Buying property from a receiver

dianadublin

Has anyone bought residential property from a receiver and could share their experience?

StillWaters

I have recently, it followed the same procedure as any other sale.

It was much slower though, as I suppose there was no-one really pushing from the vendor's side the same way as a private sale. Also, my solicitor warned that many of the standard questions, eg boundary and planning issues asked would probably be met with a 'don't know', so it is very important to do your own research to make sure everything is in order.

dianadublin

Thanks for that info, StillWaters. Was there a big difference between the asking price and what you actually paid for? Also, how were your dealings with the estate agent?

ArraMusha

StillWaters wrote: »

I have recently, it followed the same procedure as any other sale.

It was much slower though, as I suppose there was no-one really pushing from the vendor's side the same way as a private sale. Also, my solicitor warned that many of the standard questions, eg boundary and planning issues asked would probably be met with a 'don't know', so it is very important to do your own research to make sure everything is in order.

Stillwater, now did you get in contact with the receiver i.e. was this outside of an EA?

StillWaters

The property was advertised via an EA, the EA told me at the viewing it was a recievership. Yes, there was a big difference between asking price and price they accepted >50%.

ArraMusha

Fair play to ya!

engineermike

Hi -
I have recently been involved in a no. of sales of homes were the receiver was vendor.
My capacity was acting as structural engineer / surveyor on behalf of private buyers. From the process I can advise:
- It can lengthen the normal conveyancing period considerably, layers of difficulty are added when structural issues - building inspection defects, which must be quantified and costed, resulting renegotiation is tedious.
Status of build (i.e - first fix, second fix, completed home) - and point it was interrupted has wide ranging implications for the buyer, partial opinions / or incomplete opinions on compliance begin offered, should be looked at carefully by your engineer.
- also the status of management company should be looked at carefully.
Mike F;)

bear2011

Hi, looking for some info on the details of properties that are for sale by receivers. i.e. do receivers(kpmg etc) list the property for sale of building firms that are in receivership? Also is there many firms in the country than do receiverships?

bear2011

Hi, looking for some info on the details of properties that are for sale by receivers. i.e. do receivers(kpmg etc) list the property for sale of building firms that are in receivership? Also is there many firms in the country than do receiverships?

Scortho

bear2011 wrote: »

Hi, looking for some info on the details of properties that are for sale by receivers. i.e. do receivers(kpmg etc) list the property for sale of building firms that are in receivership? Also is there many firms in the country than do receiverships?

The upcoming allsop space auction would contain a lot of units that are in receivership.
Nama as far as I remember have a list of all repossessed properties but not all of them would be advertised on the open market.
Some estate agents such as cbre have a large amount of commercial properties in receivership.
Finally companies such as kpmg, grant Thornton Etc would have properties as well listed.

This is grant Thorntons list of residential ones:http://www.grantthornton.ie/propertydatabank/Residential

okidoki987

No prices on the GT list, do they look for offers?

Scortho

okidoki987 wrote: »

No prices on the GT list, do they look for offers?

I'd say enquiries first. Then put in an offer. Some people who I know have gotten receiver properties at significant discounts to the asking price.

blops2013

Scortho wrote: »

I'd say enquiries first. Then put in an offer. Some people who I know have gotten receiver properties at significant discounts to the asking price.

How significant

Scortho

blops2013 wrote: »

How significant

Between 40-60%. It was a long drawn out process of close to a year.

blops2013

Scortho wrote: »

Between 40-60%. It was a long drawn out process of close to a year.

40-60% of market value(if there is such a thing in this climate) or 40-60% from peak of the boom. Also can you give us exact numbers because 40-60% from a 500,000 property would be different to 40-60% of one under 100k

Scortho

blops2013 wrote: »

40-60% of market value(if there is such a thing in this climate) or 40-60% from peak of the boom. Also can you give us exact numbers because 40-60% from a 500,000 property would be different to 40-60% of one under 100k

The price the receiver was originally looking for was the around the 2m mark for commercial units which were unoccupied and needed further work. Negotiations had started in 2010 but didn't finish until mid 2011. The original offer was rejected but after the whole IMF/troika bailout the receiver came back to him to discuss business.
I'd take a hardball attitude with receivers. They are much more likely to negotiate as their job is to get the best bid. They don't want to hang onto the property for a number of years and will have no personal attachment to it. In comparison an owner will most likely reject a low offer whereas the receiver will keep you in mind just in case. Being able to prove that finance is available will improve your side of the negotiations.

RATM

Thanks for the info Scortho.

It would be interesting to hear exact figures from other posters for residential recievership sales to see what kind of discounts are possible from current prices. I guess it is a supply-demand scenario as to how big a discount is achievable but if for example a receiver had a 2 bed apartment on their books for 2 years without a sale would they then be willing to apply 40-50% discounts ? I guess what I'm asking is whether or not there is a time frame by which time they haven't sold it that they decide to sell at any price ?

Like others I'm chasing a bargain for cash as there isn't a hope in hell a bank will lend to me (self-employed).
All the buy to lets that are in arrears are supposed to be going into receivership in 2013 so these questions about possible discounts are going to be cropping up more and more IMO.

Scortho

RATM wrote: »

Thanks for the info Scortho.

It would be interesting to hear exact figures from other posters for residential recievership sales to see what kind of discounts are possible from current prices. I guess it is a supply-demand scenario as to how big a discount is achievable but if for example a receiver had a 2 bed apartment on their books for 2 years without a sale would they then be willing to apply 40-50% discounts ? I guess what I'm asking is whether or not there is a time frame by which time they haven't sold it that they decide to sell at any price ?

Like others I'm chasing a bargain for cash as there isn't a hope in hell a bank will lend to me (self-employed).
All the buy to lets that are in arrears are supposed to be going into receivership in 2013 so these questions about possible discounts are going to be cropping up more and more IMO.

The time for commercial properties was 2011-market was absolutely dead and there was uncertainty in relation to upward only's. there was properties changing hands with yields of over 10%. There were a few last year as well in this range or close to it (state st, castle st) but there were more bids put in.
A receiver has no connection to the assets. If he has something on his desk for the last 2 years, he's doing something wrong. He wants to get out of it as soon as possible with the best price that he can get. Look at kpmg and ibrc. I've heard 6-12 months to get rid off loan book.

You're best bargain will come from fire sale of apartments in the btl sector. Most likely someone like allsop space. While these auctions have low reserves to get people in the door, some properties have gone for fairly good value. Again once they meet their reserve they're on the market. It's up to the bidder to decide if they're getting their monies worth for them.
When bidding on a btl, and especially if you intend to rent it out, bare in mind the yield which it will offer you and set a price above which you won't go. I've gone to allsops auctions before and seen people get carried away and end up paying over the odds for the property.

RATM

Scortho wrote: »

T

You're best bargain will come from fire sale of apartments in the btl sector. Most likely someone like allsop space. While these auctions have low reserves to get people in the door, some properties have gone for fairly good value. Again once they meet their reserve they're on the market. It's up to the bidder to decide if they're getting their monies worth for them.
When bidding on a btl, and especially if you intend to rent it out, bare in mind the yield which it will offer you and set a price above which you won't go. I've gone to allsops auctions before and seen people get carried away and end up paying over the odds for the property.

Yeah I've been at a couple of them myself with a friend who has the cash to pick up a BTL on the cheap. He wouldn't do it for anything less than a 10% gross yield so for each property that interested him location wise he had an upper limit figure in his head which was based on the rent achievable. On several occasions he was outbid as amateur investors got into bidding frenzies with each other. On one particular property he calculated that the purchaser would be lucky to get a 6.4% yield at current rents- pure madness when you factor in all the extra property taxes, forthcoming water charges, etc and also when you could have your money on deposit at 3.5-4%. As he said what is the point of taking a risk if all it will give you is 2 or 3% above what leaving the money on deposit would.

Some people have been fortunate enough to purchase BTLs with 10% and higher yields but it still amazed me how many people had not learnt any lessons from the crash and were still willing to jump in gung-ho for miniscule profits.

dahamsta

I bought a 4 bed detached from a receiver a couple years ago and while I agree about the delays, we only got a small (<2.5%) discount over asking because the first sale fell through )failure on their part). The houses were very keenly priced though, only 6 were available, and they sold quickly. The process took over 6 months though, and they / their solicitors were a complete pain in the hole to deal with. The EA was actually the nice guy in our case.

Point being, your mileage may vary.

Scortho

RATM wrote: »

Yeah I've been at a couple of them myself with a friend who has the cash to pick up a BTL on the cheap. He wouldn't do it for anything less than a 10% gross yield so for each property that interested him location wise he had an upper limit figure in his head which was based on the rent achievable. On several occasions he was outbid as amateur investors got into bidding frenzies with each other. On one particular property he calculated that the purchaser would be lucky to get a 6.4% yield at current rents- pure madness when you factor in all the extra property taxes, forthcoming water charges, etc and also when you could have your money on deposit at 3.5-4%. As he said what is the point of taking a risk if all it will give you is 2 or 3% above what leaving the money on deposit would.

Some people have been fortunate enough to purchase BTLs with 10% and higher yields but it still amazed me how many people had not learnt any lessons from the crash and were still willing to jump in gung-ho for miniscule profits.

During the boom times people were borrowing money at an interest rate higher than the yield. McNamara bought this at a yield of less than 2% :eek:
http://www.irishtimes.com/newspaper/finance/2012/0229/1224312517361.html

They eventually sold for 2.9m but demand was high with over 100 enquiries.
http://www.irishtimes.com/newspaper/finance/2012/0418/1224314863447.html

One that caught my eye in the article was the unit purchased by may frisby of pasta fresca for 4m. That's a lot of pasta dishes one would need to sell every month if it was unoccupied for even a short time. Also a new tenant would be paying a much lower rent I'd imagine making a likely default more plausible.

makeorbrake

Scortho wrote: »

They don't want to hang onto the property for a number of years and will have no personal attachment to it.

I originally was inclined to think this to be the case until someone pointed out to me that it's in their interests to have these properties on their books for longer - as they can rack up fees all the while.

I'd be interested to hear of instances where people did get a property following major discounting - not sure if there really is such a difference at all. In fact, far from advantages, it seems that a purchaser could well be disadvantaged overall with a receiver sale.

Darith

I'm about 4-6 weeks into a buying a property form a receiver myself. Just rang my solicitor today and got rather negative news. The receiver or their solicitor are not answering any questions about a management company so she doesn't even know whom owns the road on the estate etc in the event of a mains burst how it would be be fixed etc. She advised not to buy; that it is unsaleable and seem to indicate i would be unable to become part of the management company. She also indicated that i would half to sign an indemnity to mitigate any comeback against my solicitor on my behalf if i did decide to proceed.

Can my solicitor not deal with the management company directly to allow to become part of the management company?

I understood the risks of buying a receivership in that the title i would end up with, could be highly unsaleable but would i end up as outright owner of the property?

Should i change solicitor? Anybody pm someone whom might deal with this better?

Graham

Darith wrote: »

I understood the risks of buying a receivership in that the title i would end up with, could be highly unsaleable but would i end up as outright owner of the property?

Should i change solicitor? Anybody pm someone whom might deal with this better?

I don't really see the issue with your current solicitor to be honest.

Your solicitor is highlighting the risks and advising that if you proceed, on your own head be it.

Darith

Graham wrote: »

I don't really see the issue with your current solicitor to be honest.

Your solicitor is highlighting the risks and advising that if you proceed, on your own head be it.

I think the indemnity which primarily refer to the management company. I need to check this.

Graham

Darith wrote: »

I think the indemnity which primarily refer to the management company. I need to check this.

It's not unusual if you're going to act against the solicitors advice.

He/she just doesn't want you coming back in 18months time claiming it's his fault and you weren't aware and you're going to sue.

Most people are essentially paying for the solicitor to make sure you have good saleable title. The solicitor is telling you that you may not have.

Darith

Graham wrote: »

It's not unusual if you're going to act against the solicitors advice.

He/she just doesn't want you coming back in 18months time claiming it's his fault and you weren't aware and you're going to sue.

Most people are essentially paying for the solicitor to make sure you have good saleable title. The solicitor is telling you that you may not have.

Don't get me wrong, i understand and accept my solicitor's advice plus reasoning. If i was in her position i would do the same. I will go back to her to ascertain is it possible to buy this property and find what can be done with the management company. If i do proceed i will also have to employ a architect to do a planning/ compliance survey.

Graham

Darith wrote: »

Don't get me wrong, i understand and accept my solicitor's advice plus reasoning. If i was in her position i would do the same. I will go back to her to ascertain is it possible to buy this property and find what can be done with the management company. If i do proceed i will also have to employ a architect to do a planning/ compliance survey.

I hope the property is being sold at a very significant discount.

At the end of the day, you will be buying with a significant element of risk. The price should reflect that.

On the other hand if you push the vendor into removing/reducing the risk, you're essentially pushing them to increase the value before you buy. I doubt that will be an issue though as they won't do it. You'll most likely end up with two options; take it as is or leave it.

Darith

Graham wrote: »

I hope the property is being sold at a very significant discount.

At the end of the day, you will be buying with a significant element of risk. The price should reflect that.

On the other hand if you push the vendor into removing/reducing the risk, you're essentially pushing them to increase the value before you buy. I doubt that will be an issue though as they won't do it. You'll most likely end up with two options; take it as is or leave it.

Yes, there is a discount. I'm just confused that my solicitor did not find out whom the management company were themselves instead of waiting on the receiver. Just rang an director of the Man. company whom past on the solicitor details representing it. Just emailed said details to my solicitor hoping she can find a path forward to include me in the man. company in the event of a purchase.

Samuel T. Cogley

Is the property a house or an apartment, is it leasehold or freehold? Are you buying cash or with a mortgage? If it's the latter then a bank is very unlikely to lend on the property.

Darith

Its a freehold house in a managed estate. I will not be borrowing to buy.