Selling my house without estate agent

BoozyBabe

Hi,
I was on a few weeks ago bout selling my house to my tenant.
Well, I got it valued, & it wasn't as good as I'd hoped.
But, I've decided, if my tenant really want it, I'll sell, otherwise I'll just keep it.
Because of this, I don't want to pay for an estate agent. I either already have my buyer or I'm not selling.
So, what do I need to do.
I have my solicitor from when I bought the house a few years ago & he has all the house papers.
I've given my tenant the price & they are now considering it.
Should that be ok & we agree a price, I believe they are to pay a booking deposit.
Is this a normal requirement & one you'd recommend? I know it's fully refundable up until contracts are signed.
Is the booking deposit normally 3% or 5%? I know I paid 5% when I bought the house.

When signing contracts, the full deposit must be paid. Is this always 10% of the full amt. (obviously minus the 3-5% already paid).
Is this extra deposit ALWAYS paid, or does the booking deposit normally just cover this? I don't seem to have a receipt for paying the full deposit, though the contract of agreement seems to refer to it.

Tenant is currently trying to save the deposit. Is this good reason for me to seek booking deposit, so I can be sure there's genuine interest instead of being strung along for up to 6months?

If my tenant secures a 90% (for example) mortgage, does their bank take the 10% deposit they've paid me as the 10%, or do they have to come up with another 10% for the bank or how does this work?

Can my solicitor provide all documentation for the sale, or do I have to furnish them with anything?
I have here the booking receipt, details of sale, & contract of agreement docs that I received when buying, which I could update if needed for this sale.

Anything else I need to know, do, etc?

Thanks,
BB

The_Conductor

Hi Boozybabe-

first of all, the bank will not necessarily accept the valuation you have had done as what the house is 'worth'. The bank (or other lending institution) that the tenant is dealing with to organise the mortgage, will have a panel of approved valuers who are the only people who are allowed to provide a valuation on the banks behalf.

The 90% mortgage is 90% of the valuation that the banks valuer puts on the property- nothing else. Deposits already paid etc- are a totally seperate matter, and have no bearing on this 90%.

To be safe I would adjust my expectations downwards by ~10% from the valuation you were given (this also allows you a little leeway to accommodate some limited haggling on the part of the tenant).

To be honest- I'd not get hungup over the deposit. The property is occupied and generating rental income come what may. Its not that you are being strung along. Worse case scenario- you continue to collect your rental income. Its not a bad worse case scenario.

I would exchange solicitor's details and push your solicitor into getting a contract signed asap (without getting hungup on the deposit part of the deal).

Its different in that its a sitting tenant who is contemplating purchasing- they are far less likely to try to walk away from the purchase than an average member of the public.

Your first port of call is your solicitor.

The only way you are going to get stung in this is for any legal fees you might incur should the sale fall through (and even then as its a transaction with your sitting tenant, its very possible that your accountant may be able to figure how to make this a tax deductable expense........)

Note: I am not advocating tax evasion........

rockbeer

Booking deposit = complete waste of time for everybody involved. Don't even bother collecting one, just try to get the contracts signed as soon as possible.

(Why does everybody persist with the fiction that this refundable 'deposit' means anything at all? )

As smccarrick says, since this is your tenant, and the only buyer in the frame, getting strung along isn't an issue as long as they keep paying the rent. Of course you could let them know that if another buyer appears and is ready to sign contracts before they do they risk losing their home, but they'll probably know you're bluffing. Just play nice.

smccarrick wrote:

Your first port of call is your solicitor.

+1

If your solicitor is any good they'll step you through what has to be done, but they'll be taking care of almost everything anyway.

SimpleSam06

smccarrick wrote: »

Note: I am not advocating tax evasion........

Tax avoidance isn't a crime though.

The_Conductor

SimpleSam06 wrote: »

Tax avoidance isn't a crime though.

Lol.....
Pity the Revenue Commissioners didn't like my discussion on the differences between evasion and avoidance!
Cost me what could have been a very interesting job......

BoozyBabe

Thanks for that.

Bit of an update.
The tenant has accepted the price.
It is a good price. There isn't a 3 bed in the county for sale for anything less thatn 20k more than this house, so my tenant will not find a cheaper price.
For that reason, if their mortgage valuers come back & say the house is not worth that amount & therefore they'll not give them a mortgage for that amount, I won't sell (though I don't think that'll happen). TBH, I'm still in two minds about it anyway, but if they tenant really wants it & it appears they do, & for that price, then that is the price they'll have to pay to get it.
I think they already know it's a really good price as they didn't even try to haggle.

So, next thing, the deposit they pay when signing contracts, they will not be able to come up with this for about 6 months. Like you said, that's fine by me as the rent will still be paid, but how do I go about getting an agreement now that the price is X amount & has been agreed on & that they don't in 6 months time say that it wasn't agreed on.
I know at any time both sides can walk away from it, but at the minute as far as the tenant is concerned, they have told me they wish to purchase the house for x amount & I've agreed. The 6 month wait is only to gather the deposit. So, can I get this in some sort of writing, or is there any point?

The_Conductor

Boozybabe-

You do not need a deposit from them.
You need a signed contract from them.

If you wait 6 months- until they have saved their deposit, before going through with this- prices will have fallen further. Its not a question of holding them to today's price in 6 month's time- its whether the bank/building society will accept today's valuation in 6 months time. They won't.

It is not a case of holding them to a contractually agreed price that they agree to today- in 6 months time when they have saved their deposit. The days of an open mortgage offer from lending institutions is well and truly over. They will not get the same loan offer from their lender in 6 months time- its simply not going to happen.

If you really want to sell this- you need to have them get the list of approved valuers from their lending institution, and have an official valuation done at today's date. They would then need to immediately seek their 90% mortgage. You would have to accept the 90% in full and final satisfaction for the transaction.

Prices are falling between 1 and 1.5% month on month. Its entirely probable that the valuation put on the house in 6 months time could very well be 10% lower than today's valuation. This is not a worst case scenario- its simply a continuation of present trends. It could be better- it could be worse.

If you really want to sell- accept these parameters, and make it as easy as possible for them to finance the transaction. You are helping both they and yourself at the same time.

You need to ask yourself how badly you want to sell the property.

BoozyBabe

Thanks again.
You see, I'm not pushed to sell at all.
& if in 6 months time I cannot sell for this price then I simply won't.
I have no financial pressures forcing me to sell.
The only reason it's even being considered is because the tenant asked me to.
I've a good relationship with my tenant & that's why I decided to sell when they asked.
But, at the end of the day, I bought it as an investment, & I'll only sell if it makes financial sense for me to do so.
At the current price, it only just about does make sense for me.
If it falls further it won't, & I simply won't sell. I'll just keep it as a long term investment.

So, I guess I'll just hold tight. Give them the time, continue to collect the rent & just see how it goes from there.

Thanks for your help.

The_Conductor

Fair enough.

In the interests of keeping good relations with your tenants- I would suggest you convey this to them as soon as possible.

Given that they are actively saving a deposit- I would also make contingency arrangements- as I would expect them to leave within the next year. While they may love your property- if purchasing it is not an option for them- they may simply decide to find somewhere that is an option.

To be quite honest with you- it really sounds as though they have not done their homework on this properly......

loyatemu

I presume by "deposit" you mean his 10% of the price. Well seeing as you're not planning to sell to anyone else, you just have to wait for him to save it. If he doesn't manage to get it, you don't sell. If he quibbles on the price, you don't have to sell either. As far as I can see you're under no obligations.

It is likely though that in 6 months time his bank will want to revalue the property, and you can be pretty sure the value won't have gone up...

antoinolachtnai

This is commercial advice rather than a direct answer to your question.

I am sorry to be tough here, but it is really meaningless for him to offer to buy your house if he can't even come up with the deposit for a further six months. I would not sign a contract with him under these circumstances. It will just be too hard to hold him to the contract for you to bother. On the other hand, he could hold you to the contract, if (for example) he finds another party willing to pay more for your house and gets the contract assigned.

I think you need to make clear to him in the nicest way is that you need him to come up with the money and to let you know when he has it so you can look at it again.

Anything could have happened in the market or in your life in the next 6 months. I wouldn't have him under any illusions that he has any sort of hold or option on the house.

Without the written contract, nobody is bound to do anything. I would not put anything in writing with your tenant about selling your house without the involvement of a solicitor.

This is not much like your case, but I know of a situation (which happened to involve a stupid attempt to avoid stamp duty) where payments were made which were supposed to be deposits and it was later claimed by the landlord that these were in fact payments for back-rent. You need to be really clear on what every payment is.