Selling to the tenants

[quintets]

Has anyone sold a property, but first offered it to the long term tenants? I haven't signed a sales agent yet. Are there any gotchas I should think about?

For us, the tenants have been there 6 years and the father grew up on the street. The son is interested in buying the property and would need the the father to help guarantee the loan. They're keen because they went to the mortgage broker and left a voice mail today to say they have a loan.

The flip side is, the house is a mess and in "updated" condition as opposed to "renovated". One agent said it wouldn't photograph well. Selling it vacant would probably get at least $10K more and we'd probably see more offers...I think.

Any perspectives would be great!

 

[luckyone]

Is it worth the trouble of cleaning it up for $10K more when you would possibly end up spending that much on agents fees anyway?

 

[Jacque]

I sold to my existing tenants about 12mths ago and figured the final agreed price was equivalent to what I wanted minus the agents and "quick reno for sale" costs that I was prepared to spend. Much easier, neater and no having to worry about opens, reno costs etc. As long as you're both happy with the price go for it!

 

[quintets]

Thanks Jacque

I just had a chat to the mortgage broker who they're dealing with and sorta found out the limit of what they could borrow. (Yes, I know it's a bit on the edge of ethics, but I suppose we're all working towards finding a common goal)

The offer would be borderline on what I'd expect to get if I took the savings of not having to pay agent's fees. I'd have to do some work to get them up that last little bit.

How did you handle deposits? Can I just use the trust fund for my conveyancer?

 

[marg4000]

If you have a property manager, check the agreement you signed. Some sneak in a clause that if you subsequently sell to a tenant they have introduced, the agent is entitled to selling commission.

You don't want a nasty shock after settlement.
Marg

 

[Perp]

If you have a property manager, check the agreement you signed. Some sneak in a clause that if you subsequently sell to a tenant they have introduced, the agent is entitled to selling commission.

You don't want a nasty shock after settlement.

I'm with Marg; you quite possibly have such a condition in the management agreement, and yes, it would be written to last forever, so you can't just sign a new self-managed lease and then sell to the tenant. (If that thought occurred to you. ) It's the fact that the agent originally introduced the tenant to the property that's relevant, not the fact that they're managing when the sale takes place.

 

[tlp]

Hi,

I sold to my tennant last year, you will need to make a judgement call on how genuine the purchaser is and ensure time is not wasted draging their feet, what I did was I signed a sole agency agreement with an agent and proceeded as if the place was going to open market, that helped speed things up and also put me in a stronger negotiating position. Ended up closing the deal comms free and we were both (buyer and seller) satisfied with the price.

Good luck
TLP