How it Can Take a Year to Sell Rental Homes in Midtown
Once upon a time in a faraway land called the Sacramento Pocket, I sold a rental home that was tenant occupied, and the tenant was extremely cooperative about showings, the home was immaculate, and it sold at top of the market. If I had any children that would have produced grandchildren, this is the bedtime story I would tell them because it is true — yet unbelievable because it so rarely happens. Still, it doesn’t stop me from selling rental homes where tenants reside.
I explain to my sellers that they could be losing a lot of money by leaving tenants in the home while the home is for sale. I know my voice often falls on deaf ears because sellers are more concerned about making the mortgage payment from the tenant’s rental payments, which is understandable. They worry that it could sit vacant forever, which of course it won’t, and they’ll go bankrupt making payments with nothing coming in to offset. Nope, it’s easier for them to leave the tenant in place, even though it might cost them more in the long run.
Take, for example, the effort I recently expended to sell rental homes in Midtown Sacramento — two homes on one lot — which closed last week. After my first inspection, I had initially suggested to the seller that he should evict the tenants, but when he refused, well, nature took its course. First, it’s no picnic to have agents calling and knocking on your door and, in this hot seller’s market in Sacramento, that’s what happens. One tenant was so upset with the showings that she put a sign on her door warning visitors in a threatening manner, let’s just say, to stay away. The other grew tired of the constant parade of buyers kicking her stuff all over the floor.
During the first four months of trying to sell these rental homes in Midtown, the only types of offers we received were lowballs, reflective of the way the home showed with occupants, and we just stopped showing the back house. Four months of open houses, blasting the listing everywhere online, tweaking the photographs, begging agents at my Midtown office to show the home, and fielding calls from prospective buyers — some doing yoga in McKinley Park, others driving by, the bulk scouting homes online — nada.
Then, lo and behold, the dark clouds lifted, the skies opened up, and the tenants abruptly moved out. Almost immediately, we received a full-price offer from a qualified buyer. Unfortunately, that buyer walked away after inspections: older homes often have issues that can frighten the unsuspecting. But within a few days, we received another full-price offer from a qualified buyer who closed escrow with minimum negotiations because we conditioned the sale.
In retrospect, the seller had listed with a cheaper agent last year, a family friend, he had explained. We had talked a year ago but he wanted to “save” 1% of the commission (typical wrong thinking), so he listed with her. Nothing happened during her 5 1/2 months of the listing, I heard. That’s when he hired this veteran, full-service Midtown agent. I imagine he regretted later not following my advice in the beginning and not hiring me to start with, but he’s also grateful I performed. No matter how long it takes, I do not abandon my sellers, and I make it work. Most sales today are not easy.