Buying from a seller using a property purchasing company?

anna_alex_home

Hi all, 

My partner and I have viewed a house we’re interested in putting an offer in on (FTBs). The house is listed through a company/estate agent that specialise in quick sales, who we have since learned have been enlisted by a property purchasing company to put this house on the market.

When we viewed the property, the current owner was at home. She herself seemed confused by the arrangement she was in, and so are we! It seems she was offered a deal for her house to be bought by a purchasing company but now they've put the house on the market. Does anyone have any experience or advice around buying in this situation?

The agent has tried to reassure us that it makes no difference our end, but it’s ringing some alarm bells. We want to put an offer in below the current asking price, as the property hasn’t been looked after, but can’t tell if we’d be negotiating with the owner or the purchasing company. We’re also concerned that the owner may be being taken advantage of - and obviously don’t want to be a part of that!

Any thoughts much appreciated, thank you!

user1977

Sounds like it's probably a "back to back" transaction i.e. the house buying company has agreed to pay the hapless/desperate current owner £X, and will simultaneously complete that transaction at the same time as they sell to you for £X+20% (or whatever they can get from you). They waltz off with the difference (minus their costs).

The problem from your point of view is that lenders tend to have a policy of not lending where the seller to you hasn't been the registered owner for at least 6 months, which is generally going to include these sorts of deals. And even if they accept it, they may have severe misgivings about the value (given the evidence suggests that the current owner can't easily get more then £X for it, so how much would the lender get if they repossessed?).

I would probably avoid, unless you desperately like it.

GDB2222

The owner is almost certainly being taken advantage of, I’m afraid. If you don’t like that, walk away. 

You are negotiating with the property purchase company, which is really a trading company that wants to sell ASAP but will still want to get a good price. 

eddddy

As above, it's probably a "back to back" transaction - so getting a mortgage will be very difficult.  At best, it's likely to be a very expensive mortgage with a sub-prime lender.


FWIW, it's not your problem, but walking away probably won't help the current owner.

• Often "Quick Sale" companies target home owners in financial distress - e.g. struggling to pay their mortgage etc.

• Often the Quick Sale company persuades the home owner to sign a 6 month "option to purchase" contract. So the home owner cannot sell the house to anyone else, except the Quick Sale company for 6 months.

• The longer the Quick Sale company takes to find a buyer - the more mortgage payments the home owner has to struggle to make

• So as time goes by, and the home owner gets more desperate, the Quick Sale company can more easily talk the home owner into accepting an even lower price

So making an offer quickly would probably reduce the home owners misery - but like I say, it's not really your problem.

anna_alex_home

incredibly helpful answers everyone, thank you! really appreciate you sharing your knowledge