Should you sell to your tenants?

When the time comes to sell your investment property, there is a whole world of potential buyers out there. However, the best option may be the people right under your nose.

Take a look at why it might make sense to fast-track the sales process and give your tenants the option of being your investment property’s next owners.

Why sell to your tenants

Nobody likes moving house. If your tenants have been thinking of buying and have saved up enough for a deposit, they may be more excited about putting in an offer than packing up and relocating.

Many renters are steadily working towards owning a home of their own. If they love the area where they live and can afford to buy, it’s worth giving them the option.

Selling to your tenants will dramatically streamline the process of selling your property. You don’t need marketing or auction campaigns. You also won’t have to worry about holding open homes while the place is occupied. What’s more, you’ll be saved from negotiating the end of the lease for your tenants if you need to sell in the middle of their contract.

Your tenants know the home inside and out (literally). They’ll have a good understanding of your property’s value because they already live there. Either they love the house and want to buy it or they don’t… there will be less deliberation with this kind of buyer.

Many tenants reach out to their property manager to let them know they’re interested in buying. The manager can connect them with your sales agent, who can negotiate on your behalf. This will help to ensure a financially fair outcome for everyone.

The downside

Selling to your standing tenants has no guarantee of netting you the best price for your property. Many tenants, especially those who have lived in the property for a while, will feel a sense of ownership and entitlement. They may think they shouldn’t have to pay top dollar for what they believe is already ‘theirs’.

If your investment property is quite aged, your current tenants will be aware of any issues it has. They will intimately know any minor issues and may refer to them in an attempt to knock down the price. You might be in for some serious negotiating if you try to sell to canny tenants.

A two-handed approach may work. Give your tenants the option to buy but also open the home to the public. A higher offer may come your way.

The final decision

At the end of the day, unless you’re in a hurry, it makes sense to get the highest offer possible for your property. If your former tenants can offer that, it is a win/win situation. Offering first ‘dibs’ to your tenants is reasonable, but you still have the final say. As with any other buyer, if the price isn’t right, you are well within your rights to accept a better offer from elsewhere.

The best place to start is by speaking with your sales agent and property manager. They’ll be able to provide advice that matches your goals.

Need more tips on selling your property? Contact Professionals today.