My first Buy to Let – Is the estate agent being fair on price?

by Readers Question

12:16 PM, 16th January 2015
About 4 years ago

My first Buy to Let – Is the estate agent being fair on price?

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My first Buy to Let – Is the estate agent being fair on price?

I am running into a confusion as you might expect when you buy your first buy to let. I looked at one 2 bed flat which was for 289k and I made an offer of 270k initially which got rejected as estate agent said there is a higher offer so increase your offer or the owner will give it to the other bidder.

I said no and he later confirmed that property is off the market now. However after 1 day I got a call back saying due to finance issues the higher bidder stepped back. So I offered him 275k, he was trying to force me to increase to 280k, but I didn’t and then he said please send me your AIP. Now my questions and confusions are:

1) Is the estate agent playing up with me to increase the offer ?
2) Property is on ground floor with no allocated parking, however all above floors have allocated parking so its a loss to me. I am thinking this quiet a lot that should I go with a flat with no parking, in case if I want to sell to get capital rise will this be able to sell off quickly.
3) I am seeing similar properties sold for 250 just 8-9 months back, do you think I should buy this for 25k premium.
4) I can see properties on rent for 1200-1250 (expenses are 2200 pa service charge etc), it is in a very good school catchment area so I presume it will attract families more. So should I think on above questions or I am just getting scared..may be normal for first time buy to let.

Just a note I also noticed that the property is marketed for 40% share or full buy so I don’t know who is the owner as normally why owners will try to sell the share. Don’t know if this is normal these days.

Any advices before I can jump on to this ladder.

Please help

Kapsprice



Comments

Neal Craven

15:06 PM, 16th January 2015
About 4 years ago

The argent is acting for the buyer; it’s his job to get the best price.

If the lease doesn’t include a parking space you need to assess if it’s going to be detrimental to any letting or subsequent sale, it will depend on the location and local market. Do other flats in the location all have a space? Speak to a local letting agent who isn’t involved in the sale to see what they think.

Is it a premium or has the market moved? Why would you pay a premium?

Need to check that the service charge is stable at that level, is the block well maintained?

Again if you are not sure speak to a local letting agent about the demand and rent achievable

Mark Lynham

15:07 PM, 16th January 2015
About 4 years ago

i kinda want to ask the question.... why do you want to buy this? long term capital growth?, monthly income? or, as i see a lot., are you buying it for the sake of buying it? just the figures dont seem to be overly attractive... and ground floor flats are not overly desirable, security and noise issues from flat above.....

Rob Crawford

15:26 PM, 16th January 2015
About 4 years ago

There is an art to purchasing properties for BTL. Look at the property, do the sums (yield/strategy), decide on a price, make an offer and don't budge! If you loose it don't worry. Wait for another do the same, if you loose that one don't worry etc etc etc. If an agent thinks your hungry he will push you hard for a better deal. As Neil says, the agent is working for the vendor - not you (no matter how nice they seem!). Talk to your local agents, ideally be a cash buyer, find out what properties are difficult to move and establish if you can resolve the problem - if so then that's the property to go for. Good luck - don't rush.

Neal Craven

15:30 PM, 16th January 2015
About 4 years ago

Favourite advice of an old solicitor friend “Act is haste, repent at your leisure” –

Don’t be afraid to move on to the next opportunity.

Tony Lilleystone

15:45 PM, 16th January 2015
About 4 years ago

It is probably not possible to answer your queries without detailed knowledge of the area and local letting market. Remember that the estate agents are acting for the seller and their job is to get the best price possible, i.e.screw as much as possible out of you (and maximise their commission) but at the end of the day it should be up to the seller whether or not to accept your offer.
Referring to your final query that the property is marketed for 40% share or full buy – this sounds to me like the seller owns the property on a shared-ownership basis. This usually means that a housing association (HA) or similar social landlord owns the remaining share and the owner has to pay a rent for this.
When buying a shared-ownership property there are usually two possibilities:
1. you just buy the existing share from the seller, in which case you would expect to pay 40% of the value of the property.
2. You arrange with the seller and the HA for the property to be 'staircased' on completion. This means that the seller gets his 40% and the association gets the balance and so you end up with a 100% interest in the property (in which case the rent for the 60% share ceases.)
Buying shared-ownership properties is somewhat more complicated than buying a straightforward leashold.
On any sale it is necessary for the seller to notify the HA. They will probably have the right to nominate a buyer for the property from their list of applicants so they might not even be willing to allow the sale to proceed. Even if they decide not to nominate a buyer it can take weeks to get a decision.
Going down route 2 is not always plain sailing. For a start the amount which you would have to pay for the remaining 60% share will depend upon the HA's valuation of the property which may be more than the amount agreed with the seller.
Also the necessary arrangements complicate the contract and purchase process, and it usually takes much longer for everything to be completed than for a straightforward sale.
Another obvious point to check is whether the lease permits letting. The shared-ownership scheme is intended to help people buy their own homes, and letting might not be permitted even if the property is staircased to 100%. As this is a flat it will remain leasehold if it is staircased so the HA will still be the freeholder.

Colin Dartnell

17:28 PM, 16th January 2015
About 4 years ago

Firstly I suspect the Agent is pushing you, the higher offer may be a fairy story if it has dissolved so quickly, probably they see an eager buyer in you.

In my area prices have gone up by that amount in the last 12 months so its not out of order if your area is desirable. But check on Zoopla for sold prices in your postcode, sometimes Zoopla is a bit out but it should give you an idea whether the increase is justified.

As far as shared ownership, if they offering the property as either 40% or full ownership, then you need to know they have the authority to sell the full share and at the price you agree before signing up.

The parking may be that the space has been sold separately elsewhere. Or the current owner is keeping it to let separately. Count up the flats then count the spaces then you will see if they are equal numbers. A parking space is always a plus, but not essential if there is plenty of free street parking close by.

Londoner 43

17:56 PM, 16th January 2015
About 4 years ago

There must be other more suitable properties available for you to purchase. It is my understanding that the shared ownership properties are meant for owner-occupation only. This would mean that you could not let it to anybody else, so it is not suitable for BTL-purposes. Best to check with the Housing Association that owns the freehold and the majority share (60%) at the moment. Why look for problems is you can avoid them?

Polly Nottingham

18:09 PM, 16th January 2015
About 4 years ago

Are you intending to self-manage, and therefore buying in your local area?

In some areas in the Midlands and North you get get 3-4 flats for that price and rent them out at £450-£475 per month.... Of course there would be 3-4 sets of 'overheads' but I still think you could make a better profit, even if you're paying a reasonable management fee. And any void periods could be carried by the rental income from the other properties.

'don't put all your eggs in one basket'

Alan Loughlin

18:55 PM, 16th January 2015
About 4 years ago

there must be parking, it is a condition of the planning, min one space per apartment.

Mick Roberts

8:51 AM, 17th January 2015
About 4 years ago

Yes Polly, are we fortunate in Nottingham? I quite often think that when see other peoples figures, we can get houses up here for 60k, rent £500pm, yes more work 4 houses, but more rent.
I won't like paying the figures other people have to pay down South.

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