Selling condo to tenants

Asked by Dcdan78, 02129 Tue Feb 16, 2010

I'm currently renting a condo in Arlington, VA. I'm thinking about asking if the tenants would be interested in purchasing it and if so, doing sowithout an agent or with only one agent (to reduce the fees). Am I legally obligated to put it on the market, or can it be done privately? Any advice on approaching my tenants or other aspects?

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6
greg, , Boston, MA
Tue Feb 16, 2010
Selling your home to the tenants sounds like a good idea and may appear to give you the greatest net with respect to a sale; however I would caution you in a couple of areas: first of all, a good local realtor will be able to give you the best idea of actual market value. Selling directly to the tenants may eliminate realtor fees, but not exposing it to the entire market may actually reduce your actual overall net return. I suggest consulting local realtors, placing the home on the market through the MLS for maximum exposure and limiting the commission for any buyer you find directly. The other value a realtor brings is knowleadge of all necessary disclosures...
1 vote
Jennifer Ric…, Agent, Valencia, CA
Tue Feb 16, 2010
Dc,
As the other agents have indicated no you do not have to use an agent or put it on the market to sell your condo. You can do a for sale by owner. If you owe more then your condo is worth you will need an agent to represent you with a short sale, lenders will not accept non licensed parties trying to sell a property. I caution you if you have never done this by yourself before, you can put yourself into harms way. Disclosing everything about your condos condition past or present to your knowledge is Key. I see in many transactions where run into issues over the disclosures. Your buyers lender will do an appraisal to verify whether your sale price is within current market values, you will have to decide whether to proceed forward or not if the buyers lenders appraisal comes in lower then your negotiated sale price with your tenant. All these issues can be addressed by yourself but having an agent who is trained and equipped to handle these issues makes for a smoother transaction. Good Luck!
0 votes
Don Tepper, Agent, Burke, VA
Tue Feb 16, 2010
As the others correctly say, you can sell it privately. No need to put it on the market.

You can either use a Realtor or a lawyer. If you use a Realtor, just be sure to negotiate the commission up front.

The first thing your tenants are likely to ask is: "How much?" So, before you approach them, you should have a defensible number in mind. It's generally pretty easy in condos to come up with good comps, and sales of identical or similar units (with the exception of short sales or foreclosures) all tend to be priced in the same narrow range. [I'd be glad to run the comps, if you'd like.]

If you have some equity in the condo, you might give them a bit of a break on the price. That's especially the case if you'll be saving some on the commission. It'll make the offer quite a bit more attractive to your tenants.

The second thing your tenants will worry about is that you might sell the condo out from under them. Your best strategy is to be honest with them. If your attitude is: If they want to buy it, great. Otherwise, I'll probably hold onto it--then tell them that. If your attitude is: I'm definitely going to sell it, but I would like to give them the first shot at it--again, be honest and tell them that.

Hope that helps.
0 votes
Scott Godzyk, Agent, Manchester, NH
Tue Feb 16, 2010
You are not obligated to put it on the market, but an agent working at a reduced fee will be able to assist you for a less exepnsive amount than hiring a lwayer and appraiser to assist you. you will first need to find teh market value, next get the tenants preapproved for a mortgage so you know they can purchase, then you need to complete the purchase and sales agrement as well as the state and federal disclosure forms. An agent should work for at least half of normal commission. If you are having trouble finding someone to assist you, email me and i can send you a name of an agent from my referral list who will. good luck with your sale.
Web Reference:  http://www.ScottSellsNH.com
0 votes
Anna M Brocco, Agent, Williston Park, NY
Tue Feb 16, 2010
No, you are not obligated to put it on the market and it can be done privately, however an agent can help you with all associated paperwork, comps, etc.--before approaching the tenants, establish a fair asking price--you need to be aware about recently sold similar units in the immediate area-- an agent can provide the information--after reviewing the data, factor in repairs--extensive or cosmetic--then establish a price and be prepared to negotiate when necessary.
0 votes
Tean Wong, Agent, Boston, MA
Tue Feb 16, 2010
Yes you can do it privately. You may be able to safe so fee, but how would you know the market value of it.
0 votes
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