Updating post from Reddit.
I'm an accidental landlord and I'd love to sell my property. Bought a flat in 2005 for 80k and it has been rented since 2010.
Its actually been quite a decent rental and is quietly paying off the mortgage - Whenever it comes up for rent we find tenants really easily, the rent covers my mortgage and if there weren't wider issues I would likely keep it forever - but now I hate owning it and being a landlord.
Problem is that there isn't a functioning management company at all. the freeholder of the the block owns 4 out of 9 of the flats in the block and has refused to co-operate in any way with maintenance of the building for more than 8 years, he contributes nothing to the building maintenance and has been pretty hostile and intimidating. The rest of the flat owners all pay into a maintenance fund which is just enough to keep on top of the worst of things and maintain cleaning & gardening. But given that there isn't a functional maintenance company, a normal sale is just very unlikely. When other owners have tried to sell, it invariably falls apart because we cant provide full and complete accounts.
I'm thinking of options of how to go forward:
The actual flat is in good condition - could do with a refresh as the last time it had a new kitchen / bathroom was when I moved in in 2005 - but completely livable and nice. Brand new boiler.
Similar flats in the area sell anywhere from 75k to 120k. I owe about 20k remaining on the mortgage and just want out at this point.
Does anybody have experience of selling a "dodgy" property such as this? How much of a hit should I expect to take on sale price?
If he owns 4 of the 9, have you considered asking him if he wants to buy?
In the UK, to exercise the Right to Manage (RTM) under the Commonhold and Leasehold Reform Act 2002, you need at least 50% of the qualifying leaseholders in the building to participate in the RTM company at the time the claim is made. This means that the number of leaseholders who are members of the RTM company must be equal to or greater than half of the total number of flats in the building that are held by qualifying tenants.
In theory, you could get five other tenants to agree to establish a Right to Manage company. Following that, you would manage the block and collect the service charges to fund the necessary repairs. You decide what needs fixing, raise invoices for all 9 units to pay for it.
Look at selling via modern method auction. You will need to pay for legal pack up front but is the ideal way to sell as it is down to the buyer to make sure they are happy with legal. You set a reserve price so that it won't sell for less than you want and it can have offers outside of auction. The brilliant part is that the contract is signed early on with an interested buyer effectively making any backing out a no no without covering for the sellers loss.
Look into modern method auctions it is the way to go. Sold mine that way.
You will get a lot less interest this way, buyers see it as heavily favouring the seller.
It will save headaches from traditional selling of finding out 4 months in that the buyer didn't realise the issues and now wants to back out. If the seller is serious and the property has issues modern method cuts out so much crap.
Granted you sold via a “modern method auction” but you don’t realise that it achieved much less than a normal auction and without the upfront costs too.
You realise you set the reserve price so it won't sell for less..it also goes into an auction so I don't understand this point
Those type of auctions do not have the amount of competing bids or interest from buyers, so therefore your property sold for less.
You’re lucky to have sold. Many properties don’t sell ever. So that’s no use.
You still do not understand the modern method usually generates interest for sorting deals outside of auction you still get the auction and it doesn't have to sell in auction. It's usually used as a marketing tool to see if anyone puts hands up in the room the agents usually then speak with these people as they clearly like the property and then deals are usually worked out. We sold many many properties this way nothing goes for less than the seller wanted because the reserve price is set.
So in ops case he reckons it is worth between £75k-120k
The reserve will probably be agreed somewhere in the middle to upper band at then auction the room will have a chance to bid say it stopped at £70k the place doesn't sell because there is a reserve at like £100k. Therefore the seller hasn't lost, the agents will approach the bidders and see if they can strike a deal closer to the reserve I was kind of blown away by this first hand day after the auctions was nuts in the office with phone call after phone call and so many deals coming through. It really does work well if you find agents that know what they are doing.
I have brought at auction and I avoid “modern auctions methods”. I have fully considered them and would actively avoid them like so many others that would instead purchase at a normal auction.
One reason to avoid is that the sellers are not that interested in selling and will wait until they get their price. As you say it’s a tool used for marketing not transactions.
If a property doesn’t meet reserve then why would anyone buy it at higher price. They wouldn’t.
And there no busyness about it, just one bidder online, hence why they don’t sell.
Agents make a lot from selling from the very high costs will the sellers indirectly incur from lower offers.
I’d seriously reconsider your selling method.
Like I said I worked in an agency that only sold this way and every sale was incredible from my experience. I was there for around 2 years and attended around 8 auctions. I do understand it's not for everyone but as a seller I'd rather know that a deal is locked in early and there are consequences for buyers backing out. You don't get that with traditional selling. Auctions on the other hand usually are just full of people wanting bargains and properties are probably far worse issues than what op has mentioned about his property. I viewed the legal pack at an auction recently in my area as a property seemed interesting, the thing was illegally built I rang the council that confirmed this and that there was going to be a costly legal fight to have it knocked down. I attended the auction not to buy but to see if anyone bought it and they did. Crazy that people buy things without understanding legal packs.
You get ALL of the benefits that are stated for a modern method in a traditional auction without any of the costs.
There is nothing to gain from a contrived modern method auction format, no one cares about them except estate agents wanting their own option for commissions than rather suggest to a failed seller to put it into traditional auction elsewhere.
Such matters would be included in the legal pack. You’re assuming the buyers were not aware. Properties are purchased for all sorts of reasons.
All traditional auction properties have a problem, there are no bargains. Property is about problem solving.
You need to set correct expectations on the price and it will sell. You say the price range is 75k to 120k. Given the problems it should be 75k or less.
Your best buyer is the freeholder.
Try to convince the other 4 leaseholders to either buy the freehold or do Right-to-Manage, with the latter being the cheaper and faster method. You need 50% or more leaseholders, thus 5/9 flats to do either.
RTM: https://www.lease-advice.org/fact-sheet/right-to-manage/
Buy the Freehold: https://www.lease-advice.org/advice-guide/ce-getting-started/