Selling through a relocation company

Cristy

Our vendor has sold his house to a relocation company, which is currently joint transferor with the original vendor. In the paperwork their solicitors sent us to sign, it says that the relocation company paid him £225.5k in January for his house. Our offer was £242.5k (AP £245k). Has the bank made a very tidy profit of £17k? Or will the vendor get at least some of this money? I am aggravated at the thought that I either overpaid by a huge amount, or that the bank is making such a huge profit at both our and our vendor's expense!

How do these things normally work? Just curious!

zappahey

We relocated last year and the relocation company were very conservative with their offer price, so low that we told them to shove it and got about £40k more selling it ourselves. If your vendor's scheme is similar to ours then they should get the extra back from the company.

Ian_W

Hi Cristy,
The "huge profit" is about 7%. I don't know how these firms work, whether they share their profit over a certain level or keep it all but what difference does it make to you? They are probably like these home buyer companies and pay well under the market value but your vendor chose to use them, rather than market it themselves. Must have suited them to do so.
If you're happy that the price you're paying was right compared to other similar properties in the area, what does it matter to you who gets the money? Businesses have to make profits otherwise they go bust, maybe they did well on this one but others don't do as well. One thing is sure, if you're paying the market price for it - they're not making money out of you but out of the vendor who has willingly agreed to use their services.

Cristy

I think we paid a more or less fair price for the house. We thought it was a nice looking, well presented house in an excellent location for our needs. Price wise, comparable to others in the area. However, when we made our offer, we put in 99% of AP. If we had known at the time was going to a bank rather than an individual, we may have been more conservative with our offer as they might have accepted anyway, KWIM?

7% in, say, 3 months (January to April = completion) is a HUGE return on their investment, Ian, would you not say?

Anyway you're quite right and it's not really my business now anymore, bottom line is we got the house we wanted for a price we could afford without overstretching ourselves. A couple grand less would have been great but that's life.

I do hope the vendor gets the extra money though... rather to an individual than a bank!

Jorgan_2

As Ian says, the company has to make a profit ot it goes out of business. They have to factor in to their offer price that the property may take a long period to sell, if it was on the market for 8 months the 7% return might not look such a great deal. Also take into account, the money they have used is likeley to borrowed from somewhere, they have to pay interest on just like any body else, so its not a true 7% return.

Cristy

Jorgan wrote:

Also take into account, the money they have used is likeley to borrowed from somewhere, they have to pay interest on just like any body else, so its not a true 7% return.

Haha! And there I was thinking that the money just comes out of a big vault presided over by a little old man wearing a monocle and a top hat

Jorgan_2

Cristy wrote:

Haha! And there I was thinking that the money just comes out of a big vault presided over by a little old man wearing a monocle and a top hat

It is, but he still needs paying, tops hats cost a lot.

Ian_W

7% in, say, 3 months (January to April = completion) is a HUGE return on their investment, Ian, would you not say?

Lets put it this way christy, if I could find somewhere paying 28%pa guarenteed my money would be in it straightaway, 2 bl00dy true.

However in terms of business turn-over/profit margins, lots of businesses need that sort of margin or more to survive, of course lots work well on much much smaller ones. In this instance they've taken a risk that the vendor wasn't prepared to which could have resulted in a lower price or longer period to realise the return and if you want others to take a risk you usually have to pay over the odds for them to do so. Or as zappahey did don't use them.

Anyway they make a profit, vendor has the money earlier to relocate more smoothly and you get the house you want and the right price for you. As they say, all's well that ends well! Enjoy your new home.

EDIT: And the top hat gets paid for ... Don't ya just love a happy ending!!