Thinking about offering my condo to my current tenants

My RE broker has been calling me trying to convince me to put my place on the market. It’s currently being rented out. I am interested in selling the property – I think there are better uses of money right now. Of course my broker is telling me it’s a seller’s market and 30 year mortgages are super low – effectively increasing buyer’s spending power.

My current tenants have been there for a few years and they definitely have the money and income to buy the place. I’d like to ask them if they’d like to buy the place. It could save me 6% on commissions depending on what I ultimately get it sold for.

Is it a bad idea to offer my place to my tenants?

Guest User | 2 years and 6 months ago

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resident2 | 2 years and 6 months ago

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Best thing to do is to contact your tenants, tell them that you are considering selling the property. You would like to bring 2 or 3 agents that know the building & the area, to get an idea of the market value to walk through the apartment. Mention to them that if they are interested, they get first dibs, before it goes on the market.
Take it slowly, give them time to think about it. Meanwhile line up 2 or 3 Brokers …. if the tenants are interested, let them know the price ranges & offer it to them for the middle.

It is obviously easier if the tenants buy it, you do not need to do a whole paint & staging as well as carrying it vacant for a few months, so you have room to negotiate with them. The price difference is not just the Brokers commission, but lost rent & prep to go on the market etc.

peaceout | 2 years and 6 months ago

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Depends on the apt, location, current sales in building/area, timing of sale
. Many landlords had to lower the rent during the covid shutdown. How long is their lease? Please be aware of the 2019 Tenant Protection law, regarding tenant rights & timelines with non renewal of leases.

Guest User | 2 years and 6 months ago

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@no-permitz good points.
Location is downtown Manhattan. Are there bidding wars going on now? I agree that doing a private sale prevents me from getting market feedback.

If my tenants aren’t interested they’ll likely leave. I did lower the rent for covid. So my rental broker thinks I’m below market 7-8%. If they decide to leave and I don’t get a buyer, I could potentially rent it our for more than I’m getting now.

peaceout | 2 years and 6 months ago

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Do what speaks to you, if your tenants are viable purchasers go for it. It shouldn’t be just about saving on commission, since an agent’s reach is vast, and selling on your own can be complicated without guidance. But, if this seems real, get yourself a solid real estate lawyer and have her/him work out the details with their lawyer. It’s a big transaction, and in the end all about business. Reach out privately if you need lawyer recs.

yudashasom | 2 years and 6 months ago

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depending on the location, you may get above ask. selling to your tenants “off market” may cost you more than the 6% you would save. the other thing is, if your tenants are not interested in buying, it may prompt them to move – so make sure you are okay with that.

bobjbkln | 2 years and 6 months ago

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Seems like a good plan. From the tenants’ point of view, they can own the place that they have been comfortably living in for years vs. having to move out when a new owners take possession. And you’ll have the satisfaction of selling to people you know who have taken care of the property respectfully (I assume). Plus the lack of hassle in getting a buyer and the saving of the brokers’ fee should compensate for not getting the absolute highest price for the unit on the open market.

ceci | 2 years and 6 months ago

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It’s not a bad idea. Have they shown an interest in purchasing? You’re the owner and its your decision!! Go for it!! It’s still a hot sellers market!! Good Luck!!!