Selling property to a neighbour/friend

mither_2

Hello,

I was hoping for some suggestions/advice about how best to deal with a situation I've never encountered before.


I bought a house several years ago and lived it in for a number of years before moving away 3 years ago for work. Since then I've been renting it out.


I always on well with my neighbours when I lived there and have maintained the house and been selective about the tenants that i rent to so have been able to maintain this relationship.


The house is currently tenanted until next Summer and the BTL fixed rate mortgage that I had on the property expires then.


On a recent visit two of my neighbours approached me seperately to ask that I contact them if I ever decide to sell the house as they have family members who would be interested in buying.


The market in the area is quite bouyant and when I had the house valued as part of he re-mortgage last Summer it was worth c45% more than I paid for it in 2010. This could all change by the time that the tenancy expires off course.


I want to get maximum value for the property but if there was a saving for both the seller and the buyer in selling to my neighbour then this would be my preferred route.


I understand that estate agents typically charge 1% to sell a property and so this would cost me £2600 (based on current property value).


Is there a way that I can work out a sale price with my neighbour and then just have lawyers transact the sale? I could then pass that saving through to them?


As I say I get on with them well and so long as it doesn't change the price I eventually receive I would like to try and pass the saving to my neighbours on buying the property.


I'm aware that there are likely many issues with this that I haven't consider but any advise would be appreciated.


When asked I didn't commit either way but simply said that I hadn't decided what i would do with the property in the longer term. I did mention to the second neighbour that the first neighbour had already approached me asking for first call if I ever sold.


Any practical and legal advice about how to deal with this would much appreciated.


Thanks

00ec25

mither wrote: »

I want to get maximum value for the property

of course you do, as does any seller

I understand that estate agents typically charge 1% to sell a property and so this would cost me £2600 (based on current property value).

so that is the max discount you can offer as that it what you are saving by not using an EA

Is there a way that I can work out a sale price with my neighbour and then just have lawyers transact the sale? I could then pass that saving through to them?

yes, don't place the property with an EA

1. mislead 3 EA's into coming round and advising you (for free) on what they would suggest as the starting price for marketing the property.
   
2. Don't sign any contracts with any of them
   
3. take an average of the 3 quotes, knock off a discount representing however much of the EA's fees saved by you that you wish to "pass on", and put that final figure to neighbour 1 & 2. See if either bite.
   
4. Expect them to check what the actual sales price (not marketing price) of identical properties in your area is. Be prepared to argue with them when they offer less.
   
5. agree a price and instruct a solicitor as normal. The legal side of selling is not impacted by you not using an EA

parking_question_chap

I would put it on the market as normal, just let them both know a couple of days before. If they make the highest offer then proceed with a sale as you would for any other buyer.

G_M

mither wrote: »

Is there a way that I can work out a sale price with my neighbour and then just have lawyers transact the sale? I could then pass that saving through to them?


As I say I get on with them well and so long as it doesn't change the price I eventually receive I would like to try and pass the saving to my neighbours on buying the property.

I'm aware that there are likely many issues with this that I haven't consider but any advise would be appreciated.

Invite 3 local agents round to value the property. Make sure you get them to tell you
a) what they recommend you market the property for (they often exagerate this to encourage you to employ them, not the others) and
b) what tey realistically think it will sell for

Then research local sale prices of similar properties yourself.

Take the 3 quotes, wth your own research, to the neighbors, and agree a 'fair' price.

Once you have a price, and an agreed timescale (your tenants have rights.....), you simpy tell your respective solicitors what rice you've agreed and away you go.

The biggest issue is what you tell your tenants.
* They may not like havng 3 EAs tramping through their home
* they may not like the idea that you will be evicting them and selling
* they may refuse access

Of course, much dpends on what kind of people they are, what your relationship with them is like, how you approach them over this, and whether you offer any incentive (£X, or a rent reduction, if you cooperate with access, and make arrangements to leave when your contract expires)

AnotherJoe

parking_question_chap wrote: »

I would put it on the market as normal, just let them both know a couple of days before. If they make the highest offer then proceed with a sale as you would for any other buyer.

If you do that, make sure that the prospective buyers are known to the EAs, provide the names of those who might be interested and get an exclusion, otherwise you will still have to pay EA fees if you sell to them.

mither_2

Thanks for the detailed replies.

I rent the property to three young professionals. Once has already confirmed that they're moving away after the tenancy expires and one is talking about moving in with a boyfriend so I think they'll be fine with having EAs visit so long as I give them some notice. We get on pretty well.


I'll definitely have the 3 valuations done and then approach the neigbours with some sort of average price with a small discount where I'm saving on the EA fees.


They'll be buying with mortgages so will need to have valuations and surveys done which would take some time and incur some costs for them but the process should be simpler I would assume (provided they don't spot anything in the survey and try to re-negotiate the price).


The survey was clean when i bought in 2010 and I don't think there any issues that would cause this too change. They both know the design and build of the property (theirs are identical) and their are no subsidence or other issues in the area.


Thanks again

AnotherJoe

mither wrote: »

They'll be buying with mortgages so will need to have valuations and surveys done which would take some time and incur some costs for them but the process should be simpler I would assume (provided they don't spot anything in the survey and try to re-negotiate the price).

I doubt a sale to them would be any simpler than a random stranger found via an EA.

mither_2

Perhaps not as they have direct access to me rather than going through lawyers which would likely complicate matters rather than simplify them.

The only real plus for me is the potential savings on EA fees and that I get to something for them as both sets of neighbours are genuinely nice people.


I doubt whether it will remove any of the stress and may add some. These sorts of transactions with supposed friendly parties can often go wrong.