Buying a Sale by Informal Tender property

beachieboo

Hi, posting a new thread as the last advice I can se eon this subject is 6 months old.

My boyfriend and I are first time buyers and have found a property we like, and can well afford, in East Ham.

It's sale by informal tender and we're doing some calculations as to what to offer, factoring in the 2% that we will have to pay to the agent.

Does anyone have any advice as to what this means in the market at the moment? I'm thinking of knocking this 2% off the guide price in order to make an offer, but is this likely to be successful? Are these sorts of properties going over the guide price at the moment? We're really keen on the property but don't want to pay more than it's worth. I also don't want to end up paying the agent so much! I'd happily invest in the property, but not to give additional cash to the agent.

Any advice gratefully received!

Hoploz

You have to look around and see how the price compares to other properties in the same area. Look at both sold prices (where deals will have been made a few months ago) and asking prices. Pay particular attention to properties which went up for sale and sold straightaway, as I think this is the best guide to current market prices.

What condition is it in? Are there ongoing costs eg if a flat/leasehold there will be ground rent and service charges, plus length of the lease. If this is 99 years plus fine, if much less then mortgage companies may not like it and there will be large costs for a lease extension.

bouicca21

There are lots of threads on this kind of tender/"modern auction". You would be well advised to look through them. The words rip off come to mind.

davidmcn

I would offer 97.8% of whatever you would have offered if it was being sold by a normal method...

You'll probably need to tell us more about the property for anyone to give you advice about the local market.

eddddy

bouicca21 wrote: »

There are lots of threads on this kind of tender/"modern auction". You would be well advised to look through them. The words rip off come to mind.

It's worth pointing out that an informal tender is usually very different from a 'modern auction'.


Arun Estates EAs are the ones that are keen on informal tenders, and frequently mentioned in this forum. With them, any offer is still 'subject to contract', their 2% + VAT fee is only payable if the sale completes. (i.e. no sale, no fee)


iamsold are the EAs that are keen on 'modern auctions'. They take a £6000+ non-refundable fee when the hammer falls. The bid is still 'subject to contract', but you won't get the £6k+ fee back, whether you complete or you drop out.

beachieboo

Thanks for the replies all.

The property is a 2 bed terraced house, in reasonable condition, thought with some walls that need knocking down in order to give reasonable sized bedrooms (it's multi occupancy tenancy at the moment).

The process seems very odd, as it's informal tender, which seems to mean that bids aren't sealed and that they will take them either over the phone or email.

I have just spoken to my broker, and he's told me this may not be entirely legal, as the agent is acting for the vendor, but being paid by the seller, so a vast conflict of interests. Do you think I should query this process? Is it possible to put an offer in, but refuse the agents' fee? (I'd up my offer to ensure additional cash went to the vendor). Really confused by this whole thing...

beachieboo

PS agent is a big one near where I live - 'largest independent in the uk'

eddddy

beachieboo wrote: »

....
I have just spoken to my broker, and he's told me this may not be entirely legal, as the agent is acting for the vendor, but being paid by the seller, so a vast conflict of interests. Do you think I should query this process? Is it possible to put an offer in, but refuse the agents' fee? (I'd up my offer to ensure additional cash went to the vendor). Really confused by this whole thing...

There are lots of arguements about whether it's legal or not... There are also suggestions about changes to the law to make it explicitly illegal.

But pragmatically, I guess you could have an argument with the EA about their fees (and probably achieve very little)...

... or you can just accept it, make an offer, and hope you get the house you want.


Yes - you can make an offer, but stating that you will not pay the 2% fee. The seller's contract with the EA almost certainly says they will then have to pay the 2%.

In fact, if you have limited ready cash, and you are near the LTV limit for your mortgage, it's better to let the seller pay the fee.

beachieboo

Thanks Eddddy, great help. I'll be sure to post how it goes on here for future users. It's one of the things I think has been missing from some of the other threads on here.

Cheers!

eddddy

Just to add - if it is one of the Arun Estates Group, they will probably ask you to sign an agreement like this one (see page 4) : http://www.cubittandwest.co.uk/_assets/pdfs/42223542_tender_pack.PDF

If you don't want to pay the introduction fee, cross out the para beginning "I/ we understand that an introduction fee of 2% + VAT ..." and write something like "All estate agents fees to be paid by seller".

The EA might huff and puff a bit, but ultimately, if yours is the best offer - I'm sure the seller will accept it.

katejo

eddddy wrote: »

Just to add - if it is one of the Arun Estates Group, they will probably ask you to sign an agreement like this one (see page 4) : http://www.cubittandwest.co.uk/_assets/pdfs/42223542_tender_pack.PDF

If you don't want to pay the introduction fee, cross out the para beginning "I/ we understand that an introduction fee of 2% + VAT ..." and write something like "All estate agents fees to be paid by seller".

The EA might huff and puff a bit, but ultimately, if yours is the best offer - I'm sure the seller will accept it.

I really dislike this newish method of selling. I do think that there is a serious conflict of interests. I am not selling or buying now but, if I did, I would try to avoid any agent using this method. Estate agent charges should be paid by the seller.