How to Sell an HMO the easy way.
We’ve bought, sold and brokered over 200 HMOs across the UK, and have seen many investors get it right, and an equal number get it wrong. If you are looking to Sell an HMO property we have put together this short guide on how best to go about it.
Follow these simple steps to give you the maximum chance of success at the maximum price.
1 – Consider the HMO Sales Pricing
Different types of HMO command different types of pricing.
- Smaller HMOs 3-6 Beds typically command residential pricing, location-dependent
- Medium HMOs 6 – 9 Beds typically command income-based valuations, location dependent.
- Large (9 beds +) can command income-based valuations.
2 – Get the HMO Sales Documents in order early
When you sell an HMO, the thing that gives potential HMO buyers the confidence to make an offer, is a full suite of documents relating to the HMO property, total clarity. To sell an HMO for the maximum possible value, get the following documents available and ready for potential buyers from the outset.
- HMO Floor Plan
- Building Regulation Certificate
- HMO Planning Documentation
- Fire Alarm Certificate
- HMO Licence Certificate
- Electrical Safety Certificate
- RICS Valuation (if available)
- High-Resolution Marketing Photos
- Rental Schedule
- Management Contract
In the cases when these documents suite is incomplete, or only show up during the legal conveyancing phase, typically more questions are raised, uncertainty occurs, and the chances of a successful transaction decrease.
Top Tip: In HMO property sales, maximum transparency leads to maximum price and maximum speed.
3 – Picking the Right HMO Agent to Help Sell Your HMO
Picking an agent who fully understands HMOs from start to finish is crucial in the HMO sale process.
HMO properties are complex in financing, regulation, planning, compliance and operations. To be able to speak confidently to potential buyers about an HMO property any agent must fully understand the everything about HMOs.
Top tip: Pick an HMO specialist agent, or at very least qualify how much an agent understands HMOs. Local estate agents can be great but have a significantly lower success rate when it comes to selling HMOs than specialist HMO sales agents.
Our recommended company is AgentHMO.co.uk the UK’s No1 HMO Sales Agent. They have nationwide coverage and also are absolute specialists at selling HMOs.
They are a nationwide HMO Sales Only Agent with a huge list of private HMO buyers and also access to the open market, Rightmove, Zoopla, etc. is a good place to start.
Failing that you can view HMO specific buyers or agents listed in our directory or drop us a line using the form below and we should be able to point you in the right direction.
4 – Select the Right HMO Buyer.
When looking to Sell an HMO, selecting a buyer for an HMO, it is important to make sure they are fully qualified to purchase the property.
HMO property buyers that are prequalified with the correct HMO finance, who understand the intricacies of HMOs and can who actually transact, are the favoured option for maximising the chances of a sale transacting.
Questions to ask potential buyers:
- Do you own any HMOs currently?
- Do you self manage or use an agent?
- What HMO lender will you use to raise the mortgage?
These questions will help give an indication of how suitable and how prepared the potential buyer is to make the purchase.
Always check the buyer has adequate HMO financing, via cash or a specialist HMO Mortgage.
Uneducated HMO property buyers will typically offer slightly more money to buy an HMO property but have a 50% lower chance of actually transacting the property, so best to understand this early on.
Top tip: Always request to see proof of funds and decision in principle before accepting any offer.
5 – Set the HMO Sales Transaction Expectations
When properly prepared and managed, an HMO transaction should take no longer than 8 weeks, and could take as little as 4 weeks.
Once the best buyer has been selected, set the expectations of the transaction immediately, including terms of the sale, and the key time frames. If the buyer declines the expectations or terms, then a renegotiation may be required or simply another buyer found.
Recommended time frames:
- Valuation Instruction Date – within 48 hours of sale being agreed, assuming a decision in principle already in place
- Property Valuation Date – within 14 days of valuation instruction. If they have chosen a lender that is slow or backed up, consider offering the property to another buyer.
- Solicitor Instruction Date – within 48 hours of sale being agreed. The
sellers’solicitor should send out a contract as soon as is practicable to avoid any delays. Some buyers solicitors won’t start work on the legal side of things until the valuation has come back, but to increase efficiency we recommend commencing the legal works without delay.
Top tip: Use a sales progression company. Normally they cost approximately £250 and only get paid if a property transacts. They maintain communication between all parties and normally speed up a sale by an average of 2 weeks, and increase the likelihood of a successful property transaction by approximately 50%.
6. Manage the HMO Valuation.
Valuations are a common sticking point when it comes to Sell an HMO so make the property and documentation is fully prepared in advance.
Have all documentation printed all and ready to be handed over. The valuer may not need all of it. Only give them what is asked for, no more.
Before the day
- Let the tenants know access to their accommodation will be required
- Make sure the property has had any essential maintenance.
- Instruct a pre valuation clean and clear program so the property is shown in its best possible light.
On the day
- Arrive at the property early.
- Remind all tenants that access will be required.
- Clear away any remaining rubbish/clutter/bikes/washing up.
- Greet the valuer with a smile and relax.
- Maintain good communication until exchange/completion.
HMO property sales are more complex than normal residential sales, and so require more attention to get them completed and over the line.
Top Tip: From the valuation instruction to completion, great communication between all parties will ensure the maximum chances of a successful HMO property transaction.