Last week’s article focussed on issues to think about when buying an unmodernised property. However, sellers should also be careful when considering the sale of a property in need of renovation.
Firstly, unmodernised is unmodernised! It is usually a waste of money to make improvements to a property on which people will want to do their own thing, and you could well fall between two markets. Certainly clear away an overgrown garden and remove whatever debris you can from the house. Preventative maintenance such as repairing a leaking gutter (miniscule cost to repair, but huge consequences if left unattended to) should also be undertaken.
It may well be that you have several buyers, which potentially puts upward pressure on the price. However, a surveyor might possibly “downvalue” the property, especially if his estimate of the renovation costs is higher than the buyer’s or there are no comparable sales in the vicinity. This can be an issue, particularly where the buyer is seeking a large loan to value ratio (LTV), the result of which could render the property unmortgageable at that level.
Do make sure your estate agent finds out what the buyer’s position is. Do they have a property of their own to sell? What level of mortgage are they applying for? Have they renovated a property before, or will they be in for a shock when they get their building quotes in? It may be that they have plans for the property that would be unlikely to gain planning permission, or which would breach a restrictive covenant, causing the sale to fall through some way down the line.
So it is always worth considering the position of the buyer in context. Ideally, provide as much information as you can up front, and do consider the possibility of inviting sealed bids. (Next week – “Buying an Unmodernised Property”)