How best to go about buying from our landlord?
June 4, 2017 12:51 PM Subscribe
Currently renting a townhouse in the DC area (NoVA) and was planning to buy in the next year or so in the same area. The landlord happened to mention this week that he might be interested in selling, particularly if it can be done in the next few months before our lease is up. What's the best way to go about this? Should we talk to a realtor esp. considering we're total real-estate newbies?
Positives:
- Well below what we had planned to spend (comps on Zillow seem to be ~$400k – 450k, was planning to spend up to $550k – 600k).
- No moving-related hassle. Also could poss. save money on moving + commissions?
- House in excellent condition (landlord is local and very proactive. He also remodeled recently + replaced the roof last year)
- Great location, rather suburban but still reasonably walkable.
- Potentially a good rental property (there’s a chance I’ll eventually do a 2-3 year overseas stint for my job so this is a big plus).
Negatives:
- A tad on the small side – it’s big enough for us (we’re DINKs and don’t need that much space) but storage space is limited. Also no garage, not a deal-breaker but having one would be nice.
- Not our “dream home” (that would be a bungalow or mid-century house in the inner suburbs) but I also know that houses like that around here are WAY over our budget (or need extensive renovations) and sell quickly.
Questions:
1. Should we still talk to a realtor? We’re total newbies here - I’ve only been through the home-buying process once (very long time ago), wife is a first-time buyer. We were very happy with the realtor that helped us find this rental and had planned to talk to him this summer to begin discussing financing, etc and maybe have him show us a few properties to see what our money could buy us. Would be nice to know our options but I’m worried about locking into a contract with him if the owner wants to avoid commissions.
2. If not, how do we go about this? Owner only mentioned it in passing, he hasn't made a formal offer yet (he's still deciding if he wants to sell). FWIW we have good credit and plan to put 20% down.
Positives:
- Well below what we had planned to spend (comps on Zillow seem to be ~$400k – 450k, was planning to spend up to $550k – 600k).
- No moving-related hassle. Also could poss. save money on moving + commissions?
- House in excellent condition (landlord is local and very proactive. He also remodeled recently + replaced the roof last year)
- Great location, rather suburban but still reasonably walkable.
- Potentially a good rental property (there’s a chance I’ll eventually do a 2-3 year overseas stint for my job so this is a big plus).
Negatives:
- A tad on the small side – it’s big enough for us (we’re DINKs and don’t need that much space) but storage space is limited. Also no garage, not a deal-breaker but having one would be nice.
- Not our “dream home” (that would be a bungalow or mid-century house in the inner suburbs) but I also know that houses like that around here are WAY over our budget (or need extensive renovations) and sell quickly.
Questions:
1. Should we still talk to a realtor? We’re total newbies here - I’ve only been through the home-buying process once (very long time ago), wife is a first-time buyer. We were very happy with the realtor that helped us find this rental and had planned to talk to him this summer to begin discussing financing, etc and maybe have him show us a few properties to see what our money could buy us. Would be nice to know our options but I’m worried about locking into a contract with him if the owner wants to avoid commissions.
2. If not, how do we go about this? Owner only mentioned it in passing, he hasn't made a formal offer yet (he's still deciding if he wants to sell). FWIW we have good credit and plan to put 20% down.
It would be worthwhile to look at other houses to see what you like and what they currently sell for. You can do this on your own during open houses, or work with realtor to show you around (although, I wouldn't mention to the realtor that you landlord is considering selling). Since your landlord doesn't seem to be in a hurry, you don't need to be either, but spend some time to get a good idea on what is available in your price range. Maybe your current place ends up being perfect for the price, maybe you'll see something else that you prefer.
If you do decide to buy your current place from the landlord, no realtor is needed (saving the 6% commission). Work with an attorney to handle the contracts.
posted by ShooBoo at 1:09 PM on June 4, 2017 [1 favorite]
If you do decide to buy your current place from the landlord, no realtor is needed (saving the 6% commission). Work with an attorney to handle the contracts.
posted by ShooBoo at 1:09 PM on June 4, 2017 [1 favorite]
As long as you are aware of the market/comps and are OK with the negatives, I see absolutely no reason to bring realtor (I'll be damned before I capitalize that word*) into the process. I would tell the owner about your interest, inquire about asking price, and go from there.
*I have been a buyer 3 times, seller twice, in the process worked with 5 realtors. One was truly excellent, i.e., he loved houses, understood construction, and had a thorough understanding of the local market. My respect for the others ranges from half-ounce to negative numbers.
posted by she's not there at 1:43 PM on June 4, 2017 [3 favorites]
*I have been a buyer 3 times, seller twice, in the process worked with 5 realtors. One was truly excellent, i.e., he loved houses, understood construction, and had a thorough understanding of the local market. My respect for the others ranges from half-ounce to negative numbers.
posted by she's not there at 1:43 PM on June 4, 2017 [3 favorites]
Well below what we had planned to spend (comps on Zillow seem to be ~$400k – 450k)
Yeah. Zillow "zestimates" are worth about as much as the pixels they are printed on. And, more importantly, it's not what your landlord thinks the property is worth.
Unless he's already told you a price, perpare for him to ask way more than you believe he will ask. Your next step will then be to get a real appraisal of the property and prepare your counteroffer, if you think you're in the ballpark.
And like ShooBoo says, shop around. There's probably lots of nice townhouses in your expected range and you really need to weigh if $5-10K of moving expense is really worth losing out on a larger and more practical property for the same amount of equity.
posted by JoeZydeco at 3:20 PM on June 4, 2017 [3 favorites]
Yeah. Zillow "zestimates" are worth about as much as the pixels they are printed on. And, more importantly, it's not what your landlord thinks the property is worth.
Unless he's already told you a price, perpare for him to ask way more than you believe he will ask. Your next step will then be to get a real appraisal of the property and prepare your counteroffer, if you think you're in the ballpark.
And like ShooBoo says, shop around. There's probably lots of nice townhouses in your expected range and you really need to weigh if $5-10K of moving expense is really worth losing out on a larger and more practical property for the same amount of equity.
posted by JoeZydeco at 3:20 PM on June 4, 2017 [3 favorites]
Having been through this scenario twice (from the landlord side), buying from your landlord SOUNDS like it's way easier than doing a standard purchase, but there can be BIG FEELINGS that arise around so much money and you need to be prepared for things to get tense, and potentially for you to wind up not buying it AND not being able to rent from that landlord anymore. I didn't appreciate realtors either until I tried negotiating directly and OMG it's not fun. It might be easier to do a regular sale, is all I'm saying. Especially if you don't LOVE the place anyway.
posted by rabbitrabbit at 4:44 PM on June 4, 2017
posted by rabbitrabbit at 4:44 PM on June 4, 2017
Response by poster: Thanks all! Definitely giving me a lot to mull over.
Think we're going to look at a few other places (maybe check out some open houses) before deciding on anything. If we decide to go ahead I'm leaning towards reaching out to the realtor we used previously and see if he'd be open to helping arrange the paperwork (or at least reviewing everything and making sure we cover our bases) for some sort of reduced commission or flat fee.
Rabbit rabbit, you do have a point - my last sale (as a long-distance landlord, wasn't sold to the tenant) was far messier than I expected. Having an agent definitely helped.
posted by photo guy at 5:19 PM on June 4, 2017
Think we're going to look at a few other places (maybe check out some open houses) before deciding on anything. If we decide to go ahead I'm leaning towards reaching out to the realtor we used previously and see if he'd be open to helping arrange the paperwork (or at least reviewing everything and making sure we cover our bases) for some sort of reduced commission or flat fee.
Rabbit rabbit, you do have a point - my last sale (as a long-distance landlord, wasn't sold to the tenant) was far messier than I expected. Having an agent definitely helped.
posted by photo guy at 5:19 PM on June 4, 2017
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posted by Lyn Never at 1:00 PM on June 4, 2017 [8 favorites]