Most renters are not doing so by choice. They are renting as a temporary stop before buying a home. They either lack a sufficient down payment, need to improve their credit score or need time to catch up on bills. However, there is an alternative. Selling to existing tenants can help both parties involved. In most cases this works out to be the perfect fit. This gives them enough time to take care of things on their end while you don’t have to worry about the hassle of listing the property and going through the selling process.
If you have an interested party and are considering selling to existing tenants, start out with having them get preapproved. Even if they are not qualified at the moment, you can work with them to get them approved. If you are six months from the end of the lease, they have time to repair their credit and improve their score. You can even offer to put a portion of their rent towards the down payment or closing costs. In today’s market, where buyers are hard to come by, you should do everything possible to try to work with them.
Note that preapprovals can change with just one missed payment. Be conscience that a preapproval today does not mean it will be valid in 90 days or more. As long as nothing changes with employment, down payment or income you should have nothing to worry about. However, one small missed credit card payment could have an impact. Be careful not to promise anything to your tenants. You want to work with them and try to do everything to make the deal happen, but you can only do so much. If their scores do not improve when you are ready to sell, you need to move on to other qualified buyers.