Buying a property being renovated

dlevene

First time buyer, was doing some research and looking into previously sold properties in a particular area. Came across a particular development that ticked all my boxes - location, character, size, budget.

Went for a walk to checkout the neighbourhood, and wouldn't you know it, spotted some contractors renovating one of the properties. Had a chat with them, they called the owner, who sounded interested in principle and gave me his number to give him a call. Couldn't quite believe my luck.

Does anyone have any advice or tips for this situation? Any resources people can point me to? The property's not yet being advertised - won't be finished for another 6 weeks. A potential win win for everyone - quicker sale, avoiding agent fees, etc - but what do I need to know in terms of the process?

Really appreciate any help.

greatcrested

Well once developer has got a buyer, all incentive to do a 'proper' job vanish.......

dlevene

I mean I guess the owner has already paid for the contractors to do the work, so doesn't necessarily have a direct incentive to cut corners, but yes this though occurred to me and was wondering how I avoid it! I guess it all comes down to how much I have to commit before the job's done...

Are you saying I should avoid?

Mickey666

I'd guess it's not much different to buying a new build in principle, except there's no show home to see what the final result will be like.  But if you like what you've seen so far perhaps you could negotiate some sort of 'first refusal' deal with the owner so you have a chance to make a firm offer before they market it.  As you rightly say, it would at least save the owner EA fees, which you could knock off the asking price.  Also, a quick sale might be worth something to someone who has already paid out a fair bit for the renovation.  All speculation of course, but what have you got to lose?  There are no real rules as such, just offer what you're comfortable with and see how it goes - it's a negotiation after all.

Do you know what the asking price will be?

Mickey666

greatcrested said:

Well once developer has got a buyer, all incentive to do a 'proper' job vanish.......

I know what you mean, but I wouldn't recommend making any sort of binding offer before the work is finished and can be inspected.  Could also still have a survey, so it would be a bit shortsighted of the owner to do a bodge-job just because they have a potential buyer.  Not saying it couldn't happen though, just that we can't really know for sure.

dlevene

Yeah that all makes sense.

I've done a lot of research into nearby properties, so have a good idea of both a) what it'd be worth and b) what the end result will look like. Both of which I'm happy with.

I guess the trick will be to avoid committing any significant costs in terms of conveyancing etc before it's finished, while keep the owner hooked!

dlevene

Well that didn't work out.

The owner is insisting on throwing a lot of money at the renovation: imported Italian doors, top end kitchen appliances, two additional en-suites (including one with a couple of other kitchen bits, such as a fridge and a literal kitchen sink).

I get trying to maximise the value of the property, and obviously it's his call, but I do think he's going to price himself out of the market especially as things slow down. I was willing to pay 10% over what a very similar property on the same street went for last autumn, and didn't come close to what he was willing to sell it for, despite that being far more than anything else nearby.

Anyway, wasn't meant to be. Thinking of doing a leaflet drop for the other properties on the street.

Doozergirl

I'm nothing but impressed with your developer, frankly.  As long as the job is done correctly, the market will find the price for it.   I don't care how much they overdevelop it if it's done well.  

The value of doing something well is worth more than the average house price.   Buyers may not realise it, not buyers win for not doing so.  It's a win.  

eddddy

dlevene said:

I was willing to pay 10% over what a very similar property on the same street went for last autumn, and didn't come close to what he was willing to sell it for, despite that being far more than anything else nearby.

Anyway, wasn't meant to be. Thinking of doing a leaflet drop for the other properties on the street.

I guess it's not too surprising that the developer would only consider a 'top-end' offer at this stage.

But if you're right about the price, and the developer is wrong - I guess you wait around for a few months, and wait for the price to come down, and then try your offer again.

(I think you might hit a similar problem with leaflet drops. People are likely to think you're desperate to buy a property in that area, and expect you to make high offers, in order to tempt them into selling.)

dlevene

eddddy said:

(I think you might hit a similar problem with leaflet drops. People are likely to think you're desperate to buy a property in that area, and expect you to make high offers, in order to tempt them into selling.)

Yes that's the worry.

It's frustrating because the one that went in the autumn was perfect, had been on the market for ages, and went for a price I would have gone for, but I hadn't started my search in earnest then. Others have gone for similar prices since 2014.

Might just need to be patient I suppose. Just keen to get moving - if nothing else sick of working off my (rented) dining room table!