shutterstock_641524333_edited.png

Off-Market Sales

An off market sale is the preference of many investors; seen as an opportunity to purchase property for below open-market value, often with a tenant in-situ and requisite rental certifications  in place.

 

The reality isn’t always straightforward - ‘deals’ are hard to access, often these properties are rented at less than optimum yields, and in a sellers’ market private investors are less likely to sell at bargain prices

 

But in a frantic market where properties are selling fast and competition led sales prices are commonly at eye-watering levels above Home Report values, an off-market sale can be a much more straightforward, transparent means of acquiring property.

 

 

Why Off-Market?

A seller may want to sell a property off-market for a number of reasons:

 

Discretion

For multiple reasons a landlord may want to quietly sell a property and discretely to avoid unwanted attention.

Cheaper Selling Costs

To save on selling costs. Marketing costs, which include photography (and commonly videography) plus listing costs can cost many hundreds of pounds. For sellers this also means paying pricey agent commission fees.

Ease of Sale

No need for multiple viewings and liasing with potentially inflexible existing tenants.

Minimal Vacancy Periods

Off-market sales with tenant in-situ means minimal loss in revenue for landlords. Typically an agent will recommend not selling a property with tenants in-situ in order to market the property in its best condition and achieve a higher sales price. This can mean 4 months or more in lost revenue while a property is marketed, viewed, then eventually (after the lengthy legal process), sold.

Efficiency

There is less ‘property tourism’ off-market with mostly just serious buyers to deal with. Failed lending is a major factor of many aborted property transactions and this sector of the market is less likely to be exposed to high Loan to Value, high-risk borrowing.

Moral Obligation

By selling with tenant in place you are not displacing existing tenants

Screenshot 2021-07-02 at 15.37.41.png
The Off-Market Purchase Process

Purchasing off-market property in Scotland typically works a little differently to buying traditionally through an agent.

 

Crucially the main difference with off-market transactions is most commonly there will be no home report available or up to date valuation (at least initially). Home reports cost upwards of £400 and often off-market sellers are not actively courting sale. It is likely they will not want to pay for expensive home reports until they know that there is a serious buyer interested.

 

Typically, the process is (but not always) as follows:

1.Introduction

Buyer is given as much detail on the property/properties as possible but this will typically be limited (due to no marketing material) It will typically include:   Address, Rough sq footage, brief account  of condition , financial summary including current rent, ‘desktop valuation’, asking price (and ideally pictures/videos)

4.Valuation

Instructed by seller (or home report depending on sellers preference - sometimes seller will demand buyer pays for upgrade to home report)

2.Conditional Offer

An offer is discussed then formally submitted through lawyers SUBJECT TO VALUATION/HOME REPORT (This will cover assessment of condition and the official surveyor valuation) Offers are made at this stage (subject to conditions) to convey trust between seller and buyer that buyer is serious.

5.Decision

Sale either halts or proceeds based on above

3.Viewing(s)

Viewings if not already taken place (in person or by agent).                

6.Lease Reassignation

If tenants are inherited with property

Portfolio Sales

Buying property in ‘bulk’ - as a portfolio  - is an extremely attractive prospect to serious investors. Often offered at a discount, this offers additional considerable savings to buyers as under current UK tax rules any single transaction of 6 or more properties is exempt from ADS (Additional Dwelling Supplement ) -  a 4% of sales price tax due on purchase of ‘second and additional homes’ (3% in England). Limited companies and SPV’s (Special Purchase Vehicles) will incur this tax on property no 1.

shutterstock_236566177_edited.jpg

 

As of November 2021 we have access to over 300 off-market properties, both as portfolios of 6 or more properties and as individual prospects. We specialise in Edinburgh but our off-market opportunities stretch to high yield locations throughout Scotland.

We also represent multiple sellers who choose the Off-Market route to selling their investment properties.

 

For any more information on off market sales please contact us at: david@propertybeeinvestments.com

Off-market opportunities at Property Bee.