UKC

I moved cites for work reasons a few years ago, and have since been renting out my house (which I love) to some good tenants. It's probably high time to come to terms with the fact that I won't be moving back any time soon, and seems only fair and sensible to consider selling the house to the current tenants (who have said they are interested).

Does anybody have any advice for me about this? I'm going to have a preliminary chat with them about it next week. I think I'd be happy to sell it to them for a "fair" price without putting it on the open market, but any advice on how to determine or negotiate what a "fair" price is? Anything particular I should be aware of if I was to go about things this way? Any reason not to do things this way?

Strikes me that it should make things easier and hopefully cheaper in many ways, but at the same time it does make it a more "personal" transaction which I could see could have the potential for awkwardness. Any thoughts?

In reply to somebody else:

Just good on you for being so reasonable, nice, not greedy, and considerate to your tenants.

In reply to somebody else:

I know a few people who have bought their places from their landlords/ladies and in these cases they just paid the going rate, I see little reason why you should do anything else unless you have money to burn and are feeling benevolent.
The buyers will be gaining from the deal anyway.
Obviously you could negotiate with them in the same way as you would if you were buying/selling in an open market

In reply to somebody else:

Have there been any sales in the street / area of similar houses? That may form a good guide price. Equally you could get a couple of estate agents to value it and then knock a bit off because they usually over value the settlement price to allow negotiation. Having said that, you may wish to do the same when opening up negotiations.

Good luck!

In reply to somebody else:

Would suggest getting it valued by an E/A or an independent valuer before you go and see them and see what they suggest in terms of price. I mean, if the property is valued at 150k and they offer 145k you've gotta consider whether you could sell it to another person who would be willing to keep them as tenants for the full sale price or if you are going to take a lower price in order to sell to the tenants who you're friendly with.

Nothing wrong with dealing with them direct when it comes to the price since obviously you won't want to waste money instructing estate agents since you're selling privately, just make sure you have separate legal representation for the actual conveyancing (even if it's 2 different solicitors from the same firm).

In reply to somebody else:

I was in the fortunate situation to put in an offer for the house we rented when the landlords decided to put it on the market. Even more fortunately they decided not to squeeze the market for the last pound. in which case we would have been unable to compete (even though Cambridge was less of a nightmare in 2001 than it has since become ), and right away accepted our offer for their (fair) asking price.

When we left Cambridge a couple years later we in turn sold to friends for a reasonable price rather than for the maximum we might have achieved.

I think that selling at a fair price, cutting out the middlemen, goes a small way towards restoring sanity in a society that put greed above everything else. I would look at what similar properties are offered for via agents, and then ask for a few % below that.

CB

CB

In reply to Removed User:

Over a lifetime 5k isn't much, though, and he gains from there being no chain and hopefully knowing enough about the people to trust that it'll go smoothly.


Good idea.

In reply to Removed User:


It's highly likely that the buyers would be getting a mortgage for the purchase so would have to get at a minimum a valuation survey to confirm that the property is worth the value of the loan.

It would be useful if any valuation on the property was one that could be used by the bank after a value is agreed upon. I'm not sure how this could be done but I imagine speaking to a surveyor would be handy.

In reply to somebody else:

There are lots of possible factors affecting such a valuation. It depends on what sort of tenancy they have. If you could legally get possession immediately then it would be Market Value, if under the terms of the Lease they are secure for several years, then they should be entitled to a discount, because you can't realise your asset quickly on the open market.

Then there are other factors to take into account such as no agents or marketing fees ( maybe deduct these from the price?? Or split the difference with them?)

Have a chat wth them and suggest you get an independent professional valuation from a Chartered Surveyor who is impartial and share the cost of that? Such a valuation might include a survey or Homebuyer Survey, because the valuation should take account of condition.

In reply to everyone:

Thankyou all for your helpful comments. Some very useful stuff to think about there. In reply to Trangia, I forget what the official term is, but this is a shorthold tenancy(?) I think, so no long-term issues with possession to cloud the issue.

In reply to somebody else:

If you are renting the property through a letting agent make sure there is no clause in your agreement with them about having to tell them and giving them a cut of the sale.

Marq

In reply to Marq:


Shit. You are right.

"In the event that a sale of the property should be agreed with the Tenant or any other associated party after the commencement of the Tenancy leading to an exchange of contracts, xxx Estate Agent’s fee will be 1%+vat of the sale price of the property. This commission will become payable once the sale is completed."

That certainly sounds like it to me. Shit. I'm pretty annoyed that I didn't spot that at the start of all this. I'm not exactly a pro at this, nor was this anywhere on my radar when I first moved away.

Elsewhere in the contract though:

"If you withdraw from this contract, yet continue to rent the property to a tenant found via ourselves, you will then be liable to a charge of 15%+Vat of 6 months gross rent. This will be payable initially from any rent held on account. Should sufficient funds not be available in this respect, the balance must be paid within 7 days of receipt of our account."

Which sounds to me like a legitimate way out of the predicament, which I would have no moral qualms with following given the lack of any loyalty I feel to the letting agents (which will come as no surprise to most people to hear, I imagine!). To be honest I would be more than a little miffed about the 15%+VAT x6 months, even, but that does appear to be the contract that I agreed to. It would mean that I'd need to shoulder the responsibility of a contract and more active management of the place for 6 months myself, but the tenants do very much seem like reasonable people and it would be considerably preferable to what the alternative seems to be!

In reply to somebody else:

Sorry to point that out! I am in a very similar position and when the tenants originally moved in they said to let them know first of all if I ever planned to sell it. For the time being I'm viewing it as an investment / pension pot for later in life!

Marq

If you want to be fair, consider that if you sold it on the open market with sitting tenants you would restrict your market. You would get less than the asking price, and potentially less than the valuation price. You'll also have to hand over about 2-3% of the price to the EA. So You may end up with 15% less than the asking price as cash.

Selling to your tenants you'll get a better valuation (as it's not for rental), and save some fees.

So you would still be better off letting them have it at 3-5% below market price. Just warning not to hold out for more and get less, look at the whole picture.