My tenant is interested in buying me out

A

Andarma

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My tenant has asked if I am interested in selling my apartment to them. I most definitely am interested! What is the best way to proceed here? Get an independent valuation, or ask them to make an offer? To say I‘m thrilled with this is an understatement, but at the same time I want to make sure that I get the best outcome.
 
I think you should settle for a reasonable discount against open market value, something like 5%.

You won't have the hassle of marketing, cleaning up for sale, an empty period before new owner, less risk of sale falling through, etc. They may want to take furniture too which a third party almost certainly won't.

Start with a few valuations and take it from there. It might be easiest for both parties to negotiate via solicitor (but this will cost more).
 
Andarma said:
What is the best way to proceed here?
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Tell them that you are if the price is right. So ask them to make an offer.

Apartments are relatively easy to value. There is probably a recent sale of a similar one.

Not sure about asking valuers or estate agents to value it. They might put a high value on it in the hope that you will give them the business.

Agree that it's worth a small discount to you. But it's also worth a bit of a premium to them in that they know what they are buying and won't have to time the end of a lease with the acquisition of their new place and the cost of moving.


Brendan
 
Thank you all, food for thought there. There have been a couple of sales of similar properties this year, so I have an idea of valuation from the property price register. I would be willing to offer a discount seeing as we will be saving on estate agent fees and the cost of clearing out the apartment etc. I think I’ll show them the PPR records and ask them to make an offer.
 
I'll bet they're well aware of the open market value already. I would not be furnishing any potential buyers with any documents over what is mandated as part of a sale.

It may be tempting for you and the tenants to allow some casual arrangements to slip into your dealings because you already know each other and this situation is seemingly favorable for all concerned, don't do it. Treat this transaction with full rigor and don't be making arbitrary concessions just because you know them.

Best of luck I hope it works out well for you both.
 
Brendan Burgess said:
Why not?

If they have been good tenants and you have plenty of money and they have not, there is no harm in giving them a small discount.

Brendan
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Because it opens a normal vanilla transaction to deviations and exceptions that if they don't pan out can cause all sorts of legal and financial hurt to one or both sides.

A price can be agreed and if it's lower than he might otherwise accept that's no problem but the point I'm driving at it to treat it with full process rigor as you would with a stranger.

It's a little like the reason not to do business with friends and relatives, there are unwritten and unspoken expectations that deviate from normal process and cause all sorts of drama. I'd be treating this as a normal arms length transaction.
 
Horatio said:
Because it opens a normal vanilla transaction to deviations and exceptions that if they don't pan out can cause all sorts of legal and financial hurt to one or both sides.
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It's a question of degree.

A 30% discount to market value could raise question marks with the purchaser's lender, stamp duty issues with Revenue, etc.

A 5% discount to market value will cause none of these issues.
 
Horatio said:
the point I'm driving at it to treat it with full process rigor as you would with a stranger.
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OK, I misunderstood your post.

I agree that the process should be treated formally.

However, the legal process for conveyancing is very formal and I doubt that there is much scope for informality.

Everything is informal up until contracts are exchanged.

After that, they are very formal.

Brendan
 
I don’t really see the need or the justification for charity here. The power in the transaction lies with the landlord. It’s the landlord who has been approached. Saving estate agent fees etc is just noise. The tenant gets to stay where he or she is living so also avoids hassle. My view is that one cancels out the other. All of the relevant information is out there in the ether; the landlord has it and the tenant has it. Brendan’s point is valid; some agents will give an inflated “valuation” just to get the sale. Just ask the tenant to make an offer. If it’s in line with recent sales of previous properties, consider accepting it. If it isn’t, negotiate.
 
Update on this - turns out the tenant doesn’t really understand the process for buying property in Ireland (they are from another country). They thought that they could simply take over my mortgage and that would be that. I have advised them to speak to a financial advisor and mortgage broker. Does anyone have a recommendation in West Dublin?
 
Finance solutions worked well for us.

That's a bummer. So near and yet so far.

The practice of taking over previous owners mortgage is common enough in some European countries obviously subject to due diligence but nonetheless I think it’s generally a good idea. Pity it didn't work out for you this time.
 
I will not be agreeing to them taking over the mortgage. I don’t think you can do that here. I have an asking price and it is up to them to raise the funds for it. I am willing to give them some time to get it sorted. If they can’t, then I’ll have to consider what to do.
 
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