Selling the rental property

The rental property curveball and Meeting the realtors

We were thrown a bit of a curve ball in the quest to sell our rental property.

The entire Beatles family met with the realtors at our rental property. It was the first time we had been inside the house in over two years.

Things have changed.

The house shows the wear and tear of family living. Our once pristine walls are scuffed and dinged. The carpet shows considerable wear from what we assume to be visitors who didn’t remove their shoes, and there is an overwhelming aroma of animals.

It was especially tough for Mrs. Beatles, who fondly remembers our past in the house. Birthdays, Christmases, and even the quiet nights, all reduced to a memory difficult to recall through the unkemptness that surrounded us.

I found it to be a perfect metaphor for our financial situation. Mrs. Beatles didn’t appreciate the comparison. I don’t blame her.

Meeting the Realtor

We chose our realtor due to his tight-knit relationship with investors in our community.

His connections with buyers who have access to cash on demand could, in theory, give us an upper hand to sell the property in half the time.

After a quick inspection he noted:

  • The carpets need to be replaced
  • Walls need to be painted
  • Basement was dry but could use an extra layer sealant
  • Tile grout needs to be whitened
  • The roof needs to be replaced

Not a terrible list, though it would cost upwards of $8,000 to do it all.

Roof on our rental property in bad shape
A portion of our roof

He then explained our options:

  1.  Move the tenant out, Repair the items he noted, Market toward first time home buyers and aim to sell nearly $90k mark.
  2.  Keep the tenant in the home and sell the home as it sits right now. Market toward investors who want quick cash flow, and hope to sell around $75k to $80k.

That’s a $10k to $15k difference but would cost significant capital to get there.

And then came the curve ball

We shook hands and told the realtor we would get back with him later on in the day.

In our minds we had already decided to sell the house without improvements, choosing to market it towards investors.

And then came the curve ball.

As we packed up, our tenant asked to speak with us. They notified us that they are working on a plan to purchase the home, but would need a week or two to know if it is feasible.

This opened up a world of other possibilities.

  1.  The tenants love the home and their family is already settled in. They would likely be willing to pay the asking price for the property.
  2. If we sell to our tenants, we would save around $5,400 in realtor fees.
  3. We would save $8,000 in upgrades that the home will eventually (probably soon) need.

This is highly tempting and now we are left wondering what to do.+

Listing immediately would be potentially throwing away $5,400 (If we list, then even if the tenant purchases the home, the realtor will receive their commission).

On the other hand, we need cash and we need it fast. For the next day or two we are going to keep the realtor waiting as we ponder our options.

We are actively seeking advice, so if you have any, feel free to comment below.

 

6 thoughts

  1. Sell the house to the tenants and be done. A listing price is not a guarantee of what you will get. And the process could take a long time. Sell and be done with it and move on. You hair is on fire and you are drowning. Doing this could allow you to get out from under all debt except your mortgages. Sure – you MIGHT make money waiting – but you are uninsured and the house could burn down tomorrow and you’ll have nothing. You need to get rid of it for the liability purposes ASAP. Without insurance your A** is hanging in the wind here. Do what is the fastest and easiest thing to do NOW.

  2. I’d give your tenants a week or two to ponder it. My assumption being if you’ve held the property for over 2 years you can afford to make it work for another week or two….even if you list the property it may not sell in the first 2 weeks + you’d lose the $5,400. I’d let the tenants know you need to know ASAP but given the savings, the guaranteed buyer, and perhaps a quicker close since they may be willing to pass on an inspection seems like it could be worth it.

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