? Assisted Sale

Suzie 88 · 28-05-2010, 06:47 PM

I've been to see a nice couple today who are selling due to financial problems.

Here's the situation:

5 bed detached in a nice area but needs a bit of TLC.

Owing on mortgage:£188k (no arrears)
2 charges on mortgage:£27k, so total of £215k owing (West Bromich BS)
No ERP
They were not sure of the interest rate but will get back to me, they came off a fixed rate 2 years ago and have been paying interest only since at
£975 per month. (ouch!)

It's on the market for £229,950 which is slightly over-priced in comparison with similar props in same area which are in much better condition and on market from £230-£270k

Rental val is £800-£900 per month so no good for a LO

I spoke to Deep who suggested an Assisted Sale, tidy it up, offer them 215k to pay off debts and 30% of any profit over the 215.

They can't afford to spend a lot of money refurbing.

Can anyone elaborate on this please? Just want to be able to suggest something to help them?

Thanks!

Suzie

Parmdeep Vadesha · 31-05-2010, 10:37 AM

Hi Sue,

This one is too tight to make AS work as it's probably worth about the same as the debt they need to pay off) but on meatier deals you need to check that the valuation stacks first by checking with local agents, doing your research etc. Assuming it does, then lets say you got the deal from a leaflet drop...

Instead of buying the property as you normally would, or passing it to another investor for example £4k fee, you offer to help the seller get a much better price on the open market by sorting out the correct agent to sell it, giving the agent a bonus for selling quickly at the right price, offering incentives like 5% gifted deposit, stamp paid, holding an open house etc. You would then split the uplift with the seller do assuming 30% BMV meant £30k equity on a £100k house you might earn £4k for passing to an investor. Doing assisted sale at 5% off MV (= £95k selling price on open market) you might make £12k-£15k or more for your part. The seller also gets more then expected and everyone is happy. The trick is to know how to market and present the property properly so that it appeals to the correct target market. Most people do not have the time, knowledge or money and estage agents are not going to do much more than suggest things they can do. You take a more proactive role (and use option agreement so you put no money in apart from staging costs) and it's a nice business

Suzie 88 · 31-05-2010, 05:23 PM

Quote:

Originally Posted by Parmdeep Vadesha

Hi Sue,

This one is too tight to make AS work as it's probably worth about the same as the debt they need to pay off) but on meatier deals you need to check that the valuation stacks first by checking with local agents, doing your research etc. Assuming it does, then lets say you got the deal from a leaflet drop...

Instead of buying the property as you normally would, or passing it to another investor for example £4k fee, you offer to help the seller get a much better price on the open market by sorting out the correct agent to sell it, giving the agent a bonus for selling quickly at the right price, offering incentives like 5% gifted deposit, stamp paid, holding an open house etc. You would then split the uplift with the seller do assuming 30% BMV meant £30k equity on a £100k house you might earn £4k for passing to an investor. Doing assisted sale at 5% off MV (= £95k selling price on open market) you might make £12k-£15k or more for your part. The seller also gets more then expected and everyone is happy. The trick is to know how to market and present the property properly so that it appeals to the correct target market. Most people do not have the time, knowledge or money and estage agents are not going to do much more than suggest things they can do. You take a more proactive role (and use option agreement so you put no money in apart from staging costs) and it's a nice business

Thanks Deep, yes it does look very tight doesn't it? What can these people do though, apart from waiting for the inevitable repossession?

I know I already spoke to you about this but I take it in better when it's written down lol so thanks, that's much clearer!

Looking forward to next week, see you then, take care

Parmdeep Vadesha · 31-05-2010, 09:23 PM

NP. These assisted sales are going to become more popular now the market is picking up again. A lot of property traders I know are adopting this model now

Rob West · 31-05-2010, 10:17 PM

What a great idea. That's something I might add to the list of stratergies. I've done around a dozen refurbs and looked at probably over 100 properties in my time. The amount of places that are poorly presented is unbelievable. Many of them only want a tidy up and a bit of paint here and there. I reckon for under £500 you could work wonders and put another 10-15K no problem.

Definately one to try. Like you say, everybody wins.

Oisin Costello · 02-09-2010, 10:20 AM

i'm looking for the exact same document, the client is also waiting for it, oisin.

Suzie 88 · 02-09-2010, 11:46 AM

Hi guys

Get the ''heads of terms" signed stating what you've agreed, send it to your solicitor, he will then draw up the Option Agreement.

The Option Agreement will state the split of the proceeds and everyone will get their share through this, the solicitor will sort all this out. This is a legal document and as far as I know you don't need anything else? (someone correct me if I'm wrong!)

Good luck!

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