There was a property which we had been circling for a while. It was guided at £750K, consisting of two commercial units and three flats above. It failed to sell in an auction, which is never good. I think they had pitched it wrong. It had planning permission which was due to lapse in months. It begs the question as to why the current owners did not implement the planning if it was lucrative to do so, after all, they had three full years to get this done.
It leads interested parties to start to speculate; perhaps this is not a worthwhile planning permission to implement, hence the reason why it had not been done.
This issue causes what we believe to be a great deal, to be seen in the wrong light. This is what causes a property not to be sold. Perception becomes reality. We put in a cheeky offer of £650K, which would have been honoured. There was some attempt to bring us up on price, but we stayed stubborn.
The property was promptly put into the next auction, with a slightly lower guide. We were pessimistic of the auction sale occurring for the reasons described. Predictably, the property did not sell for the second time. Having not sold in two auctions back to back, puts the property in a worser light than before.
Presumably, the seller was getting more desperate and was ready to devalue his own property. Annoyingly the property got sold post auction, for the sum which we had offered!
Well, you win some, you lose some.
We had a similar situation with another property we had purchased some years ago, this time we happened to be on the selling side. The property was a freehold block in South Kensington, which consisted of 6,700 sq. ft. of space, we purchased this for £5.2M; which was very cheap. This was a good deal. The aim was to trade the building for more money, without doing anything to it, as we were in the habit of doing at the time. This was a sale by a charity and therefore we had to go through a process in order to win the bid.
However, the property had a quirky issue in that a small portion on the ground floor rear part of the building was owned by the French government, which they were leasing to us at a reasonable rent.
What should have been an easy sale was handicapped by this point. This is the issue which prevented the saleable deal from selling.
It would have been easier – and possible – to cut off the rear part of the ground floor and sell this as a plain vanilla fully freehold block. In retrospect this property would have been sold.
This quirky issue with the ground floor meant the market could not get their heads around this deal.
The property bizarrely was valued by a leading valuer for only £3.2M, which was just ludicrous given the size of the building.
Despite the issue, in the end the property was sold on for £5.8M. The desirability of the location overrode the issue of perceived complication.