Bidding against current tenants of house - how should we play this?

Buzz78

Hi everyone,

I would really appreciate some objective advice on behalf of my wife and I with regards to a house we were looking to buy.

Background
The house in question has been on the market for 18 months, originally at £250k (certainly overpriced) and has been reduced incrementally to its current price of £208k (certainly a lot fairer) which was listed around 6 weeks ago. The property is currently rented by tenants who have been there for 6 (six) years.

The current Situation
We went for a second viewing on the house last weekend and agreed that we both really liked it and subsequently put in a low(ish) offer which we knew would probably be rejected - which it was on Sunday morning. At this point, we were under the impression that we were, in effect, the only party who had shown any recent interest in buying the property, i.e. we were confident of getting it, it was just a case of negotiating the price.

However, on Monday morning, as we were in the process of submitting our improved offer, we were advised by the EA that the current tenants had also put in an offer - we could not believe it! After living there for 6 years and having had all this time to negotiate an easy sale with the owner (especially since it's further price reduction 6 weeks ago), they now decide to go up against us, no doubt having been 'tipped-off' by the owner. I was absolutely fuming, but also, just could not work out the logic of the tenaants, particularly as they'd had the past 18 months to consider their position since the house has been on the market.

By cop on Monday we had put in an imporved, fair offer based on what next door sold for 4 months ago. Unsurprisingly, the EA came back and advised that the tenants had matched our offer, but we decided we couldn't risk going higher in a supposed bidding war (i.e. to asking price and possibly beyond) as we had no way of knowing whether this was in fact a genuine bid or just a 'phantom offer', particularly given the situation and so many factors not stacking up - it all smelt a bit off.

Come Tuesday morning the EA confirmed that, unsurprisingly, the owners had gone with the current tenants, and now 4 days later the proprty is showing as Sold STC.

So, given that we both really like the house, it ticks virtually all of our boxes - particularly for the asking price which, incidentally, my wife and I had previously agreed we would happily go to if necessary - we really don't know what to do, and hence our appeal for some impartial, structured opinions.

Just one further point before the questions, my wife and I are ordinarily against the thought of gazumping anyone as we feel it's such an under-hand tactic. However, in this instance, given the way the tenants have played their hand, we feel like we've in effect already been gazumped - and given my frustration of the situation I'm definitely of the opinion that live by the sword, die by the sword!

My wife really isn't keen on us re-bidding given the situation and the potential risk of being gazumped further, but my opinion is that if this house could be our happy home for the next 10-20 years, is it not worth taking a chance, particularly as we've not yet even gone to asking price which we'd previously happily agreed that we'd meet.

What should we do?


So, I guess my questions are; what would you knowledgeable folk do given our circumstances and opinions?

Do we sit tight for a while, or assume that we're definitely going to lose the property as things stand (i.e. assume the buyers have a mortgage arranged, aren't playing a game to avoid eviction etc)?

If you did put in a further offer, how would you play the bidding game if it came down to it - would you test the water further with an incremental bid, or go straight to what your maximum offer would be and if that's no good at least it's easier to walk away without thinking "what if"?

Many thanks in advance for any replies, we really do appreciate it.

mrginge

Lets say you go back in and gazump them. How likely do you think it is that the tenants
a. Leave when you want them to.
b. Look after the place in a responsible way.

Buying with sitting tenants is usually not wise.
Getting into a bidding war is usually not wise (IMO)
Congratulations, you appear to be doing both!

franklee

Not sure anger against the tenant is helpful here they did not gazump you as your offer was not accepted. As for why they didn't offer as soon as the price was reduced, maybe they didn't have funds in place then? Maybe they wanted a bit of time to elapse as in early days of a reduction the seller is more likely to hold out for the full reduced price? They allowed viewings of their home so they weren't all bad.

The tenants matched your offer and they are always going to be the more attractive buyer as it saves the landlord the hassle of evicting the tenant etc. If your offer was accepted, the landlord would have to evict the tenant before contracts are exchanged and then you could pull out leaving the landlord with no sale and no rent coming in. Also it can take up to six months to evict a tenant during which time a buyer can lose their buyer or their mortgage offer may run out etc. You have not said what the difference between your last offer and the asking price is but any new offer would have to be substantial to make the landlord take the above risks.

What I would do if I were you is reiterate to the agent that you like the property etc. and ask them to leave your offer on record so that if the sale to the tenants falls through they will get straight back to you. That way if the tenants can't get a mortgage or whatever you get another chance. If the tenants can raise the money they are going to trump an outside buyer unless there is a big difference in offer. Meanwhile get looking at other properties.

moneyistooshorttomention

Speaking personally as to what I would do - assuming I had decided to try and buy a tenanted property in the first place:

- I'd assume that the tenants hadn't been able to afford the initial higher price and had been sitting there saving up some more money on the one hand and hoping the house would reduce in price on the other hand.

- They have put in an offer now because they ARE able to afford the lower price it now is (and I certainly wouldnt assume they are being awkward at all).

- I would be disappointed that it had turned out they wanted the place, but would have to accept that it IS their home after all and they have "first shuftie" at it and withdraw my offer (as I wouldnt want to be responsible for kicking someone out of their home).

- I would also be aware that, if I DID decide to kick these people out of their home against their will, I would be asking for trouble. I would expect they would do everything they possibly could to wreck the place (it might have to be very subtle "damage" - so the landlord gave them their deposit back okay). I would certainly expect damage of some description though (as their revenge against the other buyers, ie yourselves).

- The revenge they might exact against you if you kick them out of their home might not just be to the house itself. They will certainly (unless they are VERY sweet-natured) make sure absolutely everyone in the neighbourhood possible knows what you did to them and that wouldn't get you off to a good start as regards neighbourly relations (there would be little chance of a neighbourly fetching-in of parcels or watering plants whilst on holiday).

angelsmomma

I agree with franklee, as a landlord I would much prefer the tenant buying.

On top of the above reasons there will also be that the landlord knows and trusts the tenants, there is less likelyhood of them trying to negotiate a reduction after survey since they now know they have competition (you). Plus they won't be stressing about exchange and completion dates.

Edited to add I also agree with the point about the neighbours. That actually happened to me on one house I bought. It was a nightmare and I had to move agin within the year.

InMyDreams

Maybe the tenants had already put in other lower offers (or even the current offer) that have all been so far rejected. Maybe it's just the landlord is only just now starting to accept that he's not going to get anything like as much extra off anyone else to make it worth his while selling to anyone other than his tenants. They are much less likely to back out further down the line as it's already their home, and it means he won't have to kick them out, resulting in risky voids before contracts are signed. I wouldn't be getting into a bidding war with the people who already call this house home.

Buzz78

Many thanks to everyone for the swift and informative replies.

I don't think I'd fully appreciated how much easier it would be for the vendor to sell this to the current tenants, and conversely, how much this situation could act against us.

I think we'll be much more likely to steer clear of this property now and just keep an eye on it should the sale fall through.

Thanks again.

Fire_Fox

You sound like a spoilt child! You have not been gazumped because your offer was never accepted, you were trying to play the game of increasing your bids and you lost by being too slow with your best and final offer. So the tenants spent the last six weeks getting their finances in place, there is nothing off about that.

A house with sitting tenants who want to buy the house is a PITA, the tenants could end up needing to be evicted through the courts and your purchase will be very delayed. It's also risky for the vendors if you will not exchange contracts without the house being vacant, they have lost their other buyers and the rent and you could still pull out. I don't think you have much choice other than a bidding war and to accept you will not be in a strong position to renegotiate after survey.

Also be aware that tenants have the right to quiet enjoyment, they do not have to permit any viewings, surveys, lenders valuations or companies in to quote for work. Maybe they don't know that yet ....

Mallotum_X

Walk away.

If you gazump the sitting tenants then expect them to leave you a few unpleasant surprises, and to be honest you would deserve them if you did that.

However it may just be a ploy by the agent to get more money. So by walking away the agent may come back to you anyway in a few days in which case you would be in a much stronger position not to have to up the offer.

ll123_2

If the tenancy is managed by an agent, and the tenant decides to buy the property, the majority of agency contracts have clauses in which allow them to take some sort of commission (my understanding anyway, others may be more knowledgeable).

But if so, surely both offers would equal out in convenience?

If you love the house then ...

lou34_2

I haven't the experience to advise you how to play it but there are lots of good pointers on here already.

I just wanted to say i totally understand why are trying to think of ways to get a home which you really like (?love!)

I know that I invested a lot of emotions into chosing a home (head should rule i know!) but its easier said then done. So don't be made to feel bad about feeling agreived....it may not be justified directing it at the other bidders as some have pointed out....but unfortunately humans arent always rationale & objective where the hearts involved!

Hope things work out.