Why sell to a tenant?
When you sell your property to a tenant, you’re
selling to a buyer who has lived in the home already.
They have made it their sanctuary for a reasonable
period, and the opportunity to avoid uprooting and finding a new place to stay
can have incredible appeal.
This could give you stronger leverage when it comes
to negotiating the asking price, because the option to own their existing
dwelling could dim all other possibilities for your tenant in light of the
time, hassle, and costs they save by not having to start over.
Sentiment could also be your best friend in this
Your tenant may genuinely be emotionally attached
to the house and may be willing to pay a good price for your property,
What’s more, selling to a tenant is a smart way of
saving you the time and money you’d need to spend on dolling up a property for
an open-market sale.
Because your tenants have lived in the property and
know it well, they may see past the imperfections of wear and tear that have
occurred over the years and accept it in its current state
A potential additional saving you can make is in
avoiding the payment of agent commissions, as you can negotiate directly with
your prospective buyer.
Having a prior relationship with the tenant/buyer
can work to your advantage and make for a quick and painless sale.
As a vendor, having a good rapport with the tenant
is important as it can make the entire process a whole lot easier. I encourage
speaking with the tenant personally and trying to come to an agreement. While
the benefits of having an agent include the potential for your house to
sell at a higher price, the commission you pay counters this and more.
You will still need other parties to facilitate the
transaction and draw up the contract, so a lawyer will have to be part of your
You will also need to do a great deal of research
on local property values so you know what your property is really worth.
Selling a Leased Property
If you sell a property that is tenanted, it is
possible in some states that you will be required to pay a fee to your property
manager for breaking your letting agreement with them.
Consider selling near the end of the lease so that
if an owner-occupier buys the property they can give the tenant notice, as the
lease will have expired, and if an investor buys the property they win first
prize as there is a tenant already in place.
Legally, the contract of sale should mention
whether a property is tenanted or vacant.
If the tenant are currently in a lease, it may be a
good idea to get your property manager to approach them, but keep in mind you
are not obligated to sell with your current property manager.
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Wednesday, 3 March 2021