Selling house to tenants?

kwmlondon

You're really into a risk exercise here. Your current tenants will give you a guaranteed sale of a set amount at a certain time. Nobody will take on the property while it has tenants in it and there are many risks involved in the sale process - what if you sell to someone in a chain and the place ends up being empty for a few months? It could then fall through and you'll have to sell an empty property which is harder than selling one inhabited, or at least won't get you the going rate.

If you could, say, get £290k for the place on the market right now, you'd lose £3k in agent fees straight away. You have the potential to lose income if the place is empty, and if prices increase massively in London (as they did last year) you could end up taking £290k for a property while the market has moved on and have to buy somewhere that has gone up 5%.

If it were me I'd let them have it for £10-5k below the going rate just to have the peace of mind and lack of headache that would go with a hassle-free sale. But that's me.

1981trouble

cloo wrote: »

Interesting. I hadn’t thought about it in terms of rentvoid, though to be honest, the rent is not money that I have anticipated goinginto the deposit for our next place, IYSWIM, so I’m not sure how much of aconsideration that is. When I lose the rental income, the upshot is that myhusband’s going to have to start paying more into the bills account!

No but it is lost money which could be part of the deposit.
for a property worth nearly 300k I would assume you have a rental income in the region of £1k a month so that is 6k lost whilst it is empty and selling which is 2% of the value. The 6k effectlively doesn't make any difference to you but it would to the buyers and you have an easier sale.

cloo

Basically, I'll have to see how close they can come in, if at all, I suppose. My gut feeling is I might be able to take up to 10k off for the risk mitigation/speed of sale above all, and the suggestions here might help convince my husband, who is taking a harderline stance against any concessions!

kwmlondon

Well, it's all very well being hardline, and you may be lucky and find serious buyers with a pain-free process, but he'll have to be happy taking the risk that it all goes pear shaped and ends up dragging on for months. You'd both make more money if you got your tenants out and gave the place a good re-vamp, put some nice furniture in to show people around and had it looking like a show-home, if you want to aim for top dollar, but it will be a lot of work and accepting some risk... But if you're not paying a mortgage and approach it from a "worst case scenario" point of view (i.e. taking months to sell the place, accruing interest) then you'll do well out of it.

Halle71

If you are prepared to swallow the void I would put it on the market empty. In our area, another London hotspot, estate agents have told me that buyers are now looking at the asking price as a guide with initial,offers usually higher. We recently bought a BTL at sealed bids with an offer of £35k over the guide price, and a house down our road that was on the market for £520k had a sealed bid of £559k. Bonkers but you don't know til you try!

Yorkie1

Bear in mind that EAs valuations are what it goes on the market at.

You will need to know what similar houses locally are actually selling at. Research on rightmove / zoopla. And ask any EAs what sale prices they have actually achieved. Also benchmark honestly and realistically the quality of any houses they've sold.

If you're not in a bubble part of London, got 3 EA valuations at say £285K - £295K, and local houses in good condition (not needing bathroom or kitchen improvements) are going for £275K, then I'd be pretty unimpressed if you tried to hold out for over £290K because it's only 1% off your top whack. The real value of your house would be somewhere under £275K to take account of the work needed.

jamesd

kwmlondon wrote: »

Nobody will take on the property while it has tenants in it

Not necessarily so. The place I referred to above was sold with me being a tenant for about five months before the sale. I stayed on for six plus years.

kwmlondon

jamesd wrote: »

Not necessarily so. The place I referred to above was sold with me being a tenant for about five months before the sale. I stayed on for six plus years.

Okay, fair point - but if someone's going to take on a property with sitting tenant they can't have a standard mortgage as the vendor has to declare if the property is vacant or not when sold and if it isn't you need to have a btl mortgage.

kwmlondon

Halle71 wrote: »

If you are prepared to swallow the void I would put it on the market empty. In our area, another London hotspot, estate agents have told me that buyers are now looking at the asking price as a guide with initial,offers usually higher. We recently bought a BTL at sealed bids with an offer of £35k over the guide price, and a house down our road that was on the market for £520k had a sealed bid of £559k. Bonkers but you don't know til you try!

OP, can you tell us how much similar properties in the area go for?

Undercovercarrot

Interestingly we are also in this situation.

Our tenants have just made an offer on our property which is £3000 below the valuation price. (£140,000). As you may guess, not London!

For us the considerations were twofold. Firstly, estate agent fees would be 1.5%, in the region of £1800, plus the gap in rental of potentially at least 2 to 3 months, another £1500. so from a purely financial perspective, we could quite happily take that it, even assuming the house made its valuation price!

However, was equally important to us is knowing that there will be less hassle selling this way, as well as the fact that we know we are selling a property to people who will take care of it. Not financial I know, but it does reassure us!