Jump to content

Please help me draft a letter
Selling house to tenant


  • Please log in to reply
17 replies to this topic

#1 PureBliss

Posted 26 December 2012 - 06:53 PM

Hi there, hoping for some help.

We are looking to sell our investment property and have had it valued by 2 agents.

Our tenant has advised both agents that he would be prepared to buy it and named a figure.

His figure is about $30k under what we would be expecting, even taking into account the fact that we could sell it directly to him, without agents fees.

So, we have decided as a first step, we would like to write him a letter, outlining our "minimum",  and give him an opportunity to raise his offer. We would sell to him privately and use a conveyancer to handle all of the logistics.

If he doesn't raise his offer we will put it on the market (with an agent) and see how we go.

Has anyone sold a property privately before? Any real estate gurus out there? What would be critical to include in the letter? Is there anything else I should be aware of?

Thanks in advance

#2 MrsSmith247

Posted 26 December 2012 - 07:03 PM

Have you had any prior contact with the tennant?  I would think that would play a part in how formal the letter needs to be.

I would make it brief and include your number for him to call to further discuss.

Dear Tennant
As you are aware, we have had the property you are residing in appraised with the intention to sell.  We have had feedback that you may be interested in the property and we would like to offer you the opportunity to purchase prior to putting it to the market. Please feel free to contact me on 0412 2345 6789 if you would like to discuss this further.

My sister purchased privately.  It was very straightforward as there was one less person in the loop.  My sister dealt with her conveyancer, the vendor dealt with theirs, and it all went off without a hitch.

Good luck!

#3 Feral-as-Meggs

Posted 26 December 2012 - 07:14 PM

Id put the price you want in there

I'd also put a timeframe on it so you don't get strung along and miss the ideal season to market the property (whenever that is for your property).  

You could say....

If you are interested in buying we would need to exchange contracts by ......... to give us time to put the property on the open market if necessary.

#4 TillyTake2

Posted 26 December 2012 - 08:19 PM

How realistic are you being? Keep in mind most agents will be "optimistic" about what the property is worth with the plan being to encourage you to decrease the price if it doesn't sell.

#5 BetteBoop

Posted 26 December 2012 - 08:26 PM

QUOTE (TillyTake2 @ 26/12/2012, 08:19 PM) <{POST_SNAPBACK}>
How realistic are you being? Keep in mind most agents will be "optimistic" about what the property is worth with the plan being to encourage you to decrease the price if it doesn't sell.


Agree with this. They know vendors are likely to list with whoever gives the highest estimate so they sometimes inflate valuations to secure a commission.

Look at sold properties in the same area and get a idea of what it's really worth. Keep in mind how much you're saving on real estate commissions and that even if you listed it, people would offer below what you probably expect.

It's always going to come down to negotiating a price. The purchaser has put in his offer, generally what happens next is you make a counter offer and be prepared to meet in the middle. Or, as PP said, give your non-negotiable price and give them a take it or leave it offer.

#6 JRA

Posted 26 December 2012 - 09:04 PM

QUOTE
His figure is about $30k under what we would be expecting, even taking into account the fact that we could sell it directly to him, without agents fees.


Check the agreement with your agent who manages the rental. They may have rights to the sale

#7 Pearson

Posted 26 December 2012 - 09:56 PM

per JRA - check with the agent who manages the property

research what properties have sold for in the area - and is your property of the same standard as these properties?

maybe this is a starting point for him.

I also, once you have checked with PM, write the letter MrsSmith suggests.

#8 Illiterati

Posted 26 December 2012 - 09:57 PM

You have a buyer. In a falling and vey uncertain market. I'd probably meet them half way on the offer and be done with it.  Especially if the house's value is on the higher side.

What if you went to auction and the house was passed in at your current price? What would you do? Take it off the market completely or would you be willing to sell at slightly below?  You might end up selling at their tenants current offer and then have to fork out for agent commission and advertising fees as well.





#9 greengoddess

Posted 27 December 2012 - 02:42 AM

I have both bought as a tenant and sold to a tenant.

I was renting a property when it came up for sale, and ended up buying it (it was my first property) - we dealt with an agent rather than the landlord. It was as per any purchase, really.

I also sold a property to a tenant. They had phoned me to say that they were interested. Their first price was about $60K less than I wanted. I told them the price I wanted to clear (which was reasonable in the context) and they said yes automatically.... mind you, they were older and the wife had just been diagnosed with something (not sure what) and I think they just wanted to stay put rather than go through the moving process again (they'd been tenants about 8 months or so). We did the deal on Christmas Day (a few years back) and had a quick settlement (using the same lawyer as it turned out! - don't worry, we both had to sign disclaimers).

I'd probably make any approach to them reasonably informal at this point. Depending on what you're expecting for the property, the fees might be $10K, $15K or more, so take that off your initial figure and you're getting close to half way to theirs. Then think about the cost of having it on the market - marketing costs upwards of $1000, more if you go to auction; each month it is on the market you will have rates (body corp if it's an apartment), mortgage interest.... so for three months on the market, you might have about $5-10K costs (depending on the property), which, when added to the agent's fee, means you're getting close to the figure your tenants suggested.

I guess what I am trying to say is look at what it will cost you to put the place on the market and take that off your initial price and then use that as a more realistic figure to begin bargaining with your tenants. Don't focus on the price you want to achieve, as that is not the money you will receive in hand, as such. It will be a lot easier to have a quick sale with the tenants, than to rely on disappointed tenants to keep the place in good order for inspections!

Good luck
GGxx




#10 red_squirrel

Posted 27 December 2012 - 12:45 PM

Have you had a bank value it?
The banks will only lend a certain amount of that value to the tenants.
Bank evaluations tend to be lower than real estate agents who want your business.
What I am trying to say is, as much as they want the property, the bank may not see the house as worth that much and subsequently not lend as much.

#11 PureBliss

Posted 28 December 2012 - 03:39 PM

Many thanks for your replies, they have given us confidence to give this a go privately! Here is the initial draft - any feedback welcome!!


Dear xxxx,

As you are aware, we have had the unit you are residing in appraised with the intention to sell. We have had feedback that you may be interested in the property. We apologise for taking several weeks to respond to your interest, sadly we had a death in the family just prior to Christmas.

We would like to offer you the opportunity to purchase the unit privately, prior to putting it to the market. We have considered your initial offer, the market value of the property, and the advantages that come with a quick, private sale. We wish to advise you that our preferred selling price is in the vicinity of $460,000.

Should you wish to amend your initial offer (which we understood to be $420,000) we can be contacted directly on xxxx or xxxxx).  We intend to use xxxx Conveyancing  Services to complete all necessary contracts.

We would like to exchange contracts by Fri 18th January 2013.  If we have not arranged a private selling agreement by then, we will put the unit on the market with a local agent.

Thank you for being a great tenant, and keeping the unit in good order during your time there.  We hope that we can come to an arrangement shortly that we are all happy with – and you can enjoy the unit on the beach this summer!
Kind regards


#12 skylark

Posted 28 December 2012 - 03:54 PM

What area are you in? Units here are regularly selling around 65k below the initial asking price (a drop of around 20%), so your agent valuations may be overly optimistic. Obviously depends on the area you are in and how the market is travelling there.

#13 PureBliss

Posted 28 December 2012 - 04:15 PM

Hi there, it is a beachside unit in SE Melbourne. Its an unusual one, because there isn't alot like it left in the area. Most unit blocks have been redeveloped and are now commanding $800k.

Its 3brm, metres from the beach, shops and station. Recently renovated.

The agents both said that conservatively we would get around $460k, maybe up to $480k in current market. Two years ago it would have got more like $500k. Sigh!

If the tenant offered $440-450k we would sell it for sure.

#14 Jellyblush

Posted 28 December 2012 - 08:23 PM

It sounds amazing, I'll buy it!

#15 ekbaby

Posted 28 December 2012 - 08:36 PM

I think your letter has a bit too many personal details in it, they don't need to know about what's been happening in your family, for example. I would probably drop the first and last paragraphs.

Are you able to speak to them by phone?

#16 humphreybear

Posted 29 December 2012 - 08:09 AM

I agree with ekbaby, it is too long and too personal (and after all whether they buy it or not, they are there this summer).

I think a phone call would be better.

#17 Shellby

Posted 29 December 2012 - 10:21 AM

I would just call them. We brought our current house through private sale - we just talked on the phone, I said I wanted this price, they said ummm we want this one, I came back with a little higher and why, they came back a little lower and why, then after 5 minutes we agreed on a price and it was done. No letters, no waiting - just yep I'm happy to pay that, your happy to get that - I will go and sign the papers tomorrow.

I also agree with looking into a non RE valuation. I know here most houses have been selling for $20,000+ less than what the RE have said or listed it at. Also banks don't go on RE valuation and you may find you miss out on a whole market as they can't borrow that much for that property from the bank as the bank values it lower than what you want, so the bank will only lend to a certain amount.


#18 Illiterati

Posted 29 December 2012 - 04:01 PM

Who has been relaying the information between you and the tenant? The letter sounds like it is a third party? Did they express their interest to buy and the offer price to the leasing agent and who then passed it to you?

Why don't you just negotiate over the phone? The only paperwork that matters is the contract and that is the only written thing I would be giving a buyer.




0 user(s) are reading this topic

0 members, 0 guests, 0 anonymous users

 

11 things that will happen when you're breastfeeding

After having three children and various degrees of success feeding them all, there's one thing I can tell you: virtually nothing will go as planned.

Surgery for baby born with a tail

A baby born with a tail has had it removed after doctors feared the birth defect might cause long term damage to his lower body.

When 'skin to skin' becomes a family affair

An adorable photo of a little boy and his dad enjoying skin to skin contact with newborn twins is melting hearts everywhere.

35 hilariously weird 'top tips'

Who would have thunk it? We never knew there were so many uses for feminine hygiene products. 

Pregnancy skin woes: acne, dry skin, itchy skin

Here are some of the most common skin complaints in pregnancy and how to tackle them, face on.

Watch this fun dance class for babywearing dads

Is there anything sexier than a babywearing dad?

Parents, this is how to cut grapes to avoid choking

One mum has learnt a harrowing lesson about the best way to cut grapes to make it safe for toddlers and little kids to eat.

When your kids have totally different temperaments

Sometimes it has felt like whiplash parenting. She perches watchfully while I vacuum; he tries to climb on and go for a ride.

How do our stress levels influence our baby?

Since having my second baby a number of people have commented on how placid, content and settled he is and, similarly, many have commented on how this is a reflection of how I am with him.

Separation anxiety isn't just for kids

Despite its prevalence, most doctors tend to be reluctant to diagnose adult patients with separation anxiety.

A charm bracelet, a boy, and my beliefs questioned

I was staring at the face of my son, realising that my once steadfast decision to be open minded was quickly unravelling at the seams.

Why I'm so grateful for Hayden Panettiere's PND honesty

There are baby steps and giant leaps forward. But there are steps backwards, too. And, oh, how they can hurt your heart.

The heartbreaking story of little Moko

The mother of 3-year-old Moko Rangitoheriri said she should have picked up on the signs. {Warning: distressing content}

Kate Beckinsale and teen daughter recreate birth photo

Kate Beckinsale has recreated her daughter Lily's birth photo, 17 years after she was born.

The adult-size stroller you'll want to test drive

It's one of the biggest baby related purchases they will make, so it makes sense that parents-to-be get a chance to road test a stroller.

Pregnancy announcement shows the reality of IVF

It's a long way from baby booties or bump shots people have become accustomed to in social media pregnancy announcements.  

Soleil Moon Frye welcomes fourth baby

"Punky Brewster" is a mom again, for the fourth time. Soleil Moon Frye announced the birth of her baby boy, Story, on Instagram Wednesday.

Mum breastfeeds baby found abandoned on the street

A woman has been praised as a "beautiful mother" after breastfeeding a baby which had been abandoned at the side of a street. 

A birth with a difference: the 'natural caesarean'

We've shared stories of gentle caesareans before, but a new video shows a new option called a 'natural caesarean'.

Baby name inspiration by music genre

If you're all about the music, then you'll need a musical name for that baby. We've got all the lists for you by music genre.

Giving effective instructions to toddlers

One of the most common errors made by parents is in how they give instructions to their children.

 
Advertisement
 

Top 5 Articles

Advertisement
 
 
 

What's hot on EB

The babies who are one in 70 million

Bethani Webb was excited to find out she was pregnant, but the first time mum did not realise she was carrying four babies not one.

Cafe offers breastfeeding mums a free cup of tea

A Sydney cafe is offering breastfeeding mums free cups of tea in a bid to show support for the right of women to nurse their babies wherever they choose.

To snip or not to snip? When the decision is not clear cut

Jamie Oliver, who considered a vasectomy, is to be a father again. A fellow dad reflects on his own decision 11 years ago

Doctors stunned by rare twins born almost six weeks apart

To everyone's surprise, Kristen Miller "kept doing better each day", keeping her second baby safe.

Baby book ideas for modern parents

Before my son was born I was given a lovely baby book full of blank pages waiting to be filled with weights and heights and first words.

The adorable smile of a baby seeing his mum clearly for the first time

There is no doubt seeing their child smile for the first time is an unforgettable moment for parents everywhere.

Mum tells how toddler 'nearly hung himself' in cot mishap

When Alison Johnson put her 18-month-old Caleb down for a nap, she had no reason to believe her son was in any danger.

Babies are still switched at birth? Yes, it can happen

All my panic and tears aside, my biggest question looking back is about the kind of security measures used in the maternity ward.

Doctors slammed for taking selfie with newborn

Everyone who visits a mum in hospital in the days following childbirth wants to get a photo with the new baby.

ergoPouch Twosie Sleepsuit for winter breastfeeding

Finally, there's a way to keep warm while breastfeeding through winter.

Health check: How long does sex 'normally' last?

What to do with this information? My advice would be to try not to think about it during the throes of passion.

When breastfeeding sucks: fixing common problems

From niplash to tight boobs, biting to milk supply issues, Pinky McKay looks at common breastfeeding issues and how to solve them.

10 things I've learnt in my first six months with twins

Six months on we're all still alive, and the more we get to know each other the easier the days become.

Mum's loving kiss leaves baby fighting for life

Kirsty Carrington thought nothing of giving her newborn son a kiss, little did she know it would leave the baby fighting for life.

When doing chores is your new 'me time'

After children, 'me time' looks a little different.

Get going: 14 travel strollers for families on the move

A stroller can make or break travelling with a baby or toddler. Here are 15 great single travel stroller options.

10 ways toddlers are terrific

It always pays to remind yourself of how terrific toddlers can be - they're little like this for such a short time

 

Vintage Toys

The toys of your childhood

Take a trip down memory lane with these vinage and retro toys that you may have had in your childhood or your parent's childhood.

 
Advertisement
 
 
Essential Baby and Essential Kids is the place to find parenting information and parenting support relating to conception, pregnancy, birth, babies, toddlers, kids, maternity, family budgeting, family travel, nutrition and wellbeing, family entertainment, kids entertainment, tips for the family home, child-friendly recipes and parenting. Try our pregnancy due date calculator to determine your due date, or our ovulation calculator to predict ovulation and your fertile period. Our pregnancy week by week guide shows your baby's stages of development. Access our very active mum's discussion groups in the Essential Baby forums or the Essential Kids forums to talk to mums about conception, pregnancy, birth, babies, toddlers, kids and parenting lifestyle. Essential Baby also offers a baby names database of more than 22,000 baby names, popular baby names, boys' names, girls' names and baby names advice in our baby names forum. Essential Kids features a range of free printable worksheets for kids from preschool years through to primary school years. For the latest baby clothes, maternity clothes, maternity accessories, toddler products, kids toys and kids clothing, breastfeeding and other parenting resources, check out Essential Baby and Essential Kids.