of an investment property they can rent out. A home with a responsible tenant who pays rent on time, maintains the property well and has been a long-term resident can make your property highly appealing to potential buyers. Especially in a hot market for investors, highlighting the presence of a reliable tenant can become a key selling point for your home.

5. Make Sure You Give Your Tenants a Notice Period

If your tenants are on a month-to-month agreement, you'll need to tell them in advance if you want them to move out. The time you need to give them notice depends on the rules in your state. Some places say you need to give at least 30 days' notice, while others might ask for more if your tenant has been there a long time. Check the rules carefully to avoid delays in your selling plans.

6. Make Sure to Resolve Any Lease Violations

If your tenant hasn't paid rent on time, it's not just a problem—it can mess up selling your property. If the tenant is staying after you sell, fix any issues with the lease before the sale. This way, you can avoid unpaid rent causing problems and slowing down the property sale.

7. Check the Deeds on Your Duplex

If you live in one part of a duplex and rent out the other side, you might be able to sell just your side. Check the paperwork for your property. If there are two documents (called deeds), you can sell each side separately. Even if there's only one deed, you can try to split the ownership by changing the property rules.


1. Don't Leave Your Tenant in the Dark

Remember to keep your tenant informed. Your rental property is their home, so it's important to be considerate. Tell your tenants about your plans for the property as soon as possible. This way, they have time to find a new place to live if they need to. Keeping your tenants in the know will make them more helpful when it's time to show the property.

2. Don't List It on The Market While It's Still Occupied

During the pandemic, many landlords are worried about buying a property with a tenant and dealing with eviction. They prefer buying a vacant property and choosing a new tenant themselves. It's also easier to fix things, set up the property, and show it to potential buyers when it's empty.

3. Don't Try to Break the Rental Agreement

You might think about talking nicely to your tenant to get them to leave before their lease is up. But if they want to stay until the lease is over, you have to stick to the agreement. Even if you sell the house, the new owner has to follow the rules of the lease until it's finished.

4. Don't Ask Your Tenant to Allow a Showing at the Last Minute

Coordinate with your tenant to find convenient showing times, especially if they have pets or kids. Check local rules; usually, you need to give at least 24 hours notice before showing the property. Being considerate about your tenant's schedule increases the chances they'll help make the home look good for potential buyers.

5. Don't Overlook the Taxes on Your Property

Selling your primary home means no taxes on profits up to $250,000 (single) or $500,000 (married). But selling rental property is different. Depending on your tax bracket, you might owe nothing or up to 37 percent of the sale profits. Keep these potential taxes in mind as you plan your sale.

6. Don't Count on Having a Tenant to Bump Up your Home's Value

Sure, a good tenant might attract more investors, but it won't make your house worth more. If your place isn't classified as multi-family housing, it'll be appraised just like any other single-family home. Having a tenant won't give your home a higher appraisal.

Closing Thoughts

Selling a house with tenants doesn't have to be a headache. By being transparent, considerate, and following some practical do's and don'ts, you can navigate the process smoothly. Remember, a bit of upfront effort can lead to a win-win for everyone involved.

Rahul Agrawal

Co-founder and Chief Business Officer at Styldod

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