Tenant asked to buy - game plan!

[DavidMc]

My PM just told me a tenant asked to buy my property. I suppose I wouldn't mind selling it.

Here is my game plan.

1. Try and avoid the PM Agencies Sales Department to avoid any 'we found the buyer, give us money!' BS.
2. Get a free bank valuation to find out the actual value of the property (noting they are pretty conservative usually).
3. Get say two sales agents to give me a written appraisal of the property, and counting on their 'quote lies' this should give me a couple of letters that say the property is worth a bit more than it probably is for the negotiations.

I'll use all this information to work out a price in my head and then arrange to sit down with the tenant to discuss.

How would you go about it?

 

[Rixter]

My PM just told me a tenant asked to buy my property. I suppose I wouldn't mind selling it.

Here is my game plan.

1. Try and avoid the PM Agencies Sales Department to avoid any 'we found the buyer, give us money!' BS.
2. Get a free bank valuation to find out the actual value of the property (noting they are pretty conservative usually).
3. Get say two sales agents to give me a written appraisal of the property, and counting on their 'quote lies' this should give me a couple of letters that say the property is worth a bit more than it probably is for the negotiations.

I'll use all this information to work out a price in my head and then arrange to sit down with the tenant to discuss.

How would you go about it?

Same as you bar point 2. Using the bank to get one free, one, its conservative for financing reasons, and 2, you are not the valuers client - the bank is.

Pay the money & get a fair open market valuation done by an independent valuer .

I hope this helps

 

[Perp]

My PM just told me a tenant asked to buy my property. I suppose I wouldn't mind selling it.

Here is my game plan.

1. Try and avoid the PM Agencies Sales Department to avoid any 'we found the buyer, give us money!' BS.

Um, but they did find your buyer, didn't they?

 

[Terry_w]

My PM just told me a tenant asked to buy my property. I suppose I wouldn't mind selling it.

Here is my game plan.

1. Try and avoid the PM Agencies Sales Department to avoid any 'we found the buyer, give us money!' BS.
2. Get a free bank valuation to find out the actual value of the property (noting they are pretty conservative usually).
3. Get say two sales agents to give me a written appraisal of the property, and counting on their 'quote lies' this should give me a couple of letters that say the property is worth a bit more than it probably is for the negotiations.

I'll use all this information to work out a price in my head and then arrange to sit down with the tenant to discuss.

How would you go about it?

1. Too late for that - they did find the potential buyer!

have a read of your management agreement

edit - posted before seeing Perp's post.

 

[turk]

1. Too late for that - they did find the potential buyer!

have a read of your management agreement

edit - posted before seeing Perp's post.

I believe that in Victoria the PMs agency has no right to any commision unless a
the agency has a sales contract with the vendor.

 

[DavidMc]

Um, but they did find your buyer, didn't they?

I disagree.

Years prior I asked them to find me a tenant, and I paid them a fee for this. I never asked them to find me a buyer, discussed any payment or anything like that.

After this time, I have formed a relationship with this tenant (as their landlord), who is now a asking to buy.

 

[Perp]

I disagree.

Years prior I asked them to find me a tenant, and I paid them a fee for this. I never asked them to find me a buyer, discussed any payment or anything like that.

After this time, I have formed a relationship with this tenant (as their landlord), who is now a asking to buy.

Didn't they pass on the message, though? Legally, the precedent is that an introduction is adequate to entitle an agent to commission.

I understand why you're reluctant to pay, I'm just not sure you're on solid legal ground, and the fact that Terry W had the same reaction bolsters that feeling.

Have you checked your management agreement? Most of them do, in fact, contain a clause saying that they're entitled to sales commission if you sell the property to a tenant that they found for you.

 

[DavidMc]

Didn't they pass on the message, though? Legally, the precedent is that an introduction is adequate to entitle an agent to commission.

I understand why you're reluctant to pay, I'm just not sure you're on solid legal ground, and the fact that Terry W had the same reaction bolsters that feeling.

Have you checked your management agreement? Most of them do, in fact, contain a clause saying that they're entitled to sales commission if you sell the property to a tenant that they found for you.

To be honest I don't know the legal situation (although I will find this out very shortly), but honestly that makes about as much sense to me as me demanding $500 from Mazda because I suggested my friend should buy one - there was no contract was in place, no request for the service, no effort nor advertising on their part. Agents don't get to just 'make free money' because they happen to facilitate the communication between myself and my tenant (which I pay them monthly for).

If that what it comes to, I either won't sell (more than happy to keep the property) or sell through another agent to get more buyer competition and a higher price.

 

[S.T]

If the agreement says they're entitled to commission, why don't you terminate the PM contract, self manage it, then sell it a few months later to the tenants?

 

[luckyone]

Have you checked your management agreement? Most of them do, in fact, contain a clause saying that they're entitled to sales commission if you sell the property to a tenant that they found for you.

Yeah, that's why I always cross out that clause. I think it's a joke. Why should that get commission for that unless they are then going to take on all of the negotiating as well?

 

[Perp]

To be honest I don't know the legal situation (although I will find this out very shortly), but honestly that makes about as much sense to me as me demanding $500 from Mazda because I suggested my friend should buy one - there was no contract was in place

I get it. But depending on what your management agreement says, there may actually be an agreement in place.

Good luck.

Don't think of this as me trying to rain on your parade, but possibly having saved you from having to pay somebody who you don't think has done anything much for you.

If you decide to sell on the open market via another agency, just be aware that your present agent may still be entitled to a commission if the purchaser is your tenant...

 

[DavidMc]

Yes absolutely Perp. The reason I posted this online was to invite a few devils advocates to poke holes in it, it helps me. I appreciate your thoughts very much.

I have heard of this before and will be checking my agreement when I get home!

 

[DavidMc]

Same as you bar point 2. Using the bank to get one free, one, its conservative for financing reasons, and 2, you are not the valuers client - the bank is.

Pay the money & get a fair open market valuation done by an independent valuer .

Yes, I suppose for the $400-odd it would be worth it.

From time to time the banks have promo's where I can get one for free, but they have been inconsistent in regards to sometimes coming in lower (i.e. for finance purposes - translation: low because the banks will sue for any difference during a fire sale).

What is the best way to find a good valuer in my area?

 

[Rixter]

What is the best way to find a good valuer in my area?

If you dont have any word of mouth recommendations on who to go with for an area, what I do is phone up one my lenders and ask for their panel list of valuers for the area the prop is located.. then inquired directly with 2-3 them and choose one I felt comfortable with.

I used this as a purchasing tactic not sell tactic, though you are still looking for fair open market valuation same as I was.

With a valuation in hand from a valuer on my banks panel, if the banks valuation came in low for a property I was purchasing I would pull my valuation out and show them.

I hope this helps.

 

[jrc]

Well if they rely on something you signed several years ago I'm sure they complied with:

http://www5.austlii.edu.au/au/legis/vic/consol_act/eaa1980145/s47a.html

 

[DavidMc]

Well if they rely on something you signed several years ago I'm sure they complied with:

http://www5.austlii.edu.au/au/legis/vic/consol_act/eaa1980145/s47a.html

That is awesome jrc! Kudos

 

[cu@thetop]

What is the best way to find a good valuer in my area?

Is the house in Brisbane? I know an honest one who's reasonably priced.

 

[DavidMc]

Inner Melbourne, but thanks anyway!

 

[SOP]

I personally would approach it differently.

I would be asking the tenant what they were willing to pay. Just to make sure they were serious and weren't just kicking tyres. Then ask how they came to that amount.

Then I would wait for the managing agent to ask for a fee. If the property sold to the tenants you could throw $500 bucks to the agent as a thankyou.

SOP

 

[DavidMc]

Yes, I know the ball park I'd sell for, and it's probably a touch higher than market but that's because I'm not really interested in selling.

The tenant is a (wealthy?) Arab lady new to Australia who's primary concern is just to have the security of a place, loves the apartment and wants to start renovating it (the bathroom and kitchen are quite dated).

I will call to see if she is in the ballpark.