Selling house to a property acquisitions "company" - dodgy contract?

Sheffield_Tiger

Hi, any advice much appreciated here

Firstly, I am quite aware of the fact that any acquisitions company is going to give a much lower price on a property however there are some valid reasons for taking a hit on the price for a fast sale. The house is unnoccupied and on a "sink estate"
Any for sale signs going up will be a signal to vandalise or even strip the property.

With that in mind, as the value is low anyway, the hit on a fast sale is no more than the possible hit of damage/theft/sqautting

THerefore I am prepared to take a lower price for the property - that's not the problem

I do want to sell it quickly too, so as not to leave it unnocupied for longer.


I have verbally agreed to sell to an aquisitions "company" and have received the contract:

It rings alarm bells to me... Firstly it ties me in until August. Hang on, you said "we will buy the property". Now it's more a "it might be someone else that buys it"

I get the feeling the plan is to keep me hanging for months and beat me down to a silly low price, causing me stress and getting me into a situation where I will accept just to be rid of the hassle. And yes, I am a prime target - a bit skint, bereaved, worried about the house, keen to sell etc.

I researched the "company" and it seems to be one guy running from home, with other dissolved businesses in the past. He isn't going to buy it I'm sure, he just wants to tie me into the rights to sell the house to a third party that may not exist for a while.

The offer was overly generous IMO, being what i would have expected after 20% deduction, from the most optimistic valuation. He's given me that as a "bottom line" and added a much more generous "target figure". Reading about this sort of thing it seems to ba a common trick?

Am i just panicking or is this a nightmare contract to be avoided. Should I trust my instincts? If so, what other paths should I look at?

Contract (details removed) below - not yet returned.

This Agreement is made on the 29 March 2011 BETWEEN
1. (company)
2. (myself)
WHEREAS
1. The Seller now owns the property known as (address) ("the Property");
2. The Seller is desirous of disposing the Property;
3. The Grantee is a property investor and agent and has agreed to assist the Seller in disposing
the Property.
NOW IT IS HEREBY AGREED AS FOLLOWS:
1. In consideration of the sum of £1.00 ("the Option Sum"), receipt of which is hereby
acknowledged by the Seller, the Seller grants an exclusive option to the Grantee at its sole
discretion to either:
a. buy the Property at a price of £31,500 ("the Option Price") in accordance with the
standard conditions of sale 4th edition save for any amendments as agreed between
the parties to this Deed; or
b. source a buyer for the Property and direct the Seller to (and the Seller shall) sell the
Property to that buyer at a sale price as directed by the Grantee ("the Sale Price") and in such circumstances clause 4 and 5 shall apply;
(hereinafter referred to as "the Option")
2. The Option shall be valid from the date of this Deed and will expire at 5.30pm on 29th August
2011 (or as extended under paragraph 7 below) ("the Option Period") and for the purposes
of this paragraph time will be of the essence.
3. Where the Grantee exercises the Option to purchase the Property under paragraph la)
above, it must do so by giving written notice to the Seller at any time during the Option
Period;
4. Where the Grantee sources a buyer for the Property in accordance with paragraph Ib)
above, it must exercise the Option in writing to the Seller by notifying the Seller of the name
and address of the buyer and the price at which the Seller must sell the Property to the
buyer.
5. Where the Grantee has sourced a buyer under paragraph Ib) above, the Seller shall:
a. execute all legal documents for the sale of the Property at the Sale Price to the
buyer which shall include (but not be limited to) the contract for the sale and
purchase of the Property and form TR1; and
b. Provide all such information as may reasonably required by the Grantee or the buyer
(whether directly or through its legal representatives) in effecting its enquiries and
due diligence against the Property which shall include (but not be limited to):
i. the usual protocol forms such the property information form, fixtures and fittings form,


ii. Replies to enquiries;
iii. Copies of all guarantees or indemnities benefiting the Property; and iv. All correspondence received by the Seller in respect of the Property, c. Pay the difference between the Sale Price and the Option Price (without deduction set-off or counterclaim, howsoever arising)) ("the Option Fee") to the Grantee on completion by direct bank transfer and hold the Option Fee as agent for the Grantee until payment is effected.
6. The Option Sum shall be credited against the Option Price or the Sale Price (whichever being
applicable) if the Grantee exercises the Option. Where the Grantee does not exercise the
Option the Seller shall be entitled to retain the Option Sum.
7. The Option Period may be extended by the Seller or the Grantee for an additional period of
1 month for a further payment of £1.00 (One Pound).
8. The Option Sum is refundable to the Grantee (without deduction set-off or counterclaim,
howsoever a rising):
a. If the Seller has made a misrepresentation or omission of a material fact that affects
value of the Property;
b. If the Property suffers from any of the normal insurable risks at any time after the
date of this Deed and during the Option Period;
c. If the Grantee having received searches from the Local Authority, Coal Authority,
Water Authority and Environmental Agency, one or more of which reveal one or
more entries which would deter a reasonably prudent Grantee from purchasing the
Property.
The Grantee can assign the Qption and all benefits and liabilities arising out of this Deed to any third party.
10. The Seller shall permit access to the Property during the Option Period at all times and at all
reasonable hours to the Grantee (or any person nominated by the Grantee) providing the
Grantee gives at least two days prior notice to the Seller of its intention to access the
Property.
11. The Seller acknowledges and consents that the burden of the Option shall be registerable (at
the sole discretion of the Grantee) at HM Land Registry as an Agreed Notice against the title
of the Property and the Seller authorises the Grantee to execute any prescribed Land
Registry forms to register the Agreed Notice.
12. The Seller hereby confirms and warrants to the Grantee:
a. that he/she enters into this Deed without any duress or undue influence from any
third party;
b. that he/she has been advised that by executing this Deed legal obligations he/she
shall become legally bound to transfer the Property to:
i. the Grantee, or
ii. a buyer nominated by the Grantee; or
iii. any third party that the Grantee seeks to assign the benefit of this Deed to
c. that he/she has been advised by the Grantee to seek independent legal advice
before executing this Deed; and
d. having considered everything that he/she executes this Deed and wishes to proceed
with granting the Option to the Grantee from the date of this Agreement.

13. No modification of this Agreement will be effective unless it is in writing and is signed by
both the Seller and the Grantee. This Agreement binds and benefits both the Seller and the
Grantee.
14. This Agreement, including any attachments appended hereto, is the entire agreement
between the Seller and the Grantee and shall be governed by English Law.
In witness of the above this document has been executed as a Deed and has been delivered on the date which appears on the first page
Signed and Delivered as a Deed By
Executed as a Deed by

BitterAndTwisted

I'm not reading all that but I have one observation to make: the overwhelming majority of companies such as these are complete shysters.

Some will wait until the eleventh hour and five minutes before exchange of contracts they will drop their offer by a huge percentage.

Some will pretend that they have an investor sitting waiting but will put any or every obstacle in your way until you are complelled to cancel the deal and then you'll find that doing so will cost you a fee, usually in the region of £1200 plus VAT.

Have they asked you for any "survey fees" yet?

poppysarah

Put it in auction.

Less problems with that.

JQ.

poppysarah wrote: »

Put it in auction.

Less problems with that.

Exactly my thoughts. Phone a national or local property auction company, tell them you want no signage and subject to the date of the next auction, you could be exchanged in 4 weeks and complete 28 days later with no stress. Put no reserve on it.

I'd also imagine you'd get a better price at auction.

PPPingu

there was a thread recently where someone recommended contacting several estate agents, let them know that the house is available for this very low price, and ask them if they can guarantee a cash buyer, as they may have a list of contacts looking for investment property at bargain prices.
Otherwise I'd second the auction plan/.

iB1

I agree with the above. Put it up for auction, OR use an estate agent, set a knock-down price for it, and ask the estate agent NOT to put up a for-sale sign

Jowo_2

I've suggested the auction route for distressed sellers before but was informed by one that they had contacted an auction company who told them that they don't take on properties with a mortgage on them. It's not clear what the position is with the OP, though.

Sheffield_Tiger

Hi
No, the house is mortgage-free and freehold, listed on Land Registry

I've spoke to the original estate agent that valued it and they recommended auction and they are getting back to me about property lists for circulation to investors too.

Sheffield_Tiger

Wow..I was on "decision time" when I posted this - or so I thought.

Can't believe I had signed the contract, had it witnessed and all but put it in the envelope to post back. Though when I posted this thread, it was because my inner alarm bells were ringing so loudly...I did nearly talk myself into thinking "no, you're just being a worrier"

I will be MUCH less instinctively-judgemental about "how do people get taken in by these people, they must be daft" - they tell you what you want to hear and give you security, or so it seems.

The old fashioned description was confidence trickster

I'm amazed that I nearly fell for it

I would have done if a good friend had not helped me out enough for me to see things more clearly

Trollfever

I get daily Get Rich Quick email spam trying to flog me properties of this nature.

Put it up for auction.

Gut feelings are usually correct.

G_M

So this company has till August to find themselves a buyer willing to pay more than £31,500.

If they succeed in finding a buyer (for, say, 40K) they are quids in. If they fail, they walk away and do not activate their 'option'!

Meanwhile you have an empty property being vandalised just as you feared, and cannot even try to find a buyer yourself!