We have tenants in a small rental property and the real estate has informed us that they're hoping to move to a month-by-month arrangement as they're wanting to buy a house.
If I'm considering on selling, would it be worth offering the property to the tenants? What would be the best place to find information on selling privately? I'm thinking it would save on advertising and commission costs but is there any other benefits to make it worth it?
Has anyone done this before?
Good to hear it worked well. I thought the saving in advertising and commission fees would be a benefit.
There's many investors here, are there any reasons why you couldn't post it in the Classifieds ?
Tenants would know all the tiny little issues with the property and may even know more than you do.
I've seen signs in front of properties from websites where you can list your property for sale and they provide support, you could try them.
'Tenants would know all the tiny little issues with the property and may even know more than you do.'
On the flip side, they may be happy with the little issues knowing their aren't any large issues so have confidence to make a strong offer.
I was thinking the tenants living in there first could either be a positive or a negative. I've rented a number of places I would happily buy if given the chance, but have also rented places I couldn't stand.
The fact that they've renewed the lease a number of times suggests to me that they like it, but never know.
I was thinking the tenants living in there first could either be a positive or a negative. I've rented a number of places I would happily buy if given the chance, but have also rented places I couldn't stand.
The fact that they've renewed the lease a number of times suggests to me that they like it, but never know.
I hadn't thought of the classifieds in here though, that's a good point.
Of course it will be worth offering to the tenants.
The issue with selling privately without an agent is making sure you are getting the highest net price.
Another buyer may offer you a higher price after taking into account agent fees and advertising costs.
Unfortunately unlike consumer goods where you can estimate the value, a house is difficult to value precisely as each house is very different.
The good thing is with the housing market slowing (in most parts of the country) is it's easier to estimate the value these days as you don't have runaway prices.
I'd definately approach the tenants directly, tell them if they are looking to buy, would they be interested and what would be the highest price they are willing to pay. You never know, they may pay equal highest and that means you saved on fees. A win/win for both.
"Unfortunately unlike consumer goods where you can estimate the value, a house is difficult to value precisely as each house is very different."
That's so true. We're lucky because the house next door is identical, except we've updated the bathroom and installed new carpets. When it went up for sale a few years ago, it was great to get an indication of what our place would do and we talked to heaps of people about the pros and cons of the house.
It was initially up for auction (we're in an area with runaway prices) but was passed in and sold a few weeks later privately. That was interesting to see.
Make sure you check the wording of your agreement with your rental agent, as many have a clause in them stating that the rental agent is entitled to a commission in the event that you sell the property to the tenant, even if they do nothing.
Whether it is an enforceable clause or not is another question.
Good point, I'll be sure to check into that. Thanks
I have done it twice, it is quite simple and we've saved tens of thousands in commission.
Your Settlement Agent does all the legal paperwork, you just have to get a copy of the relevant documentation like the official Offer and Acceptance form and fill it out with the agreed terms of sale / price / timelines etc and give it to the Settlement agent to execute.