Archive | December, 2011

All I Want For Christmas: An Insurance Claim Free Year

20 Dec

As Christmas draws ever nearer and I am still trying decide what gifts to buy my loved-ones (note to self – have probably missed Amazon’s delivery cut off date) I am faced with a bigger quandary at this time of year…and unfortunately it’s not of the “how-is-santa-going-to-deliver-my-presents-when-I-don’t-have-a-chimney” quandary.

Nope. My dilemma is very seasonal for this time of year – it is: Can you ever claim too many times on your buildings insurance?

Making an insurance claim,  in theory, should be pretty straight forward – I pay my insurance premiums and I am covered for the damage that has occurred. (I won’t bore you with the latest fiasco, this is the season to be jolly and hang tinsel on the tree). However, I feel I’m now on the cusp of being every insurance man’s nightmare – because “I-am-the-customer-who-always-claims-insurance”. And the fact is, insurance companies make their money from the “customers-who-never-claim-insurance”

So I didn’t mean to become the “customer-who-always-claims-insurance” it’s just I’ve had a run of bad luck in the last couple of years and tenants being the darlings that they are, have ensured that my properties have remained problem-free-only-in-my-dreams…

And so I spoke with my broker about what to do, and my concerns with being “the-customer-who-always-claims-insurance” and whether any company in their right mind would ever insure me again and he informed me it’s not about the amount of the claim that is the issue, but the frequency.  Which quelled one concern, as the claim would be for several thousands of pounds.  But, it opened another concern, because unfortunately, not only am I “the-customer-who-always-claims-insurance” I am, in fact, a regular. I am a frequent flyer. I am “the-customer-who-regularly-claims-insurance”

I never wanted to be this person. I never wanted the loyalty card, bonus points and free desk top calendars that come with having my insurance broker’s telephone number on speed dial – I just somehow seem to have drifted into this territory.

And so my dilemma is – what is the probability if I claim again on my insurance, what is the likelihood that an insurance company will insure me again?  And if I find one that does, just what sort of mark up on the premiums am I going to have to end up paying? (bearing in mind I’ve already seen a 30% increase in the last 2 years due to my insurance incidents). And what choice am I actually going to have? Because the fact is, insurance companies insure those people who think something “may happen”, but it doesn’t. Insurance companies are not overly keen on people like me where something is “probably going to happen”.

So what to do? I have a valid claim.  But will the short term gain of claiming on the insurance for the damage be a long term pain?

Decisions. Decisions. Oh I would much rather be wondering what sort of mince pies to bake 🙁


How Listening To An Estate Agent Lost Me Over 100,000 pounds

13 Dec

Now there are many reasons why you should never trust an estate agent.  Consistently voted the least trustworthy professions I should know better…

So let’s begin.  It’s Wednesday 23rd November.  I see the below property going to auction with a guide of £65-70k and it’s being sold by Mortgagees Not In Possession.

I know it doesn’t look much. It’s described as an empty shop with one flat above in a place (South Ockenden) which sounds like the back end of nowhere.  However, let me enlighten you because I have done my research: it’s actually a popular commuter town, with pretty good property prices.  And in fact, the property comprises two flats, both of which have recently been refurbished and are let for a combined income of £1500 pcm.  Also, I can tell you the shop would rent for £800 pcm – so a combined rental of £2300 pcm against an auction guide of £65-70k.  That’s an incredible yield of over 40%!

In terms of value – you’re looking at c.£70k per flat and about £50k for the shop – so a combined value of £190k.  Plus, there is potential for additional income from the advertising board erected on the side of the property so we could say another £10k for that.  Plus, there is a rear yard/ storage area. All in, I would say we’re talking a total of £200k value.

So I’m used to tempting auction guide prices just to get you in – but this auction guide surprised me and I wondered if the guide was so low because they had only valued it as one flat rather than the two it had.  The catalogue entry stated that the auctioneers had not been able to gain access and the description was taken from the VOA website.

Doing my research I had discovered the building was on the market with a local estate agent with a price tag of £275k – far too top heavy so I reckoned that was the reason it hadn’t sold prior to being entered to auction.  I called the estate agent to find out what the issues are with the property, if they could get me in etc etc.  So imagine their surprise when they have no idea it’s going to auction and actually it was only put on the market a couple of days previously by the owner, who the estate agent I was speaking with, has known for a number of years, and who has bought and sold many properties with them.

Estate agent: “No, sorry you must be mistaken, that property is not going to auction”

Me: “OK, well this is the address I have – is that the same building you are selling?”

Estate agent: “Well, yes…but that can’t be it”

Me: “Well open this website to the auction page and tell me if this is the same building which they are selling which you are selling, it is a sale of Mortgagee Not In Possession perhaps that’s the issue?”

Estate agent takes web details and enters the site: “Well I never. Yes, this is the same building. Oh and it says it’s being sold by the mortgagees…hmmm that does sound odd. I know the owner and he hasn’t got any money problems and this property was only recently refurbished and let so I don’t understand this.  It really doesn’t make sense as we only took this on our books a couple of days ago”

Me: “Well, is it possible that perhaps the owner is having financial difficulties, but he didn’t want to tell you – and that is why he is trying to sell it – before if gets sold as a repossession?”

Estate Agent: “No, I really doubt that…but look I am going to call him now and find out more – give me your number and I’ll call you back”

*************Half an hour later***********

Estate agent: “I have spoken with the owner and he believes it’s a mistake, he has tried to call the auction house to find out, but they have closed at 5.30pm so he’s going to call them in the morning. He’s also going to speak to his business partner to find out what is going on, I’ll call you then when I know more – oh by the way I have said to him if he wants to sell quickly then I am more than happy to give him 70 grand cash – that’s a steal!”

Me: (feeling uncomfortable that I seem to have created a competitor) “OK that’s great thanks, speak then”

Now at this point my internal alarm bells should have been ringing.  If I owned a property, that unbeknownst to me was being entered for sale as a repossession in an auction, the first thing I would do is ring the bank to find out what on earth was going on!

Thursday 24th November – estate agent calls me and assures me it’s been a huge mistake, the property is not going to be sold at auction and the owner is now in talks with the bank and his business partner.  I call the auction house, as far as they know the property is still going to auction.  Hmm two very different opinions.

Friday 25th November – estate agent assures me the property is going to be withdrawn from auction, it’s all a big mistake and something to do with the business partner. Auction house still does not have any legal papers and so I am still none the wiser.

Saturday 26th November – Sam goes on holiday.

The following week I check online and still there are no legal papers available, the property is still showing as available in the upcoming auction, but at the same time is still showing on the estate agents site as for sale.  I think about what the estate agent has told me and figure that shortly the property will get withdrawn from the auction and that’s why there are no legal papers available. At the same time I also juggling the figures for an office block conversion we are proceeding on, so I withdraw my interest in the auction property so that I can properly focus on the office block – which is a receivership sale.

So now I am back from holiday and I am checking the auction results from the past few days…and you guessed it. It did go to auction. The estate agent was wrong.  I should not have listened to him. In fact, I bet he bid for it.  Whoever bought it, got a bargain. It sold for £80k. By my reckoning that’s over £100k profit when you split it and sell it on.  I should never have listened to the estate agent.  That just cost me a lost opportunity of over £100k.