Auction Property

The half price flat in Bristol…what a saga!

Today I am going to write about a cheap flat in Bristol which I nearly bought, then my friend Rich nearly bought… and then neither of us bought!!
It all started when I saw a flat for sale in Bristol – it looked cheap and while I don’t know the area, my friend Rich (a builder and investor) lives there. I asked him to take a look for me and he kindly reported back – the flat was in great condition and in a popular area for tenants – would be a good renter and a good seller. Only problem was I was due to fly out on holiday the next day.  Fortunately I know the auctioneer and I said if it doesn’t sell keep me updated.
So there I was lying on the beach sipping cocktails and I get a text from the auctioneer that the flat hasn’t sold… several texts backwards and forwards between Rich and I and I establish a price which I am happy to pay. The reserve was £40k and so I offer a cheeky £30k….
It comes back 5 mins later “No, sorry too low”.
So I increase to £32k…
It comes back 10 mins later “No, sorry still too low”.
I try £33k….
One hour later “Sorry, still no”.
I have a couple more cocktails and decide my final bid.
“£35k is my best and final offer” I text the auctioneer.
I hear nothing…hmmm maybe they are thinking.
Next morning…
“Sorry still too low”.
I decide that I’m out and I get on with enjoying the rest of my holiday.
One month later I am emailed by the auctioneer.
“Are you still interested in that flat in Bristol at 35k?”
Well one whole month has passed and I have now decided that I will stick closer to home in my investments and so I decide it’s not for me – although it is a good price and there is money to be made (resale was c.£75k) So I decide to call Rich (who had seen it originally) and ask him if he is interested.
“What – you have a chance to buy that flat for £35k and you’re not going for it?” He sounds flabbergasted.
“Well, I have decided that I am going to stick to my area for now and so I am passing on it” I reply.
“How long have I got?” He asks.
“Not long” I reply “you have to act quickly”.
Rich springs into action and quickly finds a joint partner who wants to buy the flat with him. Issue is there are some legal problems which basically mean while you own the flat – you don’t have right of access to the flat! It requires sorting out to make it worth the money.
Rich decides it’s prudent to get it sorted before exchange and hires a private detective to track down the freeholder. She turns out to be the same person who owned the flat and got repossessed. She is very elusive, and after 3 days of travelling to a series of empty properties he eventually finds the mother – who has her telephone number!
Meanwhile…Rich’s investor has got annoyed with the estate agent for not returning his calls to view the flat, so he’s no longer interested. Rich can’t believe he’d pass up a half-price flat over something so petty, but quickly finds a relative who’ll partner with him instead.
In the meantime, he’s negotiating with the freeholder to buy the title (which would then secure legal access to the flat and double the flat’s value). All this happens within a few days, but meanwhile – out of the blue – an offer of £38k is put forward by the estate agent.

The auctioneer is very apologetic but asks if Rich will increase his offer. Having agreed a price Rich is unwilling to bid away his profit. He persuades the auctioneer it may be a frivolous bid from an amateur who doesn’t fully understand the legal issues. This is accepted and they say whoever gets to exchange first gets the deal.

Rich quickly gets the freeholder to agree a price, then spends the next 2 days frantically driving around the country delivering papers for investor’s signatures and contracts to solicitors.
First thing Friday morning the solicitor tells Rich exchange will take place in half an hour. But at midday the solicitor calls back to say the vendor (the repossessing bank) are refusing to exchange.
Turns out they changed their minds and have put the flat in an online auction… they want to see how that goes before they’ll exchange. The auction ends on Sunday at 7pm.
Rich is at his wits end – he’s pulled out all the stops to get this sale through. Offering higher bids could end up making the whole deal unprofitable if the rival bidder follows suit. He’s still hoping it’s an amateur who’ll be unable to exchange.
On Sunday the online auction deadline approaches and he watches in horror as the bidding reaches its reserve of 38k… presumably to the same person who had given the 38k offer to the estate agent.

And that’s the end of that.  The buyer exchanges and completes on the flat within a matter of days.

Rich is left with a hefty legal bill and a slice of disappointment pie.

The morale of this story – if you see a bargain – act quickly and decisively. Time waits for nobody.

  1. Rich Greenland

    Yes it was a massive lesson. Not only that but I now have the investors in place, the solicitor in place and with the investors’ and my ID, and a clear strategy to move forward with. Which I didn’t have until I sent an email to Sam asking for advice and altho I don’t remember her ever telling me what to do, somehow this grew out of the conversation. So a big thank-u for Sam, and a bottle of bubbly or two when I get the first one thru.

    I’m working on two other deals right now but these are very different and both require a lot of patience for different reasons. Basically my strat involves looking for problem properties which most people are afraid to buy. Figuring out how to fix the problem, then buying with investor finance at a massive discount. Letting or selling depending on circs. Lots of properties have problems and only some are economical to fix. It’s knowing the difference and using creative ways to fix them.

    BTW Sam I subscribed to your blog but I’m not getting email notifications when they appear.

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