I'm considering selling my rental condo to my current tenant and am seeking advice for what to consider. I'd like to sell direct using just a real estate attorney to reduce the cost of sale/increase profits. I'm hoping folks here can share resources on everything to consider for conducting this transaction on my own, steps, disclosures required in VT or links to good resources. More info on the property and sale below.
My tenant has been in place for 2.5 years, has very steady income in the medical field (over $300k annually) and is interested in purchasing.
I wouldn't consider FSBO for the open market, but I would consider selling at recent comp values to my existing tenant without agents involved to keep our costs down. The association is currently in the process of acquiring bids for residing both buildings entirely and rebuilding 3 story decks that have rot. I anticipate this to cost ~$30,000-$40,000 per owner and it could be a good chance
I bought in November 2018 for $278k with $56k down and put another $5k in for renovations. I've got roughly $200k in equity with similar units going for $400k in recent sales.
My plan would be to use the profits to purchase a multifamily in the same neighborhood.
I'm considering selling my rental condo to my current tenant and am seeking advice for what to consider. I'd like to sell direct using just a real estate attorney to reduce the cost of sale/increase profits. I'm hoping folks here can share resources on everything to consider for conducting this transaction on my own, steps, disclosures required in VT or links to good resources. More info on the property and sale below.
My tenant has been in place for 2.5 years, has very steady income in the medical field (over $300k annually) and is interested in purchasing.
I wouldn't consider FSBO for the open market, but I would consider selling at recent comp values to my existing tenant without agents involved to keep our costs down. The association is currently in the process of acquiring bids for residing both buildings entirely and rebuilding 3 story decks that have rot. I anticipate this to cost ~$30,000-$40,000 per owner and it could be a good chance
I bought in November 2018 for $278k with $56k down and put another $5k in for renovations. I've got roughly $200k in equity with similar units going for $400k in recent sales.
My plan would be to use the profits to purchase a multifamily in the same neighborhood.
Thanks in advance for any insight!
Zach
Hey Zach,
It seems as though the proverbial stars are aligning in your favor with regards to selling your condo to your tenant. The timing of the proposed sale couldn’t be more to your advantage than it is now given the details you’ve provided in your post.
Although I can appreciate your desire to save money by cutting out the real estate attorney/real estate agent, it would detrimental to do so for a variety of reasons. Selling property may appear relatively simple (on paper) to do when researched but the actual process itself can be complex and more so if liability is involved. I would recommend anyone selling real estate to have proper representation as aspects of the process can be time-sensitive and/or contentious.
If you insist on selling your condo on your own I would keep these things in mind:
Determine the condo’s actual market value. Knowing the value of the condo will help you come up with a realistic selling price.
Negotiate the Price and Terms. You can present your asking price to your tenant, but be prepared for your tenant to counter with a lower offer. Consider issues like repairs that the tenant is willing to make at his own expense and what closing costs each of you will pay after settling on an agreed-upon price.
Discuss an Earnest Money Amount. The earnest money amount is separate from the down payment and is a small fee, paid up-front to show the buyer's good faith intention of purchasing the condo.
Consider a Contract-For-Deed. You may want to finance the condo for your tenant if he is unable to get a loan through a mortgage company.
Have your attorney draw up the sales contract once all of the terms have been agreed upon and you know what your tenant's financing and down payment plans are.
You can ask the attorney to order a title report on the condo in preparation for closing.
An appraisal should be done to ensure the value of the condo if mortgaged.
Arrange for closing with your attorney once the inspections and repairs have been finalized and the tenant's financing is in order. In some areas of the country, home sale closings are done at title companies.
Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
3y
What would I do if I were in your shoes? In my experience attorneys are often not very good with real estate transactions, at least in Wisconsin, where they are usually not involved. They either over-legalize the process and make it unnecessarily complicated or just flat out dive down rabit holes.
Probably better to ask an (experienced) agent to do a single part listingy for a flat fee or a reduced comission like 3%. I have done these in the past for existing clients and can tell you working for both buyer and seller it's more work than it sounds and I had to earn that money.
Just calculating fair market value is worth it and the difference could be more than an entire 6% comission. Get a CMA/BPO and let the agent present it to the tenant, with math and reason, you both know the price is fair, the process is done correctly, there is no legal exposure etc.
@Account Closed thanks for your detailed response. Really helpful insight! Normally, I wouldn't consider this at all, but given the tenant's 2 years at the property and their stated desire to purchase in addition to nearly identical existing comps in the past 6 months I'd feel confident in accurately coming up with fair market pricing.
@David M. I have a real estate attorney I would work with, just considering saving on commission for a listing agent, only for this one buyer.