Tenant wants to buy?

Question

After a brief stint on the sales market last fall, we opted to rent out our home for 6 months and then return to the market this spring (our tenants were/are fully aware of these circumstances).  In any case, we just met with our realtor, signed a contract to place it on the market 4/1/14 and the tenants are now interested in buying.  Obviously, we would all love to avoid paying commissions but I assume we are too late?  Any suggestions on how to navigate benefit both parties?  I always appreciate the wealth of advice on this site!  Thanks

Robert Steele · Answer

Oh boy. If I had a dollar for every time a tenant said they were interesting in buying ...

Jon Klaus · Answer

"Life is timing...phew". Yeah I was in Austin.yesterday, drove back to my Dallas home last night, and today my Austin bank says we need you here now to sign papers.  : /

Account Closed · Answer

I think  that almost any agent would release you from the listing agreement if you explained  the situation nicely to them. (I would).  After all, they've spent very little time on it up to this point.  And they could retain the listing if you don't end up selling to the tenant.

If you maybe need help doing the paperwork you might offering to pay them $100 per hour or something for their help with this.

Miranda Crown · Answer

I love this website, thank you all for sharing your thoughts, very helpful!  We don't really have the time or know-how to navigate a real estate transaction so I think it would suit us to keep the realtor involved for a lower commission.  The tenants know we are serious about selling and their lease is up 5/31 so if they don't move fairly quickly, we are moving on.  Thanks again!

Michael Seeker · Answer

If you do not list the property you stand to save a few dollars, but you're stuck working on the tenants' timeline (meaning there's not much incentive for them to move forward at a normal pace since they already live there).

If you list the property, the tenant can still buy it, but you can treat them just like any other buyer - i.e. write me a contract and provide pre-approval letter and good faith deposit etc.  I would ask the realtor to take a reduced commission of 3% instead of 6% if the tenant buys and they can handle both ends of the deal or possibly just do it for a flat fee.

As @Robert Steele mentioned - I think there's a much higher likelihood that the tenants will waste your time than actually follow through on the purchase.  I had a tenant spend 6+ months telling me they'd buy the house.  Eventually I had to evict for non-payment and ended up selling on the MLS.

Miranda Crown · Answer

Seems reasonable...and yes, we did mention to the tenants that we were meeting with our real estate agent...they admit to being undecided but now don't know why they would move if they could own the house themselves!  Life is timing...phew

Jon Klaus · Answer

You can ask your agent to release you from the contract, or at least for a reduced commission if your tenant does buy it.

Note, whenever selling a rental, consider the tenant as possible first.  That can be a low cost, low hassle way to sell.

Tenant wants to buy?

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