Does this scheme exist?

Woolington

Why would you put a £500k auction reserve on a property that would only be worth £450k at auction...?

they want fast money! and they're not very realistic - they think that mentioning it had a prize winning garden in 2005 will improve its value!!

Unless you and your brother can raise the money to buy the other two out, and do the work

its a bit catch 22, because without the repairs (according to the surveyor and two estate agents) we won't get a mortgage, I'm not sure we could raise that much in a loan...

thank you for your thoughts so far - I hadn't even thought about CGT. All food for thought. Thank you for taking the time to answer :-)

AdrianC

Woolington wrote: »

Unless you and your brother can raise the money to buy the other two out, and do the work

its a bit catch 22, because without the repairs (according to the surveyor and two estate agents) we won't get a mortgage, I'm not sure we could raise that much in a loan...

Then get it in the auction, because you're not going to get the work done - even without having to buy your brothers out.

Tom99

Woolington wrote: »

I think the other family members' objection to this is that it might prolong the selling process - my understanding is that it is currently un-insurable so can not get a mortgage. Do we just sell it as it is with all the knowledge up front? perhaps include the survey? if so, what price would you suggest? I know the others would be happy with £500,000 as they intend this as their auction reserve.

The problem with an auction is that some cash buyers may be put off because they have to do all of the due diligence before bidding with no guarantee they would be successful.
You could line up an auction date for say Feb and market it with access to the surveys in the mean time.

sal_III

If the remedial work only costs £20k vs potential gain of £200k. Can't you and your brother offer to cover the full amount? This might make the other 2 more amenable, given the fact there will be no risk for them, only potential gain.

cloo

Honestly in your position, I'd pick your battles and sell up as is for an easy life as it were. Two siblings don't want to wait for possible extra money, so be it.

Woolington

Thank you all so far!
Emotionally, I'll be gutted not to have the opportunity to mend our old family home (not theirs). Part of them bailing out is their complete refusal to co-operate and/or communicate which seems unfair in that we'll be penalised for it.

The problem with an auction is that some cash buyers may be put off because they have to do all of the due diligence before bidding with no guarantee they would be successful.
You could line up an auction date for say Feb and market it with access to the surveys in the mean time

I haven't explored auctions at all. Is it always the case that houses sell for under their market value? it all seems like such a reckless gamble versus doing the repairs and having a guaranteed respectable sale at the end of it.

AdrianC

Woolington wrote: »

Emotionally, I'll be gutted not to have the opportunity to mend our old family home (not theirs).

Woah, woah, woah!

Put the "family heirloom" right back in its box. That way lies all sorts of problems.
It's a property, no more, no less.
It's a property that needs work. Substantial structural work.
It's a property that you do not have to take on, and substantial structural work that you do not have to take on.
If you do take it on as a joint project with others, then you are doing so simply for a share in any resale profit. You have no intention of living there.

But this much is for sure: you cannot force anybody to be part of that joint project if they don't want to be, and you can't afford to buy them out to do it without them.

I haven't explored auctions at all. Is it always the case that houses sell for under their market value?

What defines the "market value"? It's what a buyer is ready and willing to pay... No more than that...

Auctions are a great way of determining the market value of a property that won't sell easily via normal routes. That includes places that may not be mortgageable...

Will that price be a strong one? It depends. If nobody at the auction's tempted, it may not sell at all, or for a low price. If two stubborn and naive people get a bad does of the believing-daytime-TVs, then it may sell very strongly indeed. It's all about what happens on the day.

[Deleted User]

Woolington wrote: »

Thank you all so far!
Emotionally, I'll be gutted not to have the opportunity to mend our old family home (not theirs).

Ok Woolington, lets be honest here, you're not doing this because of some sort of emotional attachment to your family home, you're doing it to make money. The home will get sold renovated or not.

Woolington

Put the "family heirloom" right back in its box. made me chuckle!

Ok Woolington, lets be honest here, you're not doing this because of some sort of emotional attachment to your family home, you're doing it to make money.

Head definitely IS ruling heart. In my old menial job Id have had to work 4 years to make £50,000. There's a strong element of spite in the other pairs' decision which rankles.

£50,000 extra despite the 'ball ache and acrimony' is okay by me :-)

Will that price be a strong one? It depends. If nobody at the auction's tempted, it may not sell at all, or for a low price. If two stubborn and naive people get a bad does of the believing-daytime-TVs, then it may sell very strongly indeed. It's all about what happens on the day.

this gamble aspect is not okay!

I've decided to approach a different estate agent - tell them everything and get their take on things. They sold a similar house last week (on at £650,000) it had sold within a week. I wonder if they have other disappointed buyers. The other two might give in if there was more assurance that they'd get a quick sale AND more money....

Thank you all for your input - it's moved my viewpoint a lot!

AdrianC

Woolington wrote: »

There's a strong element of spite in the other pairs' decision which rankles.

Spite? You really think they're turning down £50k because they don't want you to have £50k...?

And it isn't going to be £50k, is it?

It's not even going to be £50k each if you really can get a £200k sale price uplift.
Because from that £50k, you've got to take the costs of the work, the costs of ownership for the period the work's going on, the finance costs, and tax.

If you really walked away with half that, I'd be astonished.

BTW, £50k in four years is £12,500/year. That's £2k/year less than the current minimum-wage for a 37.5hr full-time week, after tax.