3 Howgill Lane, Sedburgh, Cumbria LA10 5DE.
At first this seemed too good to be true, but I don’t believe in TGTBT so I looked into it. It starts as a desperately sad story but has a kinda happy ending. The owner never lived in the house but his mother in law did. He suffered a double bereavement (wife & brother) in two separate RTAs. Then he lost his commercial diving business due to an investigation when one of his divers falsified his own health status from his doc and died underwater. As a result he had been on IVA for 2 years, a family of 4 living on £450 a month. To top it all off he had developed Sudden Death Syndrome where his heart can suddenly stop beating, so has a heart defib fitted. I would almost have thought it was too BAD to be true, that he was making it up, except I saw the shape of the defib fitted under his skin. It was quite a big triangular lump. Just when you'd think it couldn't get any worse for him, there was a partial collapse of the basement at the house and the council placed scaffolding against the side of it under the Dangerous Structures Act, and a charge on the house for the cost. It blocked the entrance to the car park of the large pub next door. Then the pub owner then threatened to sue for loss of trade. The poor vendor had no money to solve the problem, and was having anxiety attacks over it and everything else. He was an awful situation.
I knew what to do about the basement (fill it with concrete - job done!) But
I commissioned a structural engineer's report anyway to tell me what I already knew, as belt-and-braces. Engineers must carry Public Indemnity Insurance, so if we both get it wrong I could claim on his insurance. Also I could put the report in the Legal Pack to reassure prospective buyers. Then I agreed to buy it for 22k, minus any costs due to the pub.
Unfortunately the pub owner wouldn't communicate properly or give me a settlement figure, only threaten, so the amount outstanding was unquantifiable and much as I felt sorry for the owner, the only sensible thing I could do was stay away until the pub owner became more communicative or the house owner sorted it out with the pub himself. The pub owner saw me as a money pit, unlike the homeowner who was skint, so he was trying to make it my problem and make me pay. I told both of them that it was THEIR problem until we exchanged contracts, not mine. I felt very sorry for the owner and apologised for having to withdraw, but it had to remain business and I had to try not to get emotionally involved, however much I wanted to help him. I was less sympathetic to the pub owner who wasn’t exactly helping himself by stymying the sale. It merely prolonged his own problem with the blocked car park. I told him that the scaffolding could be there till kingdom come, because no normal sane buyer would buy that house with a partial basement collapse AND an unquantifiable financial claim against it.
Things finally moved when the owner offered to GIVE me the house for nothing just to take the stress and the pain away. It seemed unlikely that my financial exposure would be greater than 22k even for the entire period the scaffolding had been up, so I agreed, but it would have been like taking candy from a baby so I insisted on keeping as close to our original agreement as possible. You have to know when something is a deal and when not to milk it. It’s about treating people fairly and being able to respect yourself and be deserving of the respect of others.
I'd already given him £500 in cash on a no strings basis so he could enjoy Christmas with his new family (he had re-married), so I gave him another 8k to settle the £5.5k charge the council had placed on the house for the scaffolding (which needed settling anyway), and the rest for his conveyancing bill and about 2k to be going on with. Eventually I paid him the entire £22k, minus an agreed sum of £6,750 to settle with the pub. I’d offered for him to wait for the full settlement but he just wanted out ASAP. I had no legally binding contract with him, we had nothing but a gentlemen's agreement and a handshake, but as I say he’d already offered me the house for nothing so he was happy with that and he trusted me. It isn't just about the money. Money comes easier than happiness. In so doing I hoped to restore his faith in humanity a bit as it's had a real kicking over the years with things going disasterously wrong and to make it worse, people treating him badly. Of course by doing so I'm helping myself too. If you want to feel happy, the best thing you can do is help someone else, especially when you don't have to. It really works you know! Try it!
Then I offered (without prejudice – that is VERY IMPORTANT to avoid legally committing to anything) to settle the damages claim from the pub owner for the entire period of car-park blockage, to clear it completely for my vendor, as with his recurrent anxiety problems he wasn't in any condition to negotiate it for himself. Eventually after a lot of persistence I got an approximate settlement figure, just under 6k so not nearly as bad as it could have been, and I'm contesting some of the items anyway. I'm hoping to get it down to 3.26k. This has still not been settled, and it turned out that the “pub owner” wasn’t the real owner after all so the dispute is still open and could go either way.
The outcome? I bought it for £22k (minus £6,750 for an ongoing dispute) and did no physical work on the property at all. I never even went back in the house. Then I put it in Auction House Cumbria and it sold for £42k! Obviously I had costs, including 2 lots of legal fees, auctioneer fees, and £3k finders fee. Still, it was a nice little profit. This is it, Lot 56, you will have to scroll down to see it
Colin the auctioneer assured me it would be very popular, in fact he said they had so many requests for viewings they had to do block viewings 2 x weekly!
If for some strange reason it didn’t sell at auction I needed more exit strategies, so exit 2 would have been to do the works and sell on with an agent. This is how the numbers looked. Working backwards:
Nicely finished it should value up at 100k with the yard opened up for parking. But the real value in a slow market is the 90 day val, and that was only 80k
The costs of the works was an allowance of up to 10k for the structural work, shuttering against the basement collapse and filling in the shuttering with concrete. Steel rods through the floors and ceilings to bind the back and front walls together, they are adrift currently. Then a fairly big refurb, 25k. So a total of £35k. Then £3k finders fee to David Clouter and his mentee who brought me the deal. Then conveyancing costs x 2, insurance, utility bills and council tax, and all the other costs associated with the sale such as estate agency fees, perhaps another £4-5k. My finance was my own cash so the only cost there would be opportunity cost. Money in £65k, money out 80k so not a brilliant deal but OK if I got stuck. Exits 3 and 4 would have been to let it on an AST, or as a holiday let. It was in an excellent location for the latter.
The new buyer's purchase price was 42k + 35k works = 77k so there's no money in it. Add in + conveyancing, auctioneer premium, finance, insurance, and agent fees if they are selling and it even looks like a loss. But some small builders just buy to keep themselves in work – I know it because I was one of those guys once. Others are hobbyists following I the mode of HUTH, which is a great program for advertising auction flips by the way! Auctions are a great place to sell really crappy knackered old houses :-)
Anyway it was a very interesting deal, and I think I found the best possible outcome. I was very happy with the result for both myself and the vendor, who was delighted.