Selling to Property Developers - Any advice?

horndean_hopeful

Myself and my neighbours have had offers to sell our houses from a Property Developer. My offer is well above market value as are the other 2 offers. However, the developer wants us to sign an option agreement to sell at this price when he gets Planning Permission. He expects this to take about a year. I mentioned to the developer that prices may vary and he (reluctantly) said we could vary the price according to the house prices index as long as we were willing to take any fall as well as any rise. I'm not sure what to do although I believe prices won't move dramatically in the next year. Has anybody else sold to a developer and, if so, were there any things written into the contract that I should think about?

coal9011

I don't like option agreements. Usually they are "subject to" a specific term coming to be. If the developer does not get his Planning Permission then one year later he can just walk away and you have been left in "limbo" for all that time.

To a degree, property developing is a gamble. If he really want's your site then he should buy it. Remember the property market is slowing. This is not always an issue for an established developer.

If I were you I would reject an option to buy agreement but tempt him by sweetening the "deal" by reducing the purchase price if he buys now! After all you say the offer is well above market value (so you have room for manoeuvre) and many people would say that "any" sale in the present market conditions - is a result!

"Good Luck!"

horndean_hopeful

coal9011 wrote: »

I don't like option agreements. Usually they are "subject to" a specific term coming to be. If the developer does not get his Planning Permission then one year later he can just walk away and you have been left in "limbo" for all that time.

To a degree, property developing is a gamble. If he really want's your site then he should buy it. Remember the property market is slowing. This is not always an issue for an established developer.

If I were you I would reject an option to buy agreement but tempt him by sweetening the "deal" by reducing the purchase price if he buys now! After all you say the offer is well above market value (so you have room for manoeuvre) and many people would say that "any" sale in the present market conditions - is a result!

"Good Luck!"

By well above market value, I mean around £35,000. However, to sell at top price we would need to spend another £10,000 plus there would be selling fees. However, we had no intention of moving for at least another 3 years and will now have to downsize twice instead of once as there are still 2 children at home who will leave in the next 2 or 3 years. If I reduced the price, it would be pointless moving. In addition, the developers say that nobody will ever buy without planning permission! Of course, I believe they are quite keen to get our house because it is in the middle of 3 plots they want to buy and judging by other developments around us, they will get at least 12 houses on the land currently occupied by our 3!!!!

Doozergirl

Why don't the three of you join together and get the PP yourselves, then sell on?

It might seem complicated but you only need to get outline planning permission which doesn't mean complicated drawings - then you could sell on for a lot more than the developer is offering you. What is your house worth? It's either a big house or has a big garden!

coal9011

Doozergirl wrote: »

Why don't the three of you join together and get the PP yourselves, then sell on?

It might seem complicated but you only need to get outline planning permission which doesn't mean complicated drawings - then you could sell on for a lot more than the developer is offering you. What is your house worth? It's either a big house or has a big garden!

Doozergirl is right!

If - as you say - you are not bothered about moving for 2 or 3 years then why not - in that time - get the planning permission yourself's. That will add value to your homes regardless.

horndean_hopeful

Doozergirl wrote: »

Why don't the three of you join together and get the PP yourselves, then sell on?

It might seem complicated but you only need to get outline planning permission which doesn't mean complicated drawings - then you could sell on for a lot more than the developer is offering you. What is your house worth? It's either a big house or has a big garden!

My neighbours aren't interested in doing that. I reckon the 3 plots are about 3/4 acre. However, all the houses are differing values. On the open market my house is probably worth the most as it has 11 rooms in total over 4 different levels. However one of my neighbours has only a 3 bedroomed bungalow but on the same amount of land as we have. The other neighbour has a house similar to mine but slightly smaller but they have more land. That neighbour is getting a very good offer - probably around £200,000 above market value - because of the land size whereas my other neighbour is probably being offered around £100,000 less than we are even though they are selling the same amount of land!

Doozergirl

They are not interested because they want to move asap or are intimidated by the thought of doing it themselves? I can see how the neighbour with the most land might be thinking 'I'm alright Jack'! if they are getting £200,000 above market value.

Have you actually tried bartering with this developer at all or did you just say yes to his initial offer? For a fact, they won't have put their best offer forward.

horndean_hopeful

Doozergirl wrote: »

They are not interested because they want to move asap or are intimidated by the thought of doing it themselves? I can see how the neighbour with the most land might be thinking 'I'm alright Jack'! if they are getting £200,000 above market value.

Have you actually tried bartering with this developer at all or did you just say yes to his initial offer? For a fact, they won't have put their best offer forward.

One neighbour is not going to do any better and the other wants to move now. In fact, it all started by that neighbour contacting the developers and offering to sell because the developers have already been buying up other houses in our street.

Doozergirl

How do your neighbours get to move now then? Are the developers buying theirs before yours?

horndean_hopeful

Doozergirl wrote: »

How do your neighbours get to move now then? Are the developers buying theirs before yours?

No, they know they will have to wait until the developers get Planning Permission but they want to sign the option agreement immediately. I have a horrible feeling we are going to upset them because I will refuse to sign the option agreement unless it specifically states the agreement will have to be re-negotiated after a year if they do not have Planning Permission by then as I am not commiting to sell to them unconditionally.

Doozergirl

Shame then that some people just see pound signs and are incapable of even researching if they are getting best value or are even protecting their own interests :cofused:

If it annoys your neighbours that you aren't entirely happy, then so be it.

If I were you I'd sign nothing and play hard to get.

At least have a valuation carried out independently of the likely value of your land with PP both as part of the proposed development AND with your own land with the possibility of either adding another house in the back garden if possible, or demolition of the existing house and replacements being built.