[PureBliss]

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

[MrsSmith247]

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!

[meggs1]

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.

[TillyTake2]

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.

[Femogan Boop!]

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.

[JRA]

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

[Pearson]

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.

[Illiterati]

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.

[greengoddess]

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

[red_squirrel]

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.