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Selling unusual properties

publication date: Dec 5, 2009
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As the original masters of spin, estate agents and auctioneers are renowned for their ability to see the best in every property they are asked to sell. When the property is unusual, or comes with baggage, then there is no profession better equipped for rising heroically to the challenge. In fact, some might say it is harder to sell a standard semi than it is to shift a pigsty with planning permission. Mark Lewis, a Partner at Symonds & Sampson, in Dorset, recalls the company being asked to sell a waterfall near Beaminster. It was such a romantic spot, he was inundated with phone calls from misty-eyed, would-be buyers.

“It was amazing, it had an acre of land with water on it, a bank, island, bluebells, primroses and wild garlic,” he says. “It was near where Hugh Fearnley-Whittingstall filmed River Cottage, but difficult to get to, down a long bridleway. However, I thought I should see it for myself. When I reached it, I saw a very attractive girl standing there, in a world of her own. I said hello and she nearly jumped out of her skin. I remember she had beautiful green eyes. She turne to me and said, ‘Wouldn’t this be a beautiful place to give birth?’”

Lewis glanced at her hand and could see she wasn’t wearing a wedding ring, and she didn’t appear to be noticeably pregnant. Non commitally (he hoped), he replied, ‘it would be a beautiful spot to get married...’ The siren gazed back at the waterfall for a few moments, then turned the beam of her piercing green eyes upon the agent and answered, ‘It would be a lovely place to conceive...’” Lewis beat a retreat. The waterfall eventually sold for £20,000. Finding a buyer had been no problem. Solving a right of way issue proved trickier.

Symonds & Sampson’s patch stretches from Salisbury and the New Forest through Dorset and Somerset to Devon. The area is rich with unusual properties. “The key with unique residential properties is to ensure that the price is right and this can be extremely difficult for a property that may be coming to the market for the first time in 100 years, or is so different to anything else that we have sold before,” says Lewis. “The value is the amount it is worth to a buyer.”

A classic example was a property built by an S&S client who had burrowed into the side of a hill, creating an eco friendly underground house with its own wind turbine and rain water collection system. Set in three acres of woodland, the property attracted a huge amount of interest. The romance of the property, plus the Certificate of Lawful Use, made it a very attractive proposition.
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“We ended up on the day with a room packed with prospective purchasers and we put a guide of £160,000 on the property,” says Lewis. “Half an hour before the sale, our client, who by this time was quite stressed, wished to drop the reserve to £90,000 just to ensure that it sold. There was no need to worry because the final price was £240,000.”

It sold to a cash buyer, which highlights a major problem in selling a property which doesn’t fit the norm for mortgage lenders. In the first flush of enthusiasm, a buyer may rush to offer on a converted windmill, lighthouse or Thames barge, then find out no-one will advance the money to pay for it. Mark Lewis points out another property, in Weymouth, which was a challenge to sell because of the difficulty in getting a mortgage on it.

A survey had been carried out saying that the Weymouth coastline was eroding at an alarming rate and within the next 50 years the whole of the garden at this property would have disappeared and possibly the house as well. “Selling by auction was the best way forward for all of the Executors and allowed the purchaser to buy at a fair market price,” says Lewis. “Even though the coastal survey was refuted by other experts and insurance was a nightmare, the fact that there were bidders on the day proves that people were prepared to take a view’.”

Melanie Bien of Savills Private Finance, the mortgage broker, says, “It has always been more difficult to arrange funding on unusual properties, such as houseboats, thatched cottages, listed buildings and the like, than on standard properties such as three-bedroom semis, but the credit crunch has made it even harder. Some lenders who would have looked at such properties in the past, albeit demanding bigger deposits than on standard propositions, are now not lending.

“It is worth speaking to an independent mortgage broker in the first instance as they are likely to know which lenders will be interested in lending to you. The lender will be keen to establish that the property has saleability factor – while a threebedroom standard semi will attract a reasonable number of buyers, a houseboat is much more of a niche home, so it follows it will be less desirable if you sell it later. The other problem with a houseboat is that it can be moved – you could sail off into the sunset without paying your loan. Therefore, to borrow against a boat you would need specialist marine mortgage finance, requiring you to have a deposit of at least 20 per cent. These mortgages tend to have shorter terms than a standard mortgage, often just 10 years and the rate can be several percentage points higher than regular home loans.”

Even if you get the finance to buy, you still have to insure the property. “Many direct insurers often do not take on unusual properties,” points out Bien. “You will need to use a specialist insurance broker as many unusual properties tend to be insured via specialist schemes or underwriter in the Lloyds Market and not via the standard company insurance market. A thatched roof, for example, can be much higher risk than a regular tiled roof and the insurer will want to see that it is well-maintained. A problem with listed buildings is that they are often inadequately insured so a specialist insurer will send out a trained valuer to ensure this is not the case. Rebuilding costs can be higher than on standard properties because of unique architectural details which would be expensive to recreate.”

Property consultant Simon Barnes, who has sold a number of odd properties including converted church in St John’s Wood, stables in Mayfair, and a boatmen’s meeting hall, thinks it is not always best to aim for the open market. There are rarely comparable properties on which to base a valuation, he says. “When selling an unusual house you are operating in a very small market, which works differently from the mainstream market,” he advises. “The difference between the value attributed to the house as simple bricks and mortar, and what it will be worth to the right buyer, is huge. The sale of an unusual house will not be dependent on price, but on the taste of the buyer. Sellers of unusual houses need to factor in from nine months to a year when they decide to sell, which is something they should bear in mind when they buy the property. A big disadvantage of putting a unique property onto the open market is that it will attract sightseers rather than serious buyers, so although agents may get a lot of people through the door, none of the viewings may turn into offers or sales. What’s more, sales will not be price motivated, so dropping the price after it has been on the market a while will not make a lot of difference.”

A classic example of finding the right buyer is Foxtons’ sale of a 5,000sq ft former Methodist chapel in Greenwich, South London. Strikingly converted, with huge living space and soaring ceilings, it was, nevertheless, hard to sell through internet searches because it had only two bedrooms, but cost £1.2m. The Canary Wharf branch managed to reach just the buyer, an artist who was looking for a live/ work property. Of course, not all unusual properties are dream-catchers like a woodland idyll, or clifftop cottage. In Suffolk, estate agents Bidwells were asked to sell a converted prefab on fiveand- a-half acres which were littered with a collection of ramshackle nissen huts. Grasley Apiary was not exactly the bees’ knees. “We must have had more than 30 viewings even though there was no planning permission (for development),” says agent Guy Jenkinson, “with eight parties interested in making a serious offer. We went to best and final offers and achieved more than £300,000, from a guide price of £200,000. The important thing is to be upfront from the word go, to explain about the things which aren’t so good, while emphasising the positives. That gets rid of the time wasters.

Bidwells are currently selling a Grade II listed property which includes store and preparation rooms for sausage-making. The owners of Hither House, Arnolds the butchers, have been known countywide for generations for their sausages, which they sell for only one day a month. They are offering their secret sausage recipe in with the £450,000 price. How do you find just the right buyer for a chipolata good life? “Sometimes you just have to say to yourself, what would I pay for something like this?” says Jenkinson. “There is no comparable evidence, just an instinctive and informed assessment.” It isn’t just quirky properties which fall foul of conservative lenders. It is often extremely difficult to get a mortgage on a former council flat in a tower block if it is above above a certain floor. That, in turn, causes problems for the agent who has to find a cash buyer or investor.

Unconventional construction will also scare off lenders who fear they might not get their money back if the buyer can’t sell on. A half finished project will also prompt lenders to advance money on a tiered basis, so the buyer has to have cash backup from elsewhere. A savvy estate agent will know specialist lenders and insurers who may be able to help a buyer take the deal forward. The Ecology Building Society, for instance, will lend where others won’t, if the property meets their criteria. Typical mortgage projects include renovating a derelict property, log cabins and converting a disused or redundant building back into a home. So that pigsty with planning permission might not be entirely out of the question...