Best Offers Letting Strategy

by Mark Alexander

7 months ago

Best Offers Letting Strategy

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Best Offers Letting Strategy

I discovered the Best Offers Letting Strategy about a year ago completely by accident and it blew my mind … here’s the story … Best Offers Letting Strategy

I had owned a property in Thetford, Norfolk for about 10 years and had kept the same tenant from day one without ever having increased the rent. When he vacated, and most unlike me, I asked my letting agents to advertise it at the same price without checking what current market rent were.

The property went on the market just a few days after my outgoing tenant had served notice. A few days after that I called my agent to see how things were going.

“OMG” he said, “we’ve had 79 viewing requests already!”

This got me thinking….  had I advertised it too cheap?

My agent ran some comparables and found that similar properties in the area had recently been let for about £100 more than I had advertised mine for.

Don’t worry I said, please add the following to the text in the adverts on Rightmove and Zoopla …. “best offers over £450 considered”. I also asked him to talk to the outgoing tenant about doing a block viewings the following Saturday. To give my existing tenant an incentive to cooperate and to make the place look nice I offered him an extra £100 on top of his deposit refund if we managed to find a new tenant off the back of the block viewings.

Well …. to cut a long story short over 100 people turned up!

Both the agent and the outgoing tenant were there. The tenant was the best salesman I could ever have recruited. Apparently, he raved the whole time about what an amazing landlord I am 😀

The agents job was easy too. All he had to say was; “well you can see what the demand is. The best offer so far is £X so if you want to get this property you will have to offer a bit more”.

In the end I was offered £180 more than the closest comparable. The referencing checked out and my new tenant moved in on the same day as the old tenant moved out.

I’ve been desperately wanting to try this again but whenever I’ve had tenants serve notice since then it’s been on a property I have subsequently sold.

Possibly the crappiest property in my portfolio (in terms of the property itself) will be vacated in one month as my tenant of seven years gave notice today. The return on equity in this property is so good though, based on the mega-cheap tracker mortgage I have and minimal equity tied up in the property, so this one is a keeper. The property is at Queensway, Halifax.

I plan to advertise it at a ludicrously low rent and see whether the “Best Offers Letting Strategy” works again.

As soon as the agent has taken pictures and put the property on the market I will post a link in the comments section and keep reporting on what happens next.

I won’t necessarily go for the best monetary offer, but I will report on it. I will also consider the quality of the tenant.

Wish me luck!

Comments

steve p

7 months ago

Although it may work, I think it may leave a bit of a bitter taste for tenants, also the one willing to pay the most might not always be the best tenant, for example if I was looking to move and buy in the area and only looking to rent while I look to buy I would be willing to pay a bit more but would not be a good long term tenant.

Dylan Morris

7 months ago

I understand what you're doing essentially creating an auction. Not sure if I were the letting agent I'd want 79 viewing requests to deal with again. I guess you can weedle out some of the poorer quality applicants on the phone, but what a load of work ! All seems a bit dishonest to me. I've always been reluctant to charge above the going rate for the area on the basis that if a tenant is overpaying (and knows it) they'll be more inclined to move on more quickly.

Chris wood

7 months ago

You say you approached your agents when you knew your current tenant was leaving and had been there for 10 years - and you told the Agent to market it at the same rent !
Well surely you knew that rents have increased over the years ? And if not, then any agent worth his salt would have advised you that you are likely to be able to get a higher rent than you are
asking for. Then you seem surprised that people are offering more.......
But now you have gone all greedy and want the most you can wring out of someone...........
I would have asked an agent (perhaps another one) what is a reasonable rent to ask for based on similar properties around the area of yours and then marketed at this.

Adrian Jones

7 months ago

And your agent didn't bother to check what similar properties were making? Not very professional.

Dylan Morris

7 months ago

Reply to the comment left by "Chris wood" at "17/02/2017 - 11:45":

It certainly does look like greed to me as well. And creating a lot of annoyed and disappointed prospective tenants. Why piss people off for no real reason ? Hardly going to give landlords (and letting agents) a good name and certainly not helpful given the country's new sport of landlord bashing.

Alistair Cooper

7 months ago

Don't know if you're surprised by all the negative comments you are getting on this Mark but I am. It seems a perfectly reasonable business practise to me; does this mean every EBay seller is motivated purely by greed when they auction something? Presumably your current tenants are happy with the property and the rent they are paying? Good luck on the Halifax property; I will follow your progress with interest and may well try this with my HMOs in St Albans

Bill O'Dell

7 months ago

All of you posting disappointed comments would do the same if you were selling the house, is that greedy too? Pushing the market is what agents and vendors do, especially in an under-supplied market. Perhaps the agent was a bit sleepy and not on the ball, but the outcome seems to have been favourable and all the prospective tenants knew exactly what they were doing.
Any auction sells to the highest bidder, so you always know you have paid the most when you secure a purchase.
The property market is is changing all the time, this is just another change and it may become the norm in a few years or it may fall on its face. Who knows? But being innovative is how you keep a business alive.
It's an interesting development

Dylan Morris

7 months ago

Reply to the comment left by "Alistair Cooper" at "17/02/2017 - 12:34":

I understand what you are saying Alistair and that's fine everybody has their own view and it's a good job we are not all the same. Every landlord will have their own individual approach to renting out their properties and what will suit some will not suit others. I think bidding for an item on eBay is quite different and more remote, it doesn't have so much emotion attached to it than having the excitement of going to view a potential home and finding that you are severely disappointed and the rent was actually a moving target.
My comments which some will see as negative are really around my concerns for the feelings of prospective tenants. I like to think I am providing nice properties at a fair price and have happy tenants. Of course some landlords are more hard nosed than me but that's not my style. Each to their own and I hope my comments have not offended the original poster or anybody else.

Richard Peeters

7 months ago

Mark, I like the idea of starting low enough to attract lots of viewers, BUT it might not be a good idea to start "ludicrously low" as this might attract the wrong demographic (who cannot afford to bid higher), and it might dissuade others from even being interested (if they think "it's too cheap for this area"). So I would start low, but not too low.

michael fickling

7 months ago

Hey guys..we didnt create our current clause 24 situatuion..we didnt ask to be TAXED on a cost. We didnt try to interfere with market forces.Im sure Mark like most of us was not cranking up rents continually prior to the Clause 24 nonsense.
As the "vendor" we are perfectly entitled to respond to market forces..especially when we didnt aggravate that market upwards in the first place. As i posted sometime back the "rental Auction " scenario was a likely outcome..it happened many years back
when another government engaged in similar market interference overseas...in the form of rent price control/ restriction..result... landlords bailed out and were not replaced..upshot restriction eventually reluctantly removed..further. result...remaining landlords did just what mark has done here..some even held full rental auctions.on site.in an attempt to restore their financial postion.
We have all been preaching that rents would have to rise...due to Clause 24...lets not get into attacking each other about the various ways thats done and lets remember..this wasnt a sitting tenant situation..where there might be perceived difficulties for a tenant in situ and not wanting to leave.These people went and looked at Marks property knowing what the score was...and each had the opportunity to effectively bid or walk away.Remember too that what a rental is worth...to one person will not be the same to another. If rental auctions are wrong then one could say that so is any auction..including a house purchase.Many of us are now being forced to increase rents..that is what we said would happen..and it is beginning to occur. Now is not the time to be belting each other about for doing it in different ways. Whether you like an auction/highest bidder scenario or not...it does add to the case that rents are rising and clause 24 is far and away the main reason. We aint seen nothing yet...and we didnt start the fire...we are merely trying to survive a tax on a cost that defies all normal accounting and tax protocol. If the local media want to have a go at Mark or any of us for raising rents we should and will stick the facts straight up front.....we are to be taxed on a cost..its plain wrong and we have to develop strategies to survive. This conservative government has taken the axe to private landlords...subsequent effects remain their responsibility as they forced the situation and market...now.. rental" auctioning" will be a feature here as it was overseas. Increasing rent is increasing rent...had to happen... the means of doing so is a secondary factor and its occurence and its existence by any means ...advertises our plight.....and as for our image with the masses...too late ..the government and media had already perpertrated the myth of greedy rich landlords.Now they can see the realities of the shortage THEY manufactured... and will have to confront them. The government drove the rent hikes by its own stupidity making it made them inevitable.We need to stick together and keep putting that message out there to anyone who growls at rent increases and the means of their acheivement.

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