Assisted sale on a property is a very specialized solution although a number of property investors do buy this way.
Now there is quite a few scenarios that lead to an assisted sale but simplicity I’ll talk through one which is the most common. And this is where by, say an owner or landlord, has a property for sale that is not in very good condition but they want more money for it than buyers are willing to pay, leading to the property sticking on the market.
Somebody may come along and offer an assisted sale with you. How this works is, they’ll exchange contracts with you and they’ll have a delayed completion.
And what will happen is they’ll carry out the repairs. The buyer will invest, will carry out the repairs and do all the work and pay for them. And then there’ll be a legal contract, which will be drawn up by solicitors.
Once that’s done the property is going to be worth a lot more money.
For round figures, let say the vendor wanted £100,000 but the property couldn’t achieve that because it needed a lot of work.
Let’s say the vendor agreed on £60,000 and the work needed total £10,000. A total of £70,000.
What would happen in this instance: the work’s been done, the property will be re-advertised and sold for £100,000,. Now, the vendor wouldn’t get the £100,000 but they’d get a lot more than the £60,000 taking some portion of the new £30,000 equity.
Be mindful that these figures are just an example. I would expect a little bit higher profit. But say there’s £30,000 leftover. The investor might propose that the first £20,000 is retained by them with £10,000 going to the vendor. Giving the vendor more capital and the investor a return on the investment they made to your property.
Assisted sale works very well on higher value properties because the price appreciate is higher. Whilst with lower value properties the margins may be very limited in order to incentivise the investor to take the risk of investing their capital.
Get up over the £100,000 mark and that’s where there is some meat on the bone.
There could be thousands of pounds there for the investor, allowing the vendor to also benefit from achieving much more money than the property is actually currently worth without the refurbishment.
So an assisted sale property solution is a win win situation for both parties.
We’ve completed a number of these assisted sale solutions for vendors so if you want a chat about this or anything else to do with assisted sale property solutions, please feel fret get in touch by calling 0191 486 2386 or filling out the form below and Ill give you a call back.