Let’s say you’ve been renting out a home for several years to a tenant. They approach you about buying the property and you are interested. There are some things to consider.
First, this should be handled like a regular sales transaction with all the paperwork for your protection. The only difference is that it won’t be listed in the MLS as an active listing so other buyers won’t have a chance to compete for it. But you should do all the normal disclosures and the tenant should do all their normal inspections. You should strongly consider using a real estate agent to represent you but of course it would be fair to ask for a reduced commission in this case.
The second issue would be price. The tenant usually wants to come in low because they think you are “saving” the commission. Per my comment above, you may still be paying something. And then also consider that you could be leaving money on the table by not exposing this to the market. So, unless you really want to do the tenant a favor, I like these transactions to go out closer to market value than at a big discount. Remember that you BOTH can’t “save the commission,” at least, not all of it. If it sells for market value minus X%, the BUYER just saved the commission and you netted about the same.
The third issue to consider would be whether you have a property manager. If so, it’s likely there is a clause in their contract that if the tenant buys the property, the property manager will handle the sale and their pre-printed form often lists a 6% commission rate. So, read your property management documents carefully before you move forward with this sale. Otherwise you may find a big surprise at the closing table!
If you have questions on this or any other real estate topic, call me at (925) 240-MOVE (6683). Voted “Best of Brentwood” multiple times. To search the MLS for free and view virtual tours of homes for sale, go to: www.SharpHomesOnline.com. Sharp Realty.