idea to help sell house

kristian12

A friend came up with an interesting concept when a group of us were talking about one of us not being able to sell an inherited house as they had no money to put it right.

What about getting someone whose willing to pay for the work to be done and then giving them their investment back plus 1 or 2% when the property sells. So if they spend say €3000 doing up a house and it then sells for €100,00 they get back €5,000. Do you reckon it would work or are there companies out there already doing this?

robertdoyle

It sounds like a good idea to me but I think that encouraging somebody into such a deal would be difficult. There are often people advertising on DoneDeal in regards to offering a start up capital to the right investment so you should check that out. The only thing is that there would obviously be a trust issue with the entire deal. You should also offer a higher percentage in the difference of valuation, i.e. have the property valued before and after the work is completed and offer say 30% of the difference upon the realization of sale.

I am sure that there would be carpenters and interior decorators interested in such a deal.

kristian12

Thanks for the advice really appreciate it.

I suppose it would depend on how much they want to sell, The idea of such a low percentage is its more likely to encourage people into thinking its a good deal but maybe the percentage could be on a sliding scale to size of value difference/

Peterdalkey

It seems like a rather good idea to me. Those who invested money, materials and/or time would want to get more back than they put in, based on agreed figures, to reflect the risk they are taking with a top bonus for a bigger than estimated final sale revenue.

Cianos

I think you'd have to put at least some money down as a guarantee for the person doing the work.

They've no guarantee that the house will be sold, or for how much. Anything can happen, be it a family disagreement, unforeseen circumstances delaying the sale, etc.

Putting some money down should attract someone who isn't entirely desperate for the work (ie more likely to be better at what they do), and will give you more leverage when negotiating their % of total sale.

kristian12

Cianos wrote: »

I think you'd have to put at least some money down as a guarantee for the person doing the work.

They've no guarantee that the house will be sold, or for how much. Anything can happen, be it a family disagreement, unforeseen circumstances delaying the sale, etc.

Putting some money down should attract someone who isn't entirely desperate for the work (ie more likely to be better at what they do), and will give you more leverage when negotiating their % of total sale.

I'd imagine you'd have to figure the problems/delays in selling into business and contingency plans. Would a contract lodge with sellers solicitor be legally binding i wonder.

Surely if the person had the money to put into it they'd do it themselves? but maybe asking for a small contribution is not a bad idea either, they might have some but not all of the money.

ironclaw

I think the biggest problem here would be the 'if it doesn't sell clause' There are plenty of properties on the market for years, great locations etc but just no buyers. Even €3000 is a lot to be tied up in a property for any period of time and given the nature of 'doing a place up' you can't exactly take your money out (Un-paint the walls etc) if it goes sour.

It would also be a three-way contract if I'm reading this right? A seller, your company promoting the work and the contractor who does it up. I'd imagine with a big sale, remembering fee's, tax and capital gains, that it may get sour when you start to split up the money.

JD Dublin

I think that anyone that is busy working on other projects would want a bigger return than a 1% bonus - or maybe that is the percentage of the sale price of the house that they would get?

Anyway it seems to me to be simple enough - contract with the service provider to get work done, on a deferred basis i.e. payment within 12 months or on the date of the sale of the building.

A solicitors undertaking is enough, I collected money from a customer who owed me money, his solicitor gave me an undertaking that he would pay me from the proceeds of the sale of the family home. Solicitors undertakings are a promise by them that they will pay a particular bill. ( at least that is my understanding of it )

12 months should be long enough to sell the place, dont you think? And if the place isn't sold, then you will just have to suck it up and pay the builder yourself at the end of 12 months

kristian12

Thanks yes it would be a percentage of sale price so if a house sells at €150,000 and agreement is 2% then your return would be original cost plus €3,000.

A solicitors undertaking is a good idea.