2 – Olive Stores – Negotiate Purchase

| 17th October 2015 | 0 Comments

How to Negotiate the Purchase of your Development Opportunity

Olive Stores, Brenchley, Kent TN12 7NQ

No 2 in series

In my previous article I told you the story of How I found my Development opportunity. Now I am going to tell you how I negotiated the purchase

Having carried out my due diligence I contacted the agent formally with my offer and waited.

“It’s not enough! ”

Well of course it wasn’t! I knew how much he had paid at auction and therefore his costs so I had made an offer equal to that figure. I increased the offer, only because my numbers said I could, to a figure that would give the seller a decent profit for doing nothing other than raising his arm at an auction. He accepted.

I now knew the purchase price. I had this amount in cash. I needed development funding and for this project my cheapest option was the bank. The only problem with this was that before they would agree the facility I needed to complete the development, planning permission needed to be in place.

I had a cunning plan.

 

Picture of rowan atkinson playing black adder - cunning plan

It seemed like a good idea at the time

 

I went back to the seller and asked if he would be happy to enter into a Purchase Option agreement pending planning permission being granted.  He didn’t want to go down this route as he wanted a secured sale as soon as possible. I therefore went back and asked if he would agree to an early exchange of contracts (before Christmas 2013) so he could rest easy knowing the sale was in place. I then asked for a delayed completion of on or before the 1st of May 2014. I would pay the agreed purchase price if completion took place on or before the 1st of April but if for some reason there was a delay I would pay £1,000 for each week or part thereafter up to the stop date of the 1st of May.

This delayed completion of 3 months, plus a further month if I needed it, would provide me with enough time to obtain planning and thus the lending facility.

The added benefit of this delay was that I only had to pay the deposit of 10% in December then nothing else for the 3 – 4 months whilst waiting for planning.

The seller agreed. Great news. I contacted my solicitor.

Now all I needed was planning permission so the next step was to contact Stephen Langer, my Architect and also my Planning Consultant Simon MacKay so a Pre Application meeting could be arranged with the Conservation Officer and Planning Department.

Please now visit the next article in this series – How to Obtain Planning Permission – Olive Stores

 

Summary:

 

  • Carry out due diligence with regards to the property and the figures.
  • Leave offers on the table as deals do fall through from time to time. Don’t increase original offer if you can help it.
  • Be creative with how you structure offers and deal with negotiations. Feel out what the seller needs and give a bit and take a bit back along the way.

 

CLICK HERE FOR NEXT POST IN SERIES

 

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Category: My Projects, Negotiating and Buying a Property, Olive Stores - Brenchley, Property Professionals

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