Purchasing house I rent from Landlord directly - HELP!

Oeufmerf

Hi all,

Am hoping that someone in the know could help me out with some advice on negotiating with my landlord. They advised us about 3 weeks ago that they were selling the house we live in currently. We've always loved this house and have dreamt of buying it and now we have the chance!

The problem is that the valuation that the landlord has communicated to us is way off what we thought it would be and I want to be able to negotiate the best deal for us.

Originally, the landlord had given us a guide price of 360k as another house in the estate had sold for this in February of this year. I reviewed this property and noted that there were some key differences between that and 'our' house that should bring the price down e.g. bigger floor space, extra bedroom (3 bed instead of 2), end of terrace as opposed to mid-terrace, higher spec bathroom and kitchen. I was confident that the valuation for 'our' house would be much lower than this.

However, the landlord told us last week that the estate agent recommended that they list the house for 320k 'to get people in the door' but that they would expect the house to go for no less than 400k. 400K!!!! Now, obviously they are going to overstate as they want to get the highest price possible but that is a 25% spread - is there any agent out there that is that unscrupulous that they would advise them of that?? Is this realistic given that the market has levelled off again?

We got an independent valuer in and he has valued the property at approx 335-340k but I want to be able to negotiate this in the best way without pissing them off and losing the opportunity of a private sale.

Would really appreciate some good advice here!

Thanks Boards

bizleads

Given market conditions at the moment you wont get your price.

Oeufmerf

Thanks Bizleads - sorry do you mean the landlord won't get the 400k or they won't accept my offer of 340k?

Ctrl Alt Delete

bizleads wrote: »

Given market conditions at the moment you wont get your price.

<mod snip>

To the op. What I would first do is say Your valuer has valued it at 340k so your making bid based off that.

If the landlord thinks he can get an extra 80k from his advertised price he will prob want to check the market again. Unless it's a cash buyer he will be struggling as market is still largely made up of cash buyers with mortgages hard to get in addition to a very uncertain / falling market

alastair

If you genuinely think the place is worth €340k, and it's asking price is €320k, then there should be no problem. If you're worried that someone might pay more than that, then you've a problem - the landlord is obviously going to go for the biggest offer, and no amount of negotiating on what the house hasn't got, is going to change that reality.

mayway

400K for a 2 bed mid-terrace house? Sounds rather excessive. If the end of terrace was 360k in Feb and it was bigger with a 3rd bedroom then I can't see how a price tag of 400K can be justified.

There's some things to bear in mind though. If the last house sold quickly then there might be people waiting to buy another one. It really depends on where it is as well.

Come up with a price that you think it's worth and add on a premium that you're willing to pay to get the house based on how badly you want it and where it is. It has to be price that you won't regret paying should you get it. Once you have the number then offer to the landlord.

It's as simple as that really.

CaoimheSquee

Also the landlord may have got a few quotes of which some were more realistic but they may be blindly going with the big figure regardless!

i think hes saying it will go for nearer 400k,

roughly where is the house?

cameramonkey

It pretty standard practice by the estate agent. Maybe he wants the business and is telling the landlord that he can get the high price so that the landlord will go with him, maybe the estate agent actually believes that he can get that price.

realistically if the house goes on the open market then you will see what people are willing to pay for it. That is the only arbiter of the real price.

Why do you want a private sale?

mayway

Ctrl Alt Delete wrote: »

<snip>

To the op. What I would first do is say Your valuer has valued it at 340k so your making bid based off that.

If the landlord thinks he can get an extra 80k from his advertised price he will prob want to check the market again. Unless it's a cash buyer he will be struggling as market is still largely made up of cash buyers with mortgages hard to get in addition to a very uncertain / falling market

Hmmm. If their valuer has told them 400K then they're just going to think you're trying to game them by saying your value said 340K. At the end of the day, estate agents are only guessing. I've lost count of the number of time that different estate agents have given me different values. Just pick the number you're comfortable with and go with that. It doesn't matter what the EAs say, what matters is how much money actually gets offered.

Mezcita

Oeufmerf wrote: »

Hi all,

Am hoping that someone in the know could help me out with some advice on negotiating with my landlord. They advised us about 3 weeks ago that they were selling the house we live in currently. We've always loved this house and have dreamt of buying it and now we have the chance!

The problem is that the valuation that the landlord has communicated to us is way off what we thought it would be and I want to be able to negotiate the best deal for us.

Originally, the landlord had given us a guide price of 360k as another house in the estate had sold for this in February of this year. I reviewed this property and noted that there were some key differences between that and 'our' house that should bring the price down e.g. bigger floor space, extra bedroom (3 bed instead of 2), end of terrace as opposed to mid-terrace, higher spec bathroom and kitchen. I was confident that the valuation for 'our' house would be much lower than this.

However, the landlord told us last week that the estate agent recommended that they list the house for 320k 'to get people in the door' but that they would expect the house to go for no less than 400k. 400K!!!! Now, obviously they are going to overstate as they want to get the highest price possible but that is a 25% spread - is there any agent out there that is that unscrupulous that they would advise them of that?? Is this realistic given that the market has levelled off again?

We got an independent valuer in and he has valued the property at approx 335-340k but I want to be able to negotiate this in the best way without pissing them off and losing the opportunity of a private sale.

Would really appreciate some good advice here!

Thanks Boards

The problem is that the house is worth what the market dictates it will go for. So you need to choose a figure and stick to it. If the owner doesn't accept your price then just be willing to walk away.

It's very easy to get emotional about houses, particularly given that you live there already. The main thing is that there will always be another house which might be nicer, better value etc.

Agents, while frequently dodgy, are out to get the best price for their client. So the idea of listing at 320K with a view of it going for 400K might work. Once again, it depends on the market.

What is in your favour is that you are familiar with the area (in terms of what houses like yours are worth), could complete on a sale quickly and could save the owner estate agent fees. So I would do some research on the area and make your offer highlighting those points to him.

Michael D Not Higgins

I'd say that it's not a matter of what the landlord wants but what the market will pay. Obviously 400k is away with the fairies money, but someone could easily push it up above your valued amount.

ted1

How well do you get on with your landlord?
What you could offer is that the puts it on the open market. and that once he gets a price that he is happy with , you then have the option of buying it at that price.

Oeufmerf

Thanks all. The house is in Dublin 8. Genuinely, I don't believe it is worth 400k!

In terms of the private sale - I just thought that might be another negotiating point e.g. the landlord does not have to pay EA fees...

I'm sure it's obvious that I am a first time buyer!!

Michael D Not Higgins

Oeufmerf wrote: »

Thanks all. The house is in Dublin 8. Genuinely, I don't believe it is worth 400k!

In terms of the private sale - I just thought that might be another negotiating point e.g. the landlord does not have to pay EA fees...

I'm sure it's obvious that I am a first time buyer!!

Just to be clear, you are able to afford the mortgage for the property right? You'll need a combined income of 80k and a deposit of 42k to qualify for the new mortgage rules for 320k.

westcoast66

This happened to us and it turned out very nasty in the end.

We asked the landlord if we would sell, he agreed and then we said, just get it valued and we'll see where we are.

The EA who valued it, of course persuaded him to put it on the market. Now, there was a bidding war and we ended up as the highest bidder. The EA then persuaded the vendor to sell to the underbidder (ie their bidder) as they were a 'better buyer'.

It kills us to this day as we then had to move out into a sub standard property, half the size across the road. (We need to be in the area for other reasons).

Oeufmerf

@Michael D Not Higgins Yes, mortgage approval is in place

Oeufmerf

@westcoast66 That's awful... The problem is as someone else said that there is a lot of emotion involved. I am dreading this whole process!

Oeufmerf

Actually I should have added that I have already communicated to the landlord that we are not willing to pay 400k and they asked us to come back with an offer.

Oeufmerf

Oeufmerf wrote: »

Actually I should have added that I have already communicated to the landlord that we are not willing to pay 400k and they asked us to come back with an offer.

Have you gotten an independent valuation? If not, that'd be the first port of call.

Oeufmerf

@Maryanne84 Yes, we have. The independent valuer gave us a valuation of between 330k - 340k.

cameramonkey

Oeufmerf wrote: »

@westcoast66 That's awful... The problem is as someone else said that there is a lot of emotion involved. I am dreading this whole process!

Dont dread it, then it becomes a big emotional problem.

Get stuck into the process, be confident and try and see it as a business deal.

I have bought and sold a few houses, the first was a night mare because of my emotions. The other ones were fine because I saw it as a business deal even though they were houses I was going to live in.

Be pro active , you can only do your best and only offer what you can.

Oeufmerf

Oeufmerf wrote: »

@Maryanne84 Yes, we have. The independent valuer gave us a valuation of between 330k - 340k.

Then this is the value you should stick with. Make an offer and leave it with them with the request that they come back to you if they get a firm higher offer.

alastair

If you offer €340k directly (outside the EA marketing), it's probably worth an extra six or seven grand to the vendor, compared to the same offer through the EA, so you could use that as a negotiating point - it's only 13 grand short of the €360 that they'd be happy with (€400k sounds very aspirational).

bizleads

What I meant is that you will not get 340 - the price that you want to pay. One of the reasons is that he is thinking of getting around 400k unless he is professional investor and you are in good terms, he might go for a quick sale. Also you have to persuade him not to go to open market because he might get fake bids and will be in control of his EA agent who wants to get his commission. All the best.

Sunny Dayz

OP I know you are hoping to go through the process without an EA but maybe it might be easier on yourself if you use one. When we were buying the house we were renting, we didn't use an EA initially - it was a combination of an employee of the professional landlord and the letting agent. It was disastrous. We had our price which we were willing to pay, they just came back and said no we won't accept that price. No negotiations, no counter price their side, it was like we just had to keep guessing until they said yeah ok. When the property was taken over by a receiver, they appointed an EA and she was actually a great help and was more impartial than our previous dealings.
OP if you still don't want to use an EA, maybe get another valuation done (check the valuer is approved by your mortgage lender) and if you have two valuations for in and around your offer price, it could help.

Jen44

we have just bought a house privately from a family friend. And while some aspects were great, as in she would give us the keys whenever we asked to pop down have a good look around take measurements etc. It was a little awkward negotiating a price with someone we knew. Initially she asked us for more as she said her brothers were putting pressure on her but we were lucky that a house two doors down in similar condition had just sold and was up on the price property register. We told her that we were basing our offer on that and she agreed to come down a good bit on price and we ended up buying it for 5k more then the other house based on the fact our house had new windows, fireplaces and bathroom. We are lucky that everything else has gone very smoothly but i suppose my point is sometimes it is easier dealing with a stranger whom you have no emotions attached to when dealing with the business side of it all

Has the landlord already hired his EA? If not it might be useful to speak to him now and suggest a direct sale at the figure your valuer has given. He may like the idea of no EA fees and marketing costs and might feel deep down that the agents hint of 400k is just bait to hook him.
The risk with this approach is that he says no and your figure then becomes the floor for the sale process.

dori_dormer

Oeufmerf wrote: »

Thanks all. The house is in Dublin 8. Genuinely, I don't believe it is worth 400k!

In terms of the private sale - I just thought that might be another negotiating point e.g. the landlord does not have to pay EA fees...

I'm sure it's obvious that I am a first time buyer!!

If he has already signed with the estate agent hell owe the fees no matter who he sells to in the next 6 months.

The fees are worth anything from 1-2.5 percent so you should calculate that onto your offer. As in if you are offering him 340, without fees, your 'real' offer to him is 347. Cos you'll be saving him 7.

freida

Also if you are still paying rent for the 3/4 months while the sale goes thru, that's another 4-6 grand in his pocket.

alastair

dori_dormer wrote: »

If he has already signed with the estate agent hell owe the fees no matter who he sells to in the next 6 months.

The fees are worth anything from 1-2.5 percent so you should calculate that onto your offer. As in if you are offering him 340, without fees, your 'real' offer to him is 347. Cos you'll be saving him 7.

It won't be worth 347k, but it will be worth a real 340k.

Oeufmerf

Yeah - very good point.

@alastair - what would you advice be on talking around the 0.7% rise in house prices that was reported yesterday? I know this will come up and I want to be able to counter it.

alastair

Oeufmerf wrote: »

Yeah - very good point.

@alastair - what would you advice be on talking around the 0.7% rise in house prices that was reported yesterday? I know this will come up and I want to be able to counter it.

I doubt you can dissuade the seller if they think they can achieve a particular price, but the price increase in Dublin houses is only 0.6% for the month June-to-July (apartment price increases were a bit higher), which levelled out a similar price fall for the preceding two months. In reality Dublin house prices have been level since the summer began, and presumably when the vendor got their valuation.

I'd run with the cost benefits of your offer as a direct buyer, and, as mentioned above, the continued rent you'll provide through the whole process. They're your bargaining chips - for whatever leverage they offer.

Qualitymark

The advantage for your landlord if he sells directly to you is that he saves paying an estate agent's fee of between 1% and 2.5% commission on the price - the valuation was free - and saves months of having people going through the house, having to have keys available, having his property empty, dealing with sometimes notionally honest estate agents, etc.

goodies

Hello there...we were in very similar situation to yourself last year but in a different part of the country. We loved the house and had moved our family 5 times in terrible uncertain rental conditions for previous 3 years. We went at the plan with military presicion. It was a very stressful time. Our house was valued by our es at 245,000 but owners valuation was at 320,000. We ended settling at 285,000.

We got an independent valuation and invited the owners around for tea and had a conversation planned and rehearsed. We highlighted differences between the house and others in the area and bigged ourselves up as much as possible in terms of being ready to go with mortgage approval and deposit (the new 20% rule was just coming on stream so we used that to highlight the speed needed to close at the time). Like yourselves we highlighted the positives of the straight sale with no need for estate agents comission or protracted viewings and problems. We also agreed to buy some of the contents seperately.

The sale nearly fell through at a number of points and we made ourselves believe that this could happen right to the last minute. I totally understand that sellers want the best possible price for their house (we too have sold in recent years and lost out). I f you want to pm me I am happy to talk further details. I completely understand the emotional attachment of renting a place you would like to own and the uncertainty you are feeling right now. Best of luck with it all....

Qualitymark

The banks may also be a factor, of course; neighbours of mine wanted to buy the house they were renting, but it's in negative equity and the bank wouldn't let the owners sell it for several years more, when, I assume the bank assumes, the value will have risen.

hanna200

Qualitymark wrote: »

The banks may also be a factor, of course; neighbours of mine wanted to buy the house they were renting, but it's in negative equity and the bank wouldn't let the owners sell it for several years more, when, I assume the bank assumes, [the value will have risen].

read: meaning several years of repayments

Murt10

EA tells seller he can get near 400k. Gets the business based on this. Leaves the house on his books for 3 months. No offers near the asking price. Tells seller market has softened, banks are not giving loans, blah, blah, blah.

Tells seller that in order to make a sale he will have to lower price. No skin off his nose. Goes back to seller and asks for the price to be lowered again and gets a sale.

He knew that he was never going to achieve the asking price unless there was a desperate buyer or a large increase in housing prices in general, but as I said, he doesn't care. He got the sale. Even if the seller took the house off him, he would still mug the seller for advertising costs etc. So he's still quids in.

davo10

Qualitymark wrote: »

The advantage for your landlord if he sells directly to you is that he saves paying an estate agent's fee of between 1% and 2.5% commission on the price - the valuation was free - and saves months of having people going through the house, having to have keys available, having his property empty, dealing with sometimes notionally honest estate agents, etc.

If EA is already on the scene and it seems from ops posts that this is the case, the EA gets paid irrespective of whether the owner sells directly to a tenent or somebody else.

alastair

davo10 wrote: »

If EA is already on the scene and it seems from ops posts that this is the case, the EA gets paid irrespective of whether the owner sells directly to a tenent or somebody else.

That's not the case here. The agency will have a sole agent contract, so no other agency can sell it, and they will also have a legal entitlement to commission on any private sale made as a consequence of their marketing. But in the case of an offer made without any reference to the marketing of the property, they have no claim.

The potential buyer here knew about the sale of the property (from the vendor) ahead of the EA's marketing, and the offer they're making has nothing to do with that role. The EA would have no claim to a commission in those circumstances. All they would get is their promo costs (paid ahead of the campaign).

dori_dormer

alastair wrote: »

That's not the case here. The agency will have a sole agent contract, so no other agency can sell it, and they will also have a legal entitlement to commission on any private sale made as a consequence of their marketing. But in the case of an offer made without any reference to the marketing of the property, they have no claim.

The potential buyer here knew about the sale of the property (from the vendor) ahead of the EA's marketing, and the offer they're making has nothing to do with that role. The EA would have no claim to a commission in those circumstances. All they would get is their promo costs (paid ahead of the campaign).

We all know estate agents will pull every trick they can for their money, so I'd guess unless they can prove they knew beforehand, ie texts/ emails, then the estate agent could just as easily say they saw their house on daft, or in his window.

alastair

dori_dormer wrote: »

We all know estate agents will pull every trick they can for their money, so I'd guess unless they can prove they knew beforehand, ie texts/ emails, then the estate agent could just as easily say they saw their house on daft, or in his window.

The onus would be on the EA to prove that the tenants/buyers didn't know about the sale of the property until it was advertised by them. The only parties who could prove this would be the vendor and buyer, neither of whom are likely to support the EA's contention, which, let's be honest, wouldn't be plausible in this situation.

EA's contracts are clear enough about where they have claim and where they don't. If it's a direct contact between the vendor and client, without an agent involved, and no introduction via the EA's marketing, then no claim exists.

davo10

alastair wrote: »

The onus would be on the EA to prove that the tenants/buyers didn't know about the sale of the property until it was advertised by them. The only parties who could prove this would be the vendor and buyer, neither of whom are likely to support the EA's contention, which, let's be honest, wouldn't be plausible in this situation.

EA's contracts are clear enough about where they have claim and where they don't. If it's a direct contact between the vendor and client, without an agent involved, and no introduction via the EA's marketing, then no claim exists.

So if the vendor informed the EA that a bid was received after the tenent had been informed that an EA had valued it at 400k, would that do? has the op made a bid yet?

alastair

davo10 wrote: »

So if the vendor informed the EA that a bid was received after the tenent had been informed that an EA had valued it at 400k, would that do? has the op made a bid yet?

That wouldn't suffice.

The client wasn't introduced by an agent.
The client didn't negotiate with an agent.
The client doesn't need to make a bid ahead of the EA agreement. They're operating outside it's terms (no agent is involved), and not beholden to them.

davo10

alastair wrote: »

That wouldn't suffice.

The client wasn't introduced by an agent.
The client didn't negotiate with an agent.
The client doesn't need to make a bid ahead of the EA agreement. They're operating outside it's terms (no agent is involved), and not beholden to them.

Can you provide some link to back that up? What would stop any vendor telling an EA that he/she has a buyer who knocked on the door and the EA can take a hike? My understanding is that once the EA has been engaged, they are entitled to their percentage irrespective of whether the buyer went through them.

If it worked your way, no EA would ever get paid, the buyer would go directly to the seller and offer a price which cuts out the EA.

alastair

davo10 wrote: »

Can you provide some link to back that up? What would stop any vendor telling an EA that he/she has a buyer who knocked on the door and the EA can take a hike? My understanding is that once the EA has been engaged, they are entitled to their percentage irrespective of whether the buyer went through them.

If it worked your way, no EA would ever get paid, the buyer would go directly to the seller and offer a price which cuts out the EA.

Your understanding is wrong - refer to an agency agreement.

Not every seller wants to deal directly with a buyer, and, if a dispute went to court, and the buyer wasn't previously known to the seller, a judge is going to want to know how they came to discover the property was for sale without an agent of some sort to lead them to the vendor.

All you need to do is look at the terms of an EA sole agent contract/agreement - there's examples floating around the Internet. I'd reviewed mine, as I'm selling, and a neighbour approached me directly proposing a direct sale, so I checked out the situation.