2024 is a buyer’s market, no doubt.
For every 20 units sold this year, do you know how many of them are tenanted?
Only 1.
The other 19 are either vacant or owner occupied.
So why are tenants such a big obstacle for sellers?
There are some obvious reasons.
And there are some shocking reasons that you have never heard about.
Today, I’m going to share some hidden stories with you about how tenants can destroy the selling process.
If you like to see more episodes where I share secret stories that you can’t find anywhere else, make sure you like and subscribe so I know what you enjoy watching!
#1 Uncertainty in Scheduling ShowingsEvery showing is an opportunity for the seller.
But it is at the mercy of the tenant to allow the showings to go through.
We’ve seen difficult tenants who would decline 9 out of 10 showing requests.
“I have a work meeting.””
“I’m not feeling well.”
“It’s not a good time.”
The seller may be desperate to sell, but tenants really have no incentives to help.
Especially if they are staying in a rent controlled unit and paying below market rent, why would they want to leave?
We would try different negotiation tactics, soft or hard, depending on the tenant’s personality, but it’s not guaranteed to work every time.
Sometimes difficult tenants can make selling nearly impossible.
#2 Uncertainty in Showing Conditions
It is obvious that tenanted units may be messy and dirty.
But this story that I’m about to share with you is really shocking.
The tenant brings it to a whole new level.
I was helping a client sell a 680 square foot unit with a den and parking in Richmond Hill.
We had a specific price in mind, but as I was preparing for the listing, I noticed a similar unit in the building had just sold for 20% below market value.
What’s going on?
So I called the agent who sold the unit to find out.
“What happened?” I asked.
He explained that the unit had a tenant who was intentionally preventing the landlord from selling the unit.
Their tactic?
Cooking smelly foods right before every showing.
Imagine buyers walking into the unit and being hit by a strong smell that sticks around everywhere.
Of course, people turned away immediately.
The tenant’s goal was clear.
Make sure no one wanted to buy the property so they could continue living there at their low rent.
This is the kind of challenges that sellers and agents face when dealing with tenanted properties.
Buyers decide based on feelings, and a bad first impression—like clutter, bad smells, or a messy space—can ruin the deal.
In cases like these, selling at market value becomes almost impossible.
#3 Uncertainty of Tenant Vacating Upon Closing
This story is about one of the trickiest tenant situations I handled.
We sold a tenanted unit earlier this year and the buyer was an end-user who planned to move in.
So the tenant would have to vacate the unit before the closing date.
We served the tenant a proper notice to terminate the tenancy on May 31.
And here’s the tenant’s response.
Let me read it out to you.
“After careful consideration, I believe a Cash for Keys arrangement would be mutually beneficial.
I propose a fair compensation of $30,000, payable to me via bank draft, in exchange for surrendering the keys and vacating the unit by May 31st, 2024.
This amount is calculated based on the current market rent on an annual basis for similar units, as well as factoring in moving expenses and the adjustment to significantly higher rents.
Such an arrangement would expedite my search for alternative housing while ensuring the unit is vacated as requested.”
That’s right, $30,000!
Obviously, their plan was to stay in the unit past the termination date so we wouldn’t be able to provide vacant possession to the buyer.
And it would take a few months to evict the tenant through the Landlord and Tenant Board.
So the deal would fall apart and the seller would have to pay a big penalty to the buyer.
You see, the tenant was essentially holding the unit hostage and asking for a $30,000 ransom.
What the tenant didn’t know was that we didn’t have to wait until the closing date 2.5 months down the road, to apply for an eviction.
We had already filed for an eviction order right after the purchase agreement was signed.
And immediately after that, we also filed a Request to Shorten Time with the purchase agreement and buyer’s self-use declaration.
LTB would grant an approval to expedite the case because the seller would face a significant penalty if the sale falls through.
We told the tenant that we managed over 700 rental units in Toronto and we have done this many times.
Of course, the tenant didn’t believe what we said and just said they would wait for notification through the proper channels.
Shortly after, the tenant received notifications from the Landlord and Tenant Board about the filings and he knew we weren’t just bluffing.
In the end, he vacated the unit peacefully before the termination date.
Sometimes it can get very tricky when you’re trying to sell with a tenant.
You have to know every single rule inside out.
That’s why vacant units are far more appealing.
Selling a tenanted unit is never straightforward.
From scheduling showings to managing tenant relationships, every step requires careful planning and execution.
But with the right team and strategy, it can be done.
If you need guidance in your situation, you can schedule a call with me at the link below:
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