The best way to market and sell a small development site in London? Auction or closed offers?

Discussion in 'Development' started by Lee7, Oct 14, 2018.

  1. Lee7

    Lee7 New Member

    Hello again everyone,

    Has anyone got any tips, opinions or comments on the best way to market and sell our small site? We’ve had some rough valuations and been told we can expect offers of over £350k. Any comments on any of these points would be appreciated!

    • Perhaps most importantly, auction? Or invite closed offers in a set (maybe 1 month?) timeframe? Which is likely to get us the best price for this sort of site in the current market?
    • If auction – any suggestions for the best firm, or any other tips? What sort of fees should we expect?

    • If closed offers – advertise it and deal with the sale ourselves or use an agent? We’ve had some direct contact from developers and we could advertise on websites, but is it worth paying for an agent to ensure we get the best price?
    • If using an agent how much should we expect to pay? I’ve contacted a few and the rates seem to vary widely! Some have suggested a flat fee but a percentage seems better as it gives them an incentive to get the best price.
    • In fact I’d prefer to offer a ‘staggered’ fee e.g. with a low percentage of the whole sale price, but a higher percentage of the amount achieved over (say) £350k. This would really incentivise the agent to get the best price possible. Has anyone done something similar before?
    • Should we expect to give the agent a set of keys and leave them to organise viewings etc, or should we be more involved?
    • Re: the sale process one agent’s recommended a small (£2k?) deposit and an exclusivity agreement with the chosen buyer in return for 28 days to exchange contracts, at which point the remainder of a 10% deposit would be payable with the rest of the money due in another 2 weeks. Does this all seem fine?

    • Obviously we’ll also need a solicitor to deal with the sale; again what sort of fees should we expect?

    Some background:

    We’ve now got Prior Approval under the Permitted Development regulations to convert the current 2 light commercial workshops into 4 small residential units. The site also includes a yard area.

    We could submit a planning application to knock the workshops down and make the best use of the whole site (using the PD scheme as a ‘fallback’ to negate any concerns the council may have re: change of use etc) but we’re not interested in developing the site ourselves and planning consultants have advised us that any buyer’s likely to want to develop their own plans anyway. We’ve no experience of development so we’re happy to get a slightly lower price and to leave the rest to someone else.

    The site’s in Catford, see my other 2 posts for a bit more information.

  2. FWL

    FWL Member

    Personally I would be wary of going via the auction method as everyone at an auction tends to want a bargain. The traditional method is my preferred route with a relatively low flat fee for an agent and an incentive to get above and beyond the perceived fair value of the property. Maybe not as easy in principle as in theory, but I just feel that auctions attract bargain hunters.
  3. lookinginvest

    lookinginvest Member

    If you go down the auction route there is every chance you could get a couple of bidders fighting against each other and pushing the prices up and up. Let’s not forget, you can also add a reserve price to the auction to ensure you are not “giving it away”. One other option would be to go into partnership with a developer but I would guess this is a degree of risk too far for you?
  4. Lee7

    Lee7 New Member

    Thanks for your replies FWL and lookinginvest, one on each side! :) Yes, partnering with a developer's more risk (and involvement) than we want to take.
    Have either of you sold sites for development like ours, or are you different types of investor / developer?
  5. realdeals

    realdeals Active Member

    I would look to appoint a third party agent to market and sell the property on your behalf. Offer them a relatively low set fee but a highly incentivised additional payment on a successful sale. That way, they will live and die by their own actions :)
  6. Elliott2018!

    Elliott2018! New Member

    Maybe worth speaking to an agent who is local to check on the pricing - there are many different ways you can sell - Property sources are normally a good option - they have clients who will pay good money for off the market opportunities!!
  7. Longterminvestor

    Longterminvestor Administrator

    It can often be a case of who you know, not what you know when it comes to anything property related. The exclusive deal is dangerous because what happens if they are not successful? You have lost 28 days of sale time and at best incurred carrying costs. As mentioned above, I agree with the use of local agents who know the market better than others.
  8. Jules1970

    Jules1970 New Member

    Hi Lee

    Have you sold it yet or still deciding?

    I have sold small to large sites to private developers.

    It all depends on how quick you want to sell the land. Auction is the quickest and you can set a guide price to potential buyers and you and the auction have a reserve which is kept between yourselves. But auctions want you to guide at a low price to entice buyers. There is the fees to pay but the buyer will put down 10% and it is sold and exchanged. Bidders will fight over it! But to be honest you will not have any troubles selling it either way. I know Catford well As I live in Bexleyheath. With a agent you can negotiate a few. They will want to sell that land. Again you have developers fighting over it.

    One thing do not sell it on conditions to allow developers to get planning permission first. It takes ages! I shouldn't say this ha. But sell it as unconditional. Set your price and don't budge!

    If you have sold it great! If you have not yet let me know. And if you need further advice. I know all the fees and solicitors.

  9. Lee7

    Lee7 New Member

    Thanks Julie! We sold it in an auction in the end, once it was registered we got a couple of good pre-auction offers (higher than the private sale estimates we'd had beforehand) but decided to let it run to auction day and got slightly more again. So very happy!
  10. diyhelp

    diyhelp Active Member

    Hi @Lee7

    You like taking risks! I would have taken the above estimate offers before the auction :)
  11. Jules1970

    Jules1970 New Member

    Great to hear Lee :)
  12. realdeals

    realdeals Active Member

    Hi @Jules1970

    Do you focus on London for your property investment or do you venture further a field?

    Many are saying some London property investors are cashing in their London premium and buying the same sized properties outside of London for a fraction of the price. Ever been interested in that strategy?
  13. Jules1970

    Jules1970 New Member

    Sorry for late reply. Yes London is suffering quite a bit lately and I don't see it rising yet at all like it was I'm thinking further afield but needs be right location. I did buy a house in Stoke and I didn't know the area well. It was on a busy road, took ages to sell. But it did in end. What do you do? Are you a buy and sell or a more rental? What area are you keen on?

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