A sticky situation
It’s been a long time since I’ve read Dale Carnegie’s book, but I’m pretty certain that collecting rent and not paying the mortgage on that same rental was not a suggestion that came from How to Win Friends and Influence People.
It is not uncommon for those who own a rental and are having trouble making the bills to cease making the mortgage payments on the rental. It’s also not uncommon for the owner of the home (the one who is still collecting the rent, but not paying the mortgage) to neglect to mention to the tenant that the end of tenancy may be imminent.
Listing a rental as a short sale can be challenging. Tenants are often a little bit disturbed when they learn that they have been paying the mortgage, yet those payments have not been making it to the bank. So, when the tenant learns that he (or she) now was to be flexible and allow prospective buyers into the property for showings, the tenant is generally not a happy camper.
It is nearly impossible to quickly and efficiently sell a property with an uncooperative tenant. And, since time is of the essence in a short sale where the mortgage payments have ceased, it is vital that tenant and landlord get on the same page.
Two Tips for Working with Tenants in Short Sales
- Ask the tenant to find a new place to live immediately; offer a cash incentive if necessary.
- Offer a reduction in monthly rent during the course of the process in order to motivate the tenant to be accommodating to requests for showings among other things.
I recently heard a story about a tenant that was so irritated with his landlord that he trashed the property on day prior to the short sale closing. As a result of the tenant’s behavior, the landlord (the short sale seller) had to pay a few thousand dollars in repairs and clean up so that the buyer would continue with the purchase.
Like I said (and maybe it’s an understatement), the landlord-tenant relationship in a short sale situation was not addressed in How to Win Friends and Influence People.