Discussion
Spent the last two weeks sniffing over an expensive but potentially excellent single family residential development opportunity (aka very large house) being sold by an educational institution privately known to be in need of cash.
I engaged in some slowplay, offering substantially under the guide (0.94 to start with, increasing to 0.96). The property is unmortgageable as is and needs the best part of half a mill spending on it to do it a proper job. The money for this is in hand.
It may help to know that I am not a developer but looking to create my perfect family home for 20 years plus, Brexit, Corbyn and Trump be damned.
Unfortunately some other moneybags has just toddled up and offered full asking on first viewing.
Having got over the disappointment (when the phone rang I thought the agent might be calling me to tell me 0.96x had been accepted) I see we're now in a different game altogether. Previously I was testing the school's desperation and now I'm in a fight. Hey ho.
I don't need to do anything before Monday morning but I am tempted to forego piddling around with babysteps at 1.02 and 1.04, and just blast in at 1.06 or 1.07x the guide price, which is where I would probably max out. There's a key number around the point at which the total transaction cost just to buy the building get to 7 figures. I don't want to be the party trying to decide whether or not to hurdle that barrier.
Some advice I have received says to hold fire, to see if the new cash bidder is kosher and then try to gazump later on, but there won't be much time between offer being accepted and exchange most likely.
I'm also aware that I am quite emotional and not very calm but after a year or more of looking we're very eager to get rolling on something for the future.
Would you go for the Big Swing here or keep going on tip-toes waiting for BAFO or sealed bids?
I engaged in some slowplay, offering substantially under the guide (0.94 to start with, increasing to 0.96). The property is unmortgageable as is and needs the best part of half a mill spending on it to do it a proper job. The money for this is in hand.
It may help to know that I am not a developer but looking to create my perfect family home for 20 years plus, Brexit, Corbyn and Trump be damned.
Unfortunately some other moneybags has just toddled up and offered full asking on first viewing.
Having got over the disappointment (when the phone rang I thought the agent might be calling me to tell me 0.96x had been accepted) I see we're now in a different game altogether. Previously I was testing the school's desperation and now I'm in a fight. Hey ho.
I don't need to do anything before Monday morning but I am tempted to forego piddling around with babysteps at 1.02 and 1.04, and just blast in at 1.06 or 1.07x the guide price, which is where I would probably max out. There's a key number around the point at which the total transaction cost just to buy the building get to 7 figures. I don't want to be the party trying to decide whether or not to hurdle that barrier.
Some advice I have received says to hold fire, to see if the new cash bidder is kosher and then try to gazump later on, but there won't be much time between offer being accepted and exchange most likely.
I'm also aware that I am quite emotional and not very calm but after a year or more of looking we're very eager to get rolling on something for the future.
Would you go for the Big Swing here or keep going on tip-toes waiting for BAFO or sealed bids?
A big swing might frighten off the other bidder...
I guess its difficult to measure without figures but is the .02 or .04 that you might save worth more than the disappointment if you lost the property?
In our current house we had to go more than I wanted to pay as Mrs O did not like anything else on the market at the time. With some time/effort/spend on the property, we are now selling for 6 figures more than we paid, 5.5 years later!
Good luck with it
I guess its difficult to measure without figures but is the .02 or .04 that you might save worth more than the disappointment if you lost the property?
In our current house we had to go more than I wanted to pay as Mrs O did not like anything else on the market at the time. With some time/effort/spend on the property, we are now selling for 6 figures more than we paid, 5.5 years later!
Good luck with it
If it's any help I am in the process of selling an office that is suitable for development.
We had 3 interested parties who kept inching the price up (starting at about 75% of the asking)
In the end I got bored and asked for sealed bids. They all went over asking in a pretty major way.
So my point is you may be best off trying to secure with a strong bid now rather than going to sealed bids.
We had 3 interested parties who kept inching the price up (starting at about 75% of the asking)
In the end I got bored and asked for sealed bids. They all went over asking in a pretty major way.
So my point is you may be best off trying to secure with a strong bid now rather than going to sealed bids.
Thanks. I used to make money trying to be disciplined and acutely price-sensitive in situations where others lost their head but it's just so difficult in property. I had the collywobbles earlier in the week going up from 0.94 to 0.96 because the house needs so much work and I'm only interested in doing it to a high standard - no Sarah Beeny white-on-bland finishes and cost-cutting bathrooms, but now the adrenaline and aggressiveness of competition kicks in.
There will be other houses (we missed out on something in March and that felt like the end of the world) and the world might go to Hell in a handcart soon enough anyway, but I suppose we'll never come out on top without going a bit mad.
There will be other houses (we missed out on something in March and that felt like the end of the world) and the world might go to Hell in a handcart soon enough anyway, but I suppose we'll never come out on top without going a bit mad.
Zonergem said:
Thanks. I used to make money trying to be disciplined and acutely price-sensitive in situations where others lost their head but it's just so difficult in property. I had the collywobbles earlier in the week going up from 0.94 to 0.96 because the house needs so much work and I'm only interested in doing it to a high standard - no Sarah Beeny white-on-bland finishes and cost-cutting bathrooms, but now the adrenaline and aggressiveness of competition kicks in.
There will be other houses (we missed out on something in March and that felt like the end of the world) and the world might go to Hell in a handcart soon enough anyway, but I suppose we'll never come out on top without going a bit mad.
It's a tricky one, happens to me as soon as I bid another 'buyer' always seems to come into play. At asking price. There will be other houses (we missed out on something in March and that felt like the end of the world) and the world might go to Hell in a handcart soon enough anyway, but I suppose we'll never come out on top without going a bit mad.
The house we purchased last yr went to sealed bids, I know it'd had other viewings, saw the people as I was driving passed. We won, my bid was strong, maybe we could've got it cheaper. I'll never know, but it's the right place for us in the right location, we could afford it so no regrets.
Out of interest, if you don’t think there is another bidder, can you tell the agent that it’s more than you are looking to pay barring in mind the cost of refurbishment.
Then say your removing your previous offer, if you do it in person and the agent has a look of horror on their face they are probably making the other buyer up.
I guess it depends how much you want that particular place and if you think values will drop further after brexit etc.
Then say your removing your previous offer, if you do it in person and the agent has a look of horror on their face they are probably making the other buyer up.
I guess it depends how much you want that particular place and if you think values will drop further after brexit etc.
What do you know about the other party?
If they are a developer they will already know precisely the ceiling price for them and emotion is highly unlikely to come into it. Run your own development appraisal based on the highest density development realistically achievable and that will give you the price a developer will pay. Then decide whether or not you're willing &/or able to beat it.
If they are a developer they will already know precisely the ceiling price for them and emotion is highly unlikely to come into it. Run your own development appraisal based on the highest density development realistically achievable and that will give you the price a developer will pay. Then decide whether or not you're willing &/or able to beat it.
OP, we had the same situation. Thread on the ups and downs here. Might be worth a read as had good suggestions, and also documented the ups and downs.
https://www.pistonheads.com/gassing/topic.asp?h=0&...
We wanted the same as you, for the same reasons. We got it in the end, so take heart. Only thing I may say is depending on the seller, underhanded tactics may make you look unreliable. But we were buying out of probate, and you are buying from a business, so...
https://www.pistonheads.com/gassing/topic.asp?h=0&...
Best of luck. I know how emotional this can be.
https://www.pistonheads.com/gassing/topic.asp?h=0&...
We wanted the same as you, for the same reasons. We got it in the end, so take heart. Only thing I may say is depending on the seller, underhanded tactics may make you look unreliable. But we were buying out of probate, and you are buying from a business, so...
https://www.pistonheads.com/gassing/topic.asp?h=0&...
Best of luck. I know how emotional this can be.
If it were me I wouldn't overthink it , I'd just pay what it's worth to me and what I'm happy with . If you are already spending decent money on refurb what difference does a a bit extra on asking mean ? I'd put in a decent offer to start off with
If you like the house and can afford it just get the job done . I would also work out how much it would be worth after refurb with the added asking price , if you would make a decent profit then it's a no brainer
If you like the house and can afford it just get the job done . I would also work out how much it would be worth after refurb with the added asking price , if you would make a decent profit then it's a no brainer
I had similar.
Bid the asking price on the deadline day, was told on the Monday my bid was the lowest and did I want to increase it.
Just said good luck to them, I have the money available and hopefully so do the others .
2 weeks later got a call saying the executors wanted to take my offer as ( bulls
t mode ) they wanted it to go to a family 
Bid the asking price on the deadline day, was told on the Monday my bid was the lowest and did I want to increase it.
Just said good luck to them, I have the money available and hopefully so do the others .
2 weeks later got a call saying the executors wanted to take my offer as ( bulls
t mode ) they wanted it to go to a family Here is another way of looking at it (that depends on the other bidder existing)
You have been looking for more than a year
If this property has the potential to be your perfect family home for 20 years plus and you have the purchase price etc. + £500k for refurbs on hand, how close to being perfect is it?
If you had to spend, say, £300k of the £500k of the refurb money you have to secure the property, is it worth it? Could a £200k refurb suffice for long enough for you to replace the extra £300k spent on acquiring it & completing the full refurb compared to the 20+ years you expect to live there?
Maybe it isn't perfect enough to warrant that. Only you know.
A friend of mine lives in a house that was built in 1820 and has been for sale on the open market once, in 2010 - which is when my friend bought it. He paid 35% over asking to secure it. His view: 1. the asking price was too low and he paid it no real attention once it was clear that the market said it was worth more. 2. if he didn't buy it NOW, the first time it had been for sale ever, would he ever have the chance to buy it again? Likely not. 3. he wanted it enough to push himself financially to get it. No regrets. Sure, he would rather have had more poke available to do it up more quickly, but he isn't planning on leaving until he is carried out by the undertakers anyway, so he doesn't feel the need to rush. He would rather own that house without every room being perfect yet, than a different house.
You have been looking for more than a year
If this property has the potential to be your perfect family home for 20 years plus and you have the purchase price etc. + £500k for refurbs on hand, how close to being perfect is it?
If you had to spend, say, £300k of the £500k of the refurb money you have to secure the property, is it worth it? Could a £200k refurb suffice for long enough for you to replace the extra £300k spent on acquiring it & completing the full refurb compared to the 20+ years you expect to live there?
Maybe it isn't perfect enough to warrant that. Only you know.
A friend of mine lives in a house that was built in 1820 and has been for sale on the open market once, in 2010 - which is when my friend bought it. He paid 35% over asking to secure it. His view: 1. the asking price was too low and he paid it no real attention once it was clear that the market said it was worth more. 2. if he didn't buy it NOW, the first time it had been for sale ever, would he ever have the chance to buy it again? Likely not. 3. he wanted it enough to push himself financially to get it. No regrets. Sure, he would rather have had more poke available to do it up more quickly, but he isn't planning on leaving until he is carried out by the undertakers anyway, so he doesn't feel the need to rush. He would rather own that house without every room being perfect yet, than a different house.
First thing is to make sure the other bid is genuinely a cash offer.
No end of buyers say they are making a cash offer in the hope of getting a deal and then worrying about financing it later.
Ask the agent if he has had proof of funding.
I never bid up a purchase, I take a view on what it’s worth and offer that. I never up my bid.
And make sure you provide evidence of funding it increases your credibility, the agent wants the deal to happen, he’s less interested in the price so the more confidence you can give that you have funds and are ready to proceed even consider offering to exchange within say 4 weeks.
Some sellers will sell to the highest bidder others to the one they feel most comfortable with and confident they will proceed to contract.
The more emotionally attached you are the more you maybe tempted to overpay, so be prepared to walk if it goes over your max.
No end of buyers say they are making a cash offer in the hope of getting a deal and then worrying about financing it later.
Ask the agent if he has had proof of funding.
I never bid up a purchase, I take a view on what it’s worth and offer that. I never up my bid.
And make sure you provide evidence of funding it increases your credibility, the agent wants the deal to happen, he’s less interested in the price so the more confidence you can give that you have funds and are ready to proceed even consider offering to exchange within say 4 weeks.
Some sellers will sell to the highest bidder others to the one they feel most comfortable with and confident they will proceed to contract.
The more emotionally attached you are the more you maybe tempted to overpay, so be prepared to walk if it goes over your max.
c2mike said:
Oh, and 3 years later I can say that a few hundred K on renovation goes very quickly if you do it to a high standard. Roof, kitchen, bathrooms, wiring, windows, plumbing, heating, insulation, stone repairs, decorating...there is more labour in restoration than building new. That said, now we are finished, very happy with the result.
Good luck and PM me if you want to discuss in more detail.
Exactly what Mike said (lthough ours wasn't listed), and I'd also be happy to help you with cost estimating: you can have my spreadsheet.Good luck and PM me if you want to discuss in more detail.
Harry Flashman said:
c2mike said:
Oh, and 3 years later I can say that a few hundred K on renovation goes very quickly if you do it to a high standard. Roof, kitchen, bathrooms, wiring, windows, plumbing, heating, insulation, stone repairs, decorating...there is more labour in restoration than building new. That said, now we are finished, very happy with the result.
Good luck and PM me if you want to discuss in more detail.
Exactly what Mike said (lthough ours wasn't listed), and I'd also be happy to help you with cost estimating: you can have my spreadsheet.Good luck and PM me if you want to discuss in more detail.
Thanks to everyone's insight.
I'm fortunate to have parents-in-law who have spent 20+ years doing renovations and barn conversions and a stepfather who was a chartered surveyor and commercial property developer and who also renovated a Grade II manor house from a pretty tired state. That means I'm under no illusions as to the cost, time and trouble involved in taking on this project.
Direct comparables aren't easy but there is one other private residence locally which was refurbed from a similar or worse condition 10 years ago, and recently sold (after 2+ years on the market at a very ambitious asking price) for 1.65x the asking price of my target.
I am on good terms with the agent who sold that and know that buyers were a bit disappointed by the quality and specification of the finishes used, in what should be a very strong period property. I also sensed from the architect who was involved in the project that the total spend on renovation was around half a million, though he had to spend more on the roof and a new staircase.
After discussion with the Mrs, breaking open the piggy banks and so on we are going to make what poker players call a "continuation bet", just to tide things along before revealing our true strength. 1.02 plus perhaps a promise to pay 2 years school fees upfront for our first child who would start in September 2019, with another to follow. I will also offer an attended exchange as soon as practicable.
This way if the rivals do turn out to be dreamers they can be found out. If not then we'll still have our knockout raise in reserve, rather than simply throwing money everywhere at the first sign of trouble. I'll try and take the agent's temperature before saying much more.
Quite a fun Monday in prospect.
I'm fortunate to have parents-in-law who have spent 20+ years doing renovations and barn conversions and a stepfather who was a chartered surveyor and commercial property developer and who also renovated a Grade II manor house from a pretty tired state. That means I'm under no illusions as to the cost, time and trouble involved in taking on this project.
Direct comparables aren't easy but there is one other private residence locally which was refurbed from a similar or worse condition 10 years ago, and recently sold (after 2+ years on the market at a very ambitious asking price) for 1.65x the asking price of my target.
I am on good terms with the agent who sold that and know that buyers were a bit disappointed by the quality and specification of the finishes used, in what should be a very strong period property. I also sensed from the architect who was involved in the project that the total spend on renovation was around half a million, though he had to spend more on the roof and a new staircase.
After discussion with the Mrs, breaking open the piggy banks and so on we are going to make what poker players call a "continuation bet", just to tide things along before revealing our true strength. 1.02 plus perhaps a promise to pay 2 years school fees upfront for our first child who would start in September 2019, with another to follow. I will also offer an attended exchange as soon as practicable.
This way if the rivals do turn out to be dreamers they can be found out. If not then we'll still have our knockout raise in reserve, rather than simply throwing money everywhere at the first sign of trouble. I'll try and take the agent's temperature before saying much more.
Quite a fun Monday in prospect.
My target only came to market this month, and I was pretty hand-wringing about going from 0.94 to 0.96, talking about being nervous and unsure, still attempting to wheedle the property away as cheaply as possible since we might be the sole contenders.
I don't think the other buyers are spurious, sad to say, so I need to keep my hand in whilst allowing at least a chance for them to be proved hollow before promising half my kingdom.
I don't think the other buyers are spurious, sad to say, so I need to keep my hand in whilst allowing at least a chance for them to be proved hollow before promising half my kingdom.
c2mike said:
We bought a "project" house in 2015 - deceased estate, not legally habitable. It went to sealed bid, which is a weird process IMO - not sure if we overpaid or just scraped in.
Helpful to know as much as you can about the other potential buyers - pays to get friendly with the agent.
I'd classify buyers of these type of properties into 3 types:
1. Dreamers - don't really have the cash and probably won't complete, despite acting keen.
2. Developers - understand the costs and pitfalls, probably have access to cheaper building contractors, possibly thinking about potential for subdivision, etc.
3. "Forever home" buyers like us - have studied the market, want something unique, have the cash to buy but nervous about total costs, hidden issues.
Worthwhile understanding the VAT status on renovations too - if unoccupied for 2 years, can potentially be 5%. Also, are there any issues with title and access, if it is co-located with a school.
I know that our bid was successful partly because our offer was not subject to survey (for a crumbling grade 2* manor house, that's significant!). We paid to have our own detailed structural survey prior to final bids. A big bet, but tiny in relation to the overall purchase.
If it is owned by a school, the final sale may need to be approved by board of governors, etc. - they will probably be very cash driven, as that is their mandate.
Oh, and 3 years later I can say that a few hundred K on renovation goes very quickly if you do it to a high standard. Roof, kitchen, bathrooms, wiring, windows, plumbing, heating, insulation, stone repairs, decorating...there is more labour in restoration than building new. That said, now we are finished, very happy with the result.
Good luck and PM me if you want to discuss in more detail.
I for one would love to see what you came up with, these threads are always intriguing and make me think about taking the plunge on our forever home,Helpful to know as much as you can about the other potential buyers - pays to get friendly with the agent.
I'd classify buyers of these type of properties into 3 types:
1. Dreamers - don't really have the cash and probably won't complete, despite acting keen.
2. Developers - understand the costs and pitfalls, probably have access to cheaper building contractors, possibly thinking about potential for subdivision, etc.
3. "Forever home" buyers like us - have studied the market, want something unique, have the cash to buy but nervous about total costs, hidden issues.
Worthwhile understanding the VAT status on renovations too - if unoccupied for 2 years, can potentially be 5%. Also, are there any issues with title and access, if it is co-located with a school.
I know that our bid was successful partly because our offer was not subject to survey (for a crumbling grade 2* manor house, that's significant!). We paid to have our own detailed structural survey prior to final bids. A big bet, but tiny in relation to the overall purchase.
If it is owned by a school, the final sale may need to be approved by board of governors, etc. - they will probably be very cash driven, as that is their mandate.
Oh, and 3 years later I can say that a few hundred K on renovation goes very quickly if you do it to a high standard. Roof, kitchen, bathrooms, wiring, windows, plumbing, heating, insulation, stone repairs, decorating...there is more labour in restoration than building new. That said, now we are finished, very happy with the result.
Good luck and PM me if you want to discuss in more detail.
Gassing Station | Homes, Gardens and DIY | Top of Page | What's New | My Stuff