I have a long standing client (who was a friend before he was a client) and he sometimes ‘dabbles’ in property. You know the sort of client I mean – always looking for that property which will make him some easy money.
He will call me on a Tuesday morning to tell me that he is interested in a house in auction the next day and can I check the documents so he knows whether or not to make a bid. He sends me the auction pack and I will go through it and let him have my thoughts on it. Two weeks ago, he asked me to look at a pack for an online auction which was happening later the same day!
He told me that the flat was a bargain and that the agent had told him that he should make a cheeky bid as the sellers were desperate to sell. A quick look on Rightmove showed me that the building was very tall; a quick review of the lease showed me that there was a ground rent which doubled every five years – that was enough for me to be able to have a sensible discussion with him as to whether he should proceed.
Last week, he called me to tell me that the flat had sold at auction but that he had been contacted by the agent to tell him that the prospective buyer could not proceed. The flat was not mortgageable. That prospective buyer had lost his deposit. The estate agent told my client to put in a really cheeky offer and it was likely he would get it at an even lower price.
Based on the advice I had given my client, he decided that he was not going to make an offer…
Now remind me why upfront information is not a good idea?
2 Responses
“Now remind me why upfront information is not a good idea?”
You are talking about a property being sold at auction. Auctions already have up front information. What spared your client in this instance was good legal advice. Exactly what proponents of UFI are attempting to deprive buyers of.
Australia operate an ‘upfront information’ system – my sister is an Australian qualified lawyer. Save that the difference there is that the buyer walks around with pre-approved finance. The “contract” is signed on the dotted line at the estate agent’s office with a pre-approved completion date. They don’t have chains. What I am told though is that buyers DO NOT get the packs checked out by a lawyer before they sign on the dotted line – you can give out all the information you want but 95% of people won’t bother to read it or take advice on it. This client came to you because he knows you etc. I’ve had clients reluctant to pay me to check over auction packs, but lucky for them when I have!