What is the best way to sell a tenanted property?

by Readers Question

8:30 AM, 14th February 2014
About 7 years ago

What is the best way to sell a tenanted property?

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What is the best way to sell a tenanted property?

I have a property which I really need to sell. The trouble is, it is tenanted to a Housing Benefit tenant and I know this will make it difficult.

If I went down the traditional Estate Agent route, viewings would be impossible and it would be difficult to arrange a survey for a potential buyer. What is the best way to sell a tenanted property

Trying to evict the tenant would cause endless problems with the courts, etc, so I was hoping to sell the property as tenanted.

I have been thinking about selling to a company who buy properties, but I don’t know what they are like, all these companies that promise cash within 7 days or whatever. I suspect at least some are talking rubbish, but does anyone know of any good ones?

I have also been in contact with a company who have offered to buy the property for an acceptable price, but the way they work is, they pay a certain amount of the equity to me upfront, then they let the property out for a time to someone who will eventually buy it. They then give me a monthly sum for about 2 or 3 years before the buyer then buys the entire property and I get the rest of the money. The company pay the mortgage and all costs including maintenance and insurance. I’d never heard of this before, and I am suspicious to say the least.

Another option could be to sell at auction, but that too has its pitfalls.

I am looking to sell so I can clear some equity to buy a property that should hopefully fair better long term, as this one is in an area where properties don’t tend to rise too highly, even in good times.

If anyone has any tips, they would be gratefully received 🙂

Many thanks

Anthony


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Mark Alexander

8:55 AM, 14th February 2014
About 7 years ago

Hi Anthony

I think you are absolutely right to be dubious about the rent to own scheme and given that it doesn't achieve your immediate objectives that would be the first I would kick into touch if I were you. I will not dwell on my thoughts about these schemes, save to point you to this http://www.property118.com/lease-options-how-do-they-work-should-they-be-regulated/18739/

If you want to achieve anywhere near to the market value then you need to be able to provide access to the property. Have you talked to your tenant about what you are trying to achieve? If he/she realises that your only viable option is to evict and sell the property with vacant possession unless he/she provides other investors with the right to view the property that might well focus his/her mind. I appreciate that void periods could end up being expensive so you might consider giving your existing tenant an "incentive" to show people around, e.g. a few hundred pounds when you sell. Also, if you make it very clear that you are looking to sell the property tenanted to another investor that might well help.

With regards to marketing the property, please take a look at this thread >>> http://www.property118.com/auctions-sell-tenanted-properties/40635/

If you talk to these "quick sale" companies expect to be offered a LOT less than the property is worth, perhaps as much as 50% less but certianly 20% to 30% less than market value is the norm. Also, many of these companies have a very bad reputation of lowering their offers just before completion. I'd avoid them like the plague if I were you.

I hope that helps and please let us know how you get on 🙂
.

Jeremy Smith

12:11 PM, 14th February 2014
About 7 years ago

Anthony,
I've been looking at auction prices recently, having also bought one in a 'cheap' area recently, through the auction.

I noticed that some of the prices achieved were really quite in line with market values ( some others were not though, as well).
I would guess that the majority of the people at auctions are probably investors, and if you have a good provable income from your tenant, you may have "an asset" there, to help sell your home, rather than a hindrance.
- An investor would be really keen to buy with no void period from day one, and a known good tenant installed !!

The auction packs contain loads of information, so perhaps that info is something that could get put into it, I don't know.
There is a guy here somewhere (!) that runs one of the biggest auction houses, I think Mark gave the link to him, or to the thread.

But you must check out, in your area, if properties at auction fetch the market value.
Can we ask what general area you are in ??

Mark Alexander

12:29 PM, 14th February 2014
About 7 years ago

Reply to the comment left by "Jeremy Smith" at "14/02/2014 - 12:11":

I think you must be referring to Martin Cunningham from Auction House UK which I believe sold more properties in the UK last year than any other property auction. This is a link to Martin's member profile and business sponsor page >>> http://www.property118.com/member/?id=376
.

12:53 PM, 14th February 2014
About 7 years ago

Anthony
Which town/city is the property in?

Anthony Endsor

20:30 PM, 14th February 2014
About 7 years ago

Thank you all very much for your advice. It does seem the consensus is an auction would be the best way to go.
Mark, I'm pleased you posted the article about the Lease to buy scheme. I'd never heard of this previously so didn't know whether it was ok or not. Now though I will definitely avoid it. And yes, the trouble with these companies that buy property is the price would be much lower, and I think I may have heard about the lowering of prices just before completion before come to think of it.
I haven't yet spoken to the tenant about this, though I would expect her to be ok about staying at the property under a new Landlord.
Jeremy, thank you for your advice regarding auctions. The property I have is in Gorton, Manchester. I'd never thought of a tenant as an 'asset' when selling before so that certainly gives me a new perspective. The rent isn't all that great (another reason I'd like to sell) but it's better than nothing. Also the tenant isn't fantastically tidy either. But hopefully a potential buyer would see it was the tenant living there, and not them 🙂

21:44 PM, 14th February 2014
About 7 years ago

Hi Anthony,

Selling a tenanted property for cash makes sense for a number of reasons as you have outlined. You won't achieve market value, but you will achieve a quick sale and no void to worry about.

A contact of mine, Richard Hill, specialises in buying tenanted properties and I am sure he would be interested to make a cash offer on yours.

Have a read of his blog:

http://www.dreamhousebuyer.co.uk/news/Sell-a-house-with-a-tenant-still-in-occupation

You can contact him directly via email on dreamhousebuyer (at) hotmail.co.uk

To put your property into auction will involve an upfront cost of around £400 to £500 (for valuation and catalogue listing) with no guarantee that you will get a sale.

Hope that helps clarify your options ... ?

Anthony Endsor

23:26 PM, 14th February 2014
About 7 years ago

Hi Vanessa
Thank you for the link to your contact's website.
I'll have a look into it and may consider sending him an email.
As you say, it could be worth it as long as the offer is sensible, as indeed there would be costs involved with an auction and the property still may not sell.

Jeremy Smith

0:09 AM, 15th February 2014
About 7 years ago

Hi Anthony,

good luck with the sale!!,
I just checked out Gorton on wikipedia.! Oh G*d-ness.!
I had been looking around north of Leeds for cheap property and I thought Darwen looked bad !!
Apparently in 2006 Gorton had the highest number of uninsured drivers....
...amongst other things!

- I think you would do very well to sell it whilst you have a good tenant, that's a really good selling point.

Mark Alexander

9:16 AM, 15th February 2014
About 7 years ago

Reply to the comment left by "Jeremy Smith" at "15/02/2014 - 00:09":

Hi Jeremy

Why would you look on Wikipedia?

Just put any postcode in England and Wales into our Property Research tool and there a mine of useful info from crime stats to the best pubs in the area!

See >>> http://www.property118.com/property-search-tool/
.

Jeremy Smith

10:35 AM, 15th February 2014
About 7 years ago

Reply to the comment left by "Mark Alexander" at "15/02/2014 - 09:16":

Wot postcode ! 😉
....ok, ok, I forgot !! I won't do it again !!
Yes, I know, it will search on name as well.

I'll try it on the property I've just bought "up north"....because I have the postcode for that one.

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