Risks of selling to a tenant

Risks of selling to a tenant

While this type of transaction can be beneficial in many ways, it can also be tricky.

For instance, you could be shutting the door on a better deal.

Sure, you’ll save on advertising and real estate commissioners. But you’re losing out on any competition from other interested buyers, which could be worth a whole lot more to you

Currently, with fewer investors in the market to buy properties and the fact that owner-occupiers buy properties with their hearts rather than their calculators, this usually means you’ll get a higher price selling your property vacant on the open market with the maximum number of potential buyers looking at your property – both buyers and investors.

If your property is located in a hotspot or a tight market, you definitely want to consider listing it on the market for public sale instead, so you have a chance to get the best offers.

Keep in mind that it’s likely your tenant will try to negotiate with you on the basis of your existing relationship, and their knowledge of the property’s ins and outs.

If they have lived in the property for many years and made personal changes, they start to think that you should reduce your price for what they have done to the property,

Some of these ‘improvements’ may have actually devalued your property, but they will still expect a discount.

In cases where the condition of the property could end up being a sticking point for you, it could be wiser to assess the situation and spend the money on sprucing things up.

As a result, you may even add greater value to your property for outside buyers.

Paying Commission When Selling to a Tenant

If your property manager just gives you the tenant's contact details, then there should be no commission payable. Remember you already have a contractual arrangement with the tenant, A lease, so you may have their details.

When you engage an estate agent to sell your property, you will sign an authority that specifies the commission payable. It doesn’t matter where the purchaser comes from, whether they are your tenant or the agent’s database or a marketing campaign produces a buyer. The same commission is payable. The agent should earn their commission by negotiating a better price for you.


The decision on whether to sell a property to a tenant ultimately depends on your priorities and circumstances.

The important thing is to keep the true value of your property in mind.

You may avoid some of the stress and time invested in a sales campaign by taking this shortcut, but at what financial cost?

RealRenta has all the tools that a property manager has, but at over ¼ the cost of a property manager.

Join now and the cost is less than a cup of coffee a week to manage your rental property

RealRenta also has a free vision, so why not check it out

Jason Gwerder
Thursday, 4 March 2021

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