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I was letting out my former home to a friend who left the property suddenly and in a bit of a mess. I intended to carry on letting it out and got agencies round who were very happy to take it onto their books and estimate rent at £400 to £425 pcm. After doing all the work necessary to get it presentable again I decided that letting was not really for me and is not conducive to my personal circumstances. I have personally had plenty of rental interest but wish to sell the property while it is empty.
It is an ex LA 2 bed house in Oldham that I bought at a discount years ago but I am mortgaged to £50k on it (partly due to remortgaging in the past to clear debts). Estate Agents valued it at £70k. It is possible to buy 2 bed terraced houses in Oldham quite cheaply. Mine is 1940s - a lot younger than the traditional terraced houses in Oldham and, unlike those, benefits from front and rear gardens. However, given that it is an ex council house and in a mediocre part of Oldham, I am not convinced that a traditional homebuyer would want to buy it and feel it is more of an investment property that would suit a number of tenants especially as social housing waiting lists are getting ever longer.
I want a quick sale and as such I am currently selling it through a 'modern day' auction which is supposed to be the catch all between the traditional auction method as it allows up to 56 days to acquire the funding and complete the sale - instead of having to do it in one day. I put a reserve on it at £62,500 which gained a starting price of £56,000. I told the agents that I would seriously consider anything around £60k so even if the bidding falls short of the reserve, there is scope for negotion. I have to say the estate agents got me quite giddy that I might actually stand to make a boost to my savings on the sale but now the auction company are making me nervous as their expectation is that the property should have had a range of viewings in the first 2 weeks and are already talking about reducing the price further. I was not worried as I know it is not an especially remarkable property and there is a glut of 2 bed terraces in mediocre areas of Oldham so I did not feel it would be snapped up but their comments are causing me concern. I do not how qualified their comments are given they are in Newcastle - is it a lack of knowledge of local markets or is based on knowledge of their selling process?
It has been on rightmove for about 2 weeks but has not attracted any viewings as yet.
This system of selling though does require a non returnable deposit upon closing of the bids. Could this be off putting? Does the 56 days completion time phase really open up the market as if buyers have to pay a deposit but still need the time to acquire the funding - then can it be guaranteed they will get it and if not are they likely to risk it?
I am starting to query whether I picked the right method of sale and wonder:
a. should I sell it on the traditional market thereby opening up to a wider audience but risking it taking ages while I pay mortgage, council tax etc. and then have the high estate agent fees?
b. sell it at a traditional auction but risk it going for a very low price?
I have thought about selling while tenanted to relieve me of the burden of the expenses in the meantime but after asking on here it seems this idea is fraught with pitfalls. (I have also received some curious offers on the property both privately and from an investor that involve renting it out then buying it later - I will post separately about these).
Any thoughts from property investors here as to your preferred methods of purchase of investment properties and any potential pitfalls with mine?
I would be very wary of people offering to rent your property then buy it later.I am struggling to understand why you don't just put it on with a local agent and expose it to the widest possible audience.You may have someone not in a chain who wants to move in quickly. Don't make assumptions!You do not pay the estate agent until completion, so you are not fronting any fees, like you do in a traditional auction. Negotiate on the fees. Many agents will accept 1%. Make sure you price it fairly to get initial interest. Work with an agent who has a track record of selling in the area. You can determine this by ticking the "sold subject to contract" box on the Rightmove search to find out who is dominating the area for sales. (Search on a simliar property type and price point to yours).Many agents have investor lists which they contact with suitable properties prior to even putting them on the open market.I do feel you are over-analysing and over-complicating matters.Just get it marketed for sale. If you have to borrow off family to pay the mortgage etc, they know they will be repaid once the sale goes through.Best of luck!
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
Thanks Vanessa. I guess there's a reason some of us are not cut out for property investing. I worry because I feel the old house could seriously affect my new found security. I am not sure I would know who to approach to tide me over in my close circle I am afraid. The risk for me is spending my limited savings on the mortgage etc whilst it is on the market and ultimately not regaining the difference in the sale price. The trad route of sale might serve me best as you say along with retaining the option of (reluctantly) re-letting as you have previously pointed out.
I found the listing (presuming the house is number 370)
The listing would put me off - it talks more about the way the auction works than about the house. That theme continues in the brochure.
The combination of undisclosed reserve price, the reservation fee (is that part of the sale price or in addition?) and the mention of VAT could easily put potential buyers off.
A 'traditional' listing as mentioned by Vanessa would likely be more successful imo.
Thank you for going to such trouble. Yes you found my house. Really interesting comments. I will let the auction run its course then pull out I think and try the trad route. One benefit I saw was that I was setting the price low and the market decides. They can sometimes go over the reserve. I will really have to give my sale price some thought I suppose in the normal route.
Why not rent it out now and then putting it up for sale at an auction with a reserve of say 60. That way you have speed of a normal auction sale but don't have to carry it in the mean time.
Thank you Rassie
I had posted this question on a separate thread; should I rent it out while trying to sell and the consensus was it is a tricky one to do it that way. I will just see how (if) it goes at auction and take it from there. Still keeping getting requests to let it out though!
Well despite the worrying I have done since the auction company called. the house had a viewing today. From the description, I suspect it was someone who had expressed interest in it before it went officially on sale. Interestingly, the estate agent said the viewer did seem confused by the auction sale method.
I will just see how it pans out.
I think you should go for a normal auction. I have just been trying to buy at a local one in Manchester. There were lots of people at all the viewings I went to and the house I was most interested in went for £17,000 over the guide price; way above my budget. Unsold lots all seemed to be the more expensive ones or flats. The low cost terraces all sold well, even the ones in terrible condition.
Thank you Alison, that is very much food for thought especially as you know the area and the type of property. It is so easy to get panicky when it is all new to you.
You can learn a lot by looking through the results pages on auctioneers websites. You can see their catalogue and what each property sold for. That will give you a feel for how similar properties to yours sell at different auctions. Try not to get too stressed out about these things. I know that's easier said than done, but auctions are interesting and the auctioneer will help you set the guide and reserve prices so the worst thing that can happen is that it doesn't sell. Even then a lot of people trawl through the unsold lots after the auction and you may get a post-auction offer.