Receivership Level 3- Smethwick Flashcards
Where is Smethwick?
West Midlands
How did the property being occupied with no AST in place impact pricing?
I advised that there would be a discount in place due to the unknown occupation as the prospective buyer would incur legal costs to gain vacant possession.
what discount did you apply?
there would need to be sufficient discount to account for time, cost and risk of purchasing a property on terms unknown. We consider based on this in the region of 15% discount from vacant possession value however this can differ on a case by case basis.
Did you just give the instruction to yourself?
I always approach 3 agents to propose a guide price, and marketing strategy for the property, I then advised my client to proceed with allsop auctioneers.
Why did you proceed with Allsop auctioneers?
- national auction house
- catalogue reaches 70,000 people
- wide marketing
When you pricing a property on terms unknown how did you get to your value?
I looked at comparable evidence of recently transacted houses on the same street to determine vacant possession value
After speaking with local agents I understood that investors were mostly likely to seek a return in the region of 8%.
I established the market rent through recent lettings and then capitalised the rent.
form speaking with local agents and considering the time, cost and risk associated with the property being sold occupied on terms unknown in this case I applied a 15% discount from VP value.
What was the VP Value compared to Occupied on terms unknown value?
VP Value - £175,000
OUTO - £150,000
AST - £165,000
With commercial property I understand if there is a breach of the lease the receivers can obtain vacant possession? Why could you not do that here?
Protection from eviction act - would be a criminal offence to evict a residential occupant.
Why did you not recommend putting an AST in place?
The tenant was not co operative and did not want to sign an AST.
What would you consider if this property was 4 flats?
consider whether to sell the freehold or market individually
consider market demand for the 4 flats / supply.
