How much discount for a house purchase with cash?
Discussion
Nope not a "how rich I am" kind of statement as it's a bit more complicated than that:
Property is a Victorian house with A1 business premises on the ground, B1 workshop in what was the garden and 2 bed flat above. Being sold by the company that owned/operated the A1 shop.
All clear so far.
But 10 years ago the A1 premises was (badly) converted into a 1 bed flat and council tax payable as a 1 bed flat.
Currently un-mortgagable (real word?) as it's A) not commercial anymore as it's effective 2 flats + B1 workshop B) not residential as it doesn't have planning for the 1 bed ground floor conversion and is still A1 on the planning register.
So up for £150k with local estate agent. Company accepted £130k from a couple unaware of the issues and subsequent problem with mortgage.
I've got access to the money turn this into a cash purchase. Deal with the planning issues, rip both flats apart and complete refurb (rewire, heating, proper conversion etc) and then convert into 2 leases, and remortgage on BTL.
Thinking of going in at 110k. Views?
Obviously having to sell to a cash purchaser severely limits the vendors intended market - but how much can I leverage on this? Is there a prescribed formula for applying a discount?
All views appreciated.
Property is a Victorian house with A1 business premises on the ground, B1 workshop in what was the garden and 2 bed flat above. Being sold by the company that owned/operated the A1 shop.
All clear so far.
But 10 years ago the A1 premises was (badly) converted into a 1 bed flat and council tax payable as a 1 bed flat.
Currently un-mortgagable (real word?) as it's A) not commercial anymore as it's effective 2 flats + B1 workshop B) not residential as it doesn't have planning for the 1 bed ground floor conversion and is still A1 on the planning register.
So up for £150k with local estate agent. Company accepted £130k from a couple unaware of the issues and subsequent problem with mortgage.
I've got access to the money turn this into a cash purchase. Deal with the planning issues, rip both flats apart and complete refurb (rewire, heating, proper conversion etc) and then convert into 2 leases, and remortgage on BTL.
Thinking of going in at 110k. Views?
Obviously having to sell to a cash purchaser severely limits the vendors intended market - but how much can I leverage on this? Is there a prescribed formula for applying a discount?
All views appreciated.
It all comes down to how desperate the vendor is to sell. If they need to sell ASAP then a cash offer will be very attractive and you should be able to negotiate hard, but if they aren't in a rush to sell then your position won't make much difference.
No harm in making a cheeky offer, the worst that can happen is that they turn it down and then you have a choice whether you decide to up it or not. You could always run it past the agent to see how they react, in the current climate most agents will just want the place to sell so should be a little more open than in the bad old days.
No harm in making a cheeky offer, the worst that can happen is that they turn it down and then you have a choice whether you decide to up it or not. You could always run it past the agent to see how they react, in the current climate most agents will just want the place to sell so should be a little more open than in the bad old days.
I don't suppose the fact people can't get a mortgage on it limits who can buy it that much as if you have a mortgage free house already then you could borrow against that for it and still be a 'cash' buyer. Just because the property will not qualify for a loan does not mean that finance can't be raised against it from another mortgagable property. Sounds like a bit of a mess to me, just be careful!!!
In some circumstances i would prefer to sell to a family with a small mortgage - less chance that they will f*ck with me around near exchange time. Or to put it another way a couple grand spent on mortgage fees and survey is an indicator that they will not pull out whereas the cash buyer has got the upper hand. So to answer your question - anything from +X% to -X%!
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