How to purchase with tenants in situ?

The question you should be asking is "why would a property that is let out to Tenant so has an income from day 1 be sold at BMV?"

Even if the LL wants out quick a good property with a decent yield & a good paying Tenant will command MV if not more.

AS for BMV of course it exists - If you have an independent survey carried out which Values the Property at X but you manage to secure it at 80 or 90% of X then that is BMV.

Reply to the comment left by John Mac at 08/01/2021 - 15:39No it is not BMV, it is below the surveyor's estimate of the market value.

Reply to the comment left by Seething Landlord at 08/01/2021 - 16:19
If a Surveyor (I'm talking about a RICS) inspects a Property, does their DD with recent sold prices etc etc & Values a Property X then that is its Value NOT an Estimate. Its then generally the Value that a lender lends against.

Reply to the comment left by John Mac at 08/01/2021 - 16:27
That's right. A Red Book valuation gives The Value. There are legally accepted tolerances which depend on the type of property but for most standard build residential stock that would be +/-5% maximum. It will be greater for the more unusual.

A Red Book valuation is based on an acceptable marketing period (some banks specify this and this often redues the value).

BMV generally suggests that an owner is looking to sell without going fully to the market, i.e. take the cash and go. It happens occasionally, but we have a mature market in the UK with defined legal processes that take time. For a UK sale to be legal there has to be proper documentation.

People on these forums often get confused about BMV, sugesting that a cheap property with issues is BMV, when really it's just being sold at a value to reflect those issues (whatever they may be - condition, planning, access, etc.).

Reply to the comment left by Graham Bowcock at 08/01/2021 - 16:37
I am not disputing that a mortgage lender will lend based on a surveyor's assessment of the value that a property is likely to achieve if offered for sale on the open market. That does not however establish the market value, which can only ever be what somebody is willing to pay for it. That is why it is called market value, it's the value that can be achieved in the market.
If somebody wants a quick sale they are in a different market from another person who can wait 12 months for a purchaser to come along but what they achieve is still the value established by that particular market.

Reply to the comment left by Derek t at 08/01/2021 - 09:22
Hi, i am looking to sell my one rented property with tenants in situ, as you have sold 20 properties I just wondered what is the best way to do this? Do you recommend any agencies/companies? I am not sure where to start! Many thanks

Reply to the comment left by ClairG at 09/01/2021 - 08:18
I used a local estate agent that I’ve used for a while and got them to market accordingly for investors only. Some of the properties that were a whole block were sold via an auction house. The agent has just secured a sale on a further block of three and we had it valued yesterday so fingers crossed that goes through. I also made all the tenants aware that the properties were being sold to another landlord and all the tenants have been assured they are not going to be evicted when the sale completes.
Good luck with the sale

Dear Claire,
My experience is if I were selling I would avoid the high street names, they can sell but lack the knowledge to handle a commercial transaction. Find yourself a specialist agent in your area with experience of handling commercial property there are also national web based companies that claim to sell portfolo properties too, but I have no experience of them.
Thoroughly prepare all your documentation, do not wait for the conveyancing process. Present your documents to the selling agent this will give credance to the busiiness sale.

How is a sitting tenant a commercial transaction? This is dealt with by the solicitors not the estate agency. The tenancy is transferred with all checks and balances. Re the comment about a bad tenant, due diligence will discover that. That said, do find a good local agency.

I bought a property 8 years ago with a tenant in situ. It didn't seem like much of a risk as he was on a 6 month rolling tenancy, which I renewed in my name as landlord on completion of the purchase. He has been, and still is, a brilliant tenant. However, the guy I bought the house from told me that the rent he was receiving for it was £100 a month more than it actually was, but as it was a verbal statement I had no come back on him. So if buying with a tenant in situ I strongly recommend asking to see evidence of the rent actually being paid.