Rent back deals 'need firm rules'

GDB2222

we do state that she can also stay in her property for as long as she likes however that does depend on a few factors we can only offer 12 months at a time on an ast

So, the rent can go up to full market rental at the end of the first year? And you have no obligation to rent it to her at all after the first year? In reality, she has no security of tenure at all.

an example i had an appointment with a lady last night at 730pm and we agreed a sale @ 48% below market value

If 48% below market value would pay off the mortgage, then surely you are misleading this lady very badly? If she can produce a valuation to show that and an action plan, then I think that it is highly unlikely that a court would order an immediate repossession - so what you have told her about being reposssessed is almost certainly misleading her. If I knew more about the case, I would inform the local Police and let them decide if this fraud.

Better courses of action would be:
The lady would have time to auction her property and get close to 100% of market value. She could then trade down, as a cash buyer.

If she is elderly, she could do a home reversion plan, which would pay off the mortgage and allow her to live there for life without paying any rent at all.

This is a simply dreadful deal for her, and she can only be doing it because she is "desperate, unwary and financially naive". I also think it is possible (judging purely from what you have said above) that you have misled her dreadfully. Somehow you think you will get some sympathy here?

As I said above, I think it may be necessary to have a discount of 25%-30%. However, you appear to be dressing the deal up with hopes of a life-long tenancy in order to obtain a 48% discount. Shame on you for exploiting this lady!

I PROMISE TO ANSWER ANY QUESTIONS HONESTLY

Excellent, but we may have different ideas about what honest means.

GDB2222

northeast1976 wrote: »

as for 25-30% bmv most investors wont touch it unless its 35-40%bmv

and heres a question, why do you think repossessions have suddenly risen over the last couple of months - answer the lenders have changed all the buy to let products down to a max of 75% so investors who would have bought the property at 15-25% cant so the repo rate has risen

I stand here, ready to go ahead for 25%-30% below market value - with my own money that I will put on the line, rather than relying on borrowings, so I can proceed straight away.

ivavoucher

GDB2222 wrote: »

Better courses of action would be:
The lady would have time to auction her property and get close to 100% of market value. She could then trade down, as a cash buyer.

quote]


The last few auctions I have been to nothing is selling.

GDB2222

ivavoucher wrote: »

GDB2222 wrote: »

Better courses of action would be:
The lady would have time to auction her property and get close to 100% of market value. She could then trade down, as a cash buyer.

quote]


The last few auctions I have been to nothing is selling.

Barnard Marcus reported 73%. Clearly, that depends on the reserves set.

silvercar

Selling at 48% discount; the old lady would be better off being repossessed.

I'm guessing that you can only offer a 12 month AST because that is all your mortgage lenders will allow you to do.

Now if that lady was prepared to walk away from her home she could have:
a) sold it herself by pricing it correctly for a quick sale,
b) auctioned it,
c) let the lender repossess - usually they sell cheap but not half price.

Slightly naughty but, in the knowledge that repossession was coming her way, she could have not paid her mortgage for a few months to save up a decent deposit to get a nice rental and used those months to find suitable accommodation.

silvercar

Fairly obvious that if you want a sale and rent back you will get less than if you want a quick sale. Buyers money is tied up for longer, risks of maintaining a tired property, possible hassles getting rent, less people out there prepared to do sell and rent back than straightforward sales.....

silvercar

GDB2222 wrote: »

I stand here, ready to go ahead for 25%-30% below market value - with my own money that I will put on the line, rather than relying on borrowings, so I can proceed straight away.

If you really wanted to do that, a phone call to a few estate agents and you would be in business. In the same way that people don't want to lose face and sell up, people are setting asking prices ridiculously high but willing to accept sensible offers just because they don't want their home to be seen to be worth only XX.

treliac

Wonder if the govt could come up with a sensibly worked out, state funded scheme for sale and rent back. Something that the taxpayer would find acceptable use of public money, would enable overstretched people to stay in their own homes and, in the long run, could re-build council housing stock or be re-sold.

GDB2222

silvercar wrote: »

If you really wanted to do that, a phone call to a few estate agents and you would be in business. In the same way that people don't want to lose face and sell up, people are setting asking prices ridiculously high but willing to accept sensible offers just because they don't want their home to be seen to be worth only XX.

Yes, I am interested, actually. Any suggested agents to ring who might be amenable around NW London? My thought was that people would not be prepared to accept this sort of discount to market value (not asking price), but I am prepared to find myself wrong on that.

silvercar

GDB2222 wrote: »

Yes, I am interested, actually. Any suggested agents to ring who might be amenable around NW London? My thought was that people would not be prepared to accept this sort of discount to market value (not asking price), but I am prepared to find myself wrong on that.

I know of one house where the owners wanted a quick sale as they were emigrating. House was on the market at 419,000 (May 2007). I saw it advertised on one of the singingpig leads pages, so I guess someone took the bait. Next thing was it was advertised locally at 379, then 379 part exchange considered, then 369, then 349. Nice house, only a few years old and improved with conservatory and decking etc. I guess someone has offered around 320-240 mark. But for whoever bought it as a quick turn around proably hasn't made a bean.

http://www.fish4.co.uk/iad/homes/advert?adId=21675488&src=nestoria