Notice of Interest and Making an Offer
We viewed what might be our 3rd buy to let property on Saturday 24th September 2011 at 9 AM. Another potential buyer had also arranged to view the property at the same time as us, but was running late so we didn’t get chance to see the potential competition!
As previously mentioned, we decided to submit a notice of interest on Monday 26th Sept, and our solicitor had replied that there was one other note of interest.
On Friday 30th Sept 2011, we contacted our solicitor saying:
“The property is offers in the region of £40,000, but needs quite a bit of work. The fact no one else has put an offer in may indicate the other viewers aren’t particularly interested…. It’s being sold by a management company and there was evidence of the property having been re-possessed from the occupiers, so they might be looking for a quick sale. They paid £40k for it back in 2005.
Could you please submit an initial offer of just £35,000 and see what they come back with? This should also flush out the other people who have a note of interest.
We are quite flexible on entry date – but are on holiday abroad in 15th – 22nd October, so realistically allowing for everything to be processed some time w/c 24t Oct would be our earliest date.
We are cash buyers so are not dependent on getting a mortgage on this particular property. (I might need to juggle some other assets around to free up the cash).”
On Monday 3rd Oct 2011, our solicitor informed us that this particular Buy to Let Property was now moving to a “Closing Date”, where by all interested parties issue a formal offer by a certain date and then the seller chooses from all the submitted offers. The reason the seller was doing this is because they had around 3 other buyers interested in purchasing the property.
It isn’t necessarily that the highest bid will always win when a property goes to a closing date. Hard facts like does the buyer have mortgage finance available and how big is their chain can potentially be worth many thousands to a seller.
So what should we offer for this property? We started out by researching what price the property had been sold for previously. We did this using http://www.ourproperty.co.uk/ which is free. The property had be sold 3 times in the last 10 years for:
May 2002 £26,623
May 2003 £32,000
Sep 2005 £40,000
So we new the previous buyer had paid £40,000 in 2005. The UK property market peaked in 2007 – 2008 and at that time this property would have been worth in excess of £65,000.
However we are now in an economic downturn and this property appeared to have been repossessed by the bank. The Home Inspection Report valued the property at just £40,000. Similar properties in the street were still being valued at £60,000, but only tended to sell when they were sold at around £50,000.
So what do we offer on this property which need a new kitchen, bathroom repairs and redecoration? Over a meal and glass of wine on lunchtime, my wife and I decided on what we would like to offer and we sent our solicitor the following email:
My wife & I struggled to make a decision on what price to offer on xx the Street and have discussed various options and strategies based on what work is required on the property, what we would like to pay and what, if any offers we think may be submitted by the other interested parties.
Taking everything in to consideration, we have decided to submit a relatively low offer of £37,620. Can you please place this offer in time for the closing date of 12:00 on Friday 7th Oct
So the offer is now in, so we now await news of if we have made a successful offer.