Do I sell house to tenants

[Movingon2024]

Asking here as no-one else to ask for advice really.

moved abroad 2024. Uk house rented to some lovely tenants. Is in a v desirable area and a v nice property.

trnants approached after Xmas and asked to buy the house. Tenancy ends November.
they made an offer of 420, I am out of touch w uk housing market so asked for EA valuations. Came back at 500-550.

called both EAs and asked for reasons for valuations. They both said local market has increased significantly in last year linked to changed schools admission criteria (local schools are outstanding). Both said 500 would be low offer for the property.

informed tenants who then increased offer to 485. Estate agent fees (I asked) are around 1 per cent.

am very torn. Have accepted that the house needs to be sold, it’s too big for me now that kids have moved on. The tenants are a lovely family and would be great owners of it.

But the price difference if it sold at 550 would make a massive difference to our lives - I could give the kids some cash to help them with a house deposit of their own for example.

Any advice? Said I would get back to them by end weekend. thankyou so much.

I'm guessing that the tenants are very aware of how much easier it would be for you to sell to them. And that's why they're offering low.

i’ved looked on Rightmove but all the houses in our area are different and it’s quite a static market, people don’t tend to move much, so it’s hard to get comparable values.

Have a look on Rightmove or Zoopla for sold prices in your area. That should give you an idea of what property prices are in the area. Good luck.

Admittedly I am only going on the threads I read on here mostly, so my advice isn't worth a lot.
Most people have to reduce the price of their house even when they are in a good area, if 500-550 is the valuation then 485 sounds like it's in the right area. I doubt you'd get 550 so you need to be focusing on the lower number rather than the top.
If you say no to the tenants you may find yourself with the financial hassle of finding new ones when these ones find another house in a couple months or so. They may be more willing to work on areas that come up on surveys for example, so you could say you accept their price but there will be no further reductions for anything from the survey as it's already below market value.
You could try and push them to 500 first but again you don't know what might come up on the survey anymore than they do yet.
Likewise if you go to the open market you will have the financial challenges of getting them out, which if they then end up in a chain buying another house they won't give notice til they have exchanged, your onward sale could possibly fall through, theirs could also the house purchase process in this country is pretty nonchalant til exchange.
Have they changed your house at all that would of improved it's value?
Ultimately what's going to be easiest for you?

Yes though also they have you g kids and it may be a stretch.
aargh feel so torn. I would love both hassle-free, esp since being abroad, and for them to have the house, but don’t want to do me or the kids out of a potential 50k.

@Movingon2024 I’d say you’d love to sell at them but the EAs estimate £500-550k and you can’t go below a certain amount, for example £510k. Have you looked at what’s sold recently in the area, or what’s on the market? Maybe the house is out of their price range, or maybe they’re being a bit cheeky, but it’s not as though they’re long-standing tenants, so while convenient for all of you to sell to them, you shouldn’t feel bad about wanting what the house is worth.

18 months isnt like theyve been there years.
So its more a business transaction.
I think if they increased their offer to 500k , the lowest valuation id probably take it , bird in hand and all that and no guarantee youd achieve top end valuation. Otherwise go to market.
Also consider if anyone else bought youd probably end up with a gap between it being rented and sold and lose rental income.

If the OP is paying an agent to manage, there may be a few payable to that agent, whether or not an estate agent is involved in the sale.

I would sell to the tenants if possible in your position OP.

Well the question actually is, would you pay £50k for a hassle free, quick, free guaranteed sale?

If no, then market it - but budget £5k legal fees for removing current tenants, £15k mortgage while it sits empty and £5.5k estate agency fees.

Then are you willing to pay £24.5k for a hassle free sale…

So estate agents fees on £550K - £5.5k
Property empty for roughly 5 months to sell I am guessing rent approx £2k per months - £10k
Value of short chain with motivated buyers - £ priceless
i would be suspicious agents are trying flattery to get you t sign with them so property really sells for £525K.
Actual loss of not going to open market £22,750, but us the reduction in stress of the likely smoothness of this saw going t be worth it. Plus you can be clear that will entertain no further reductions regardless of what is on the survey, further reducing your stress.
All of these are points to consider.

Some really helpful thoughts here thanks.
propose a minimum
go to open market and tenants first refusal
see it as a business transaction
and others
Thankyou!

In order to get the house on the market you’ll need vacant possession which will take a while. Then you can market it which means you’ll have to pay the mortgage, council tax and insurance on the property with no rent coming in. You need to think about how long you can be without the rent and paying the bills - selling a house can be a long process with ups and downs.
I personally would work on by selling to the tenants you’ll be saving 6 months costs and estate agent fees. Only you can decide whether that makes it worthwhile selling to the tenants or going in the open market

Long story short- our nice tenants turned awkward tenants when we needed to sell. They couldn’t get close to our asking price. It’s impossible to get the house in a good condition for selling until they’ve left (no motivation for tidying/cleaning for viewings). What should have been reasonably straightforward turned into a v.long process. Honestly, yours sound dream tenants to convert into buyers, the extra £50k that you might get is not worth it- of course the agent wants you to put on open market, so you’ll be paying them too but if your house has tenants the time it might take to exit, house market can change anyway, plus capital gains it’s maybe not as much as you’d expect 🤷‍♀️
Ironically, when we relocated back we rented and ended up buying the rental from our landlord- it was a dream process, saved £ on both sides, no chain, no hassles and scope for negotiation on some of the works which needed doing.
I can’t encourage you enough to sell to them for an easier life and I’d say guarantee of a price close enough to what you’d get on open market. Just negotiate like you would in that situation, as they sound like that’s what they’re doing as serious buyers would. Good luck OP.

Oh that is hugely helpful thank you - breaking it down

Please take on board the agents are probably being generous with their valuation because they want you to market with them. After a couple of months of no offers they will then suggest you reduce the price.

Rather than see the money you may be missing out on can you concentrate on the profit you’ll be making even if selling at lower than market value? It sounds like you weren’t expecting the value to have increased as much as it has so you’ve still done well out of it?

@Movingon2024 So - static market. People are not selling and this could make your place more desirable but not £550,000 desirable. How are the agents pricing with few local sales? Guesswork?

Our friends have a basic semi on an estate with two outstanding primary schools. There are now 5 semis on the market. This is unusual, and there are detached and bungalows available too. They are not immediately selling and prices are probably 5% down. So desirable has a price ceiling. There’s also many new houses to choose from nearby with new schools. There is choice and when a house needs improvements (theirs does) some buyers will prefer new. So everything in the area comes into the equation,

They might find it hard to find somewhere else to rent or buy so you do have some power in the situation. Remember that. I’d suggest agreeing to sell to them for £500k and not a penny less.

Another thing you could do @Movingon2024 is set an aggressive date for completion so things don’t drag on. I do think £485k is too low but I’d probably weigh up costs and stress and accept £510k or even £500 but only after doing some research on the local market. As a PP said, taking into account getting them to move out/possibly empty property for a while would dent the profits, but there again a desirable house in a good area is not going to be difficult to sell. Did it move quickly when you were buying it?

Your tenant gets not to pay moving fees/avoids the stress of packing and moving, so you both benefit.

One other consideration is that you will pay capital gains tax. This applies to the increase in value between purchase and sale price. Please take advice

Yes that’s true. I bought it for 350 6 years ago. But have added extension, extremely lovely home office, redone floors and bathrooms etc etc. def more than 100k spent on improvements.

I've not read the whole thread, and I'm no finance expert either but you might be liable for capital gains tax on selling a property that is not your main home. Just another thing to consider when reviewing the costs concerned. You might not be as it has been your home for longer than not, just get advice and do research all round really.

And I would believe the agents re valuations, it sounds like your tenants know this too. But selling a rented property also v tricky, even more so with tenants who'd feel put out. I'd factor in all your likely costs and balance out the potential gains and go from there.

Yep, and add to that six months of council tax, utilities, insurance (really expensive for an unoccupied property) cleaning/clearing, garden maintenance (the lawn will end up sky high if you're selling over spring and summer, and you need the house and garden looking good to sell).

Sell the house at market value. If the situation were reversed no matter how lovely the tenants are they wouldn’t sell to you cheaply. The difference in price is massive and would be a great house deposit for your children. Family first always. If the difference was 5-10k then yes sell to the tenant but more than that no. Your family is more deserving of the money than a stranger.

Also think about it what if they sell in 2 years time for the increased amount? You will have gifted strangers £50 - £60k madness.

As @JudgementalCatsays it is very likely that you will have to pay the estate agent who found your tenants the fee if you sell to them - that’s normal practise and has been in every lease agreement I’ve had (I rent out a couple properties).
Also, unless your property is in a very rare area the market in the majority of the UK is totally flat. I really doubt there’s been a large increase in the last year and I think the lower estimate is your likely sale price. Of course it’s a gamble but I would really consider all the PPs have mentioned about the difficulty of selling with a tenant still living there and the cost to you once they move out - you will have to pay the council tax, utilities (there are standing charges whether someone is living there or not), mortgage fees etc. it would be about three months from agreed price to completion and it may be on the market for months.
You can try to get them to £500k but do not think of it as a ‘£50k loss’ but rather a good sale with little stress!