How to Sell a Non Standard Construction Property

Transcript

Hi, I’m Ruban Selvanayagam from Property Solvers.

If you own a non-standard construction property and are thinking about selling, you’re probably already aware of some of the challenges that can arise.

Mortgage lenders can be more restrictive. Surveyors may raise concerns. And perhaps most importantly, the pool of potential buyers is often considerably smaller than it would be for a standard brick built property.

In some cases, buyers can disappear as soon as they discover the type of construction involved. 

As estate agents and auctioneers, we’ve seen this happen many times. Today’s Material Information requirements also means that we’re required to disclose that a property is non-standard from the outset.

But does that mean your property is impossible to sell? Not necessarily.

In fact, many non-standard construction properties change hands successfully every year.

The key is understanding your likely buyer audience and choosing the right route to market.

In this video, I’ll explain why these properties can present challenges, what options are available and what we believe is one of the most effective ways to achieve a successful sale.

Let’s get into it…

Before we go any further, it’s worth clarifying what we mean by non-standard construction.

Most homes in the UK are built using traditional brick and block construction.

Non-standard properties are those built using alternative methods or materials.

Examples include Precast Reinforced Concrete houses, Airey houses, Cornish Units, BISF steel-framed homes, Wimpey No-Fines properties and a range of other non-traditional systems that we’ve covered in a blog post, which I’ll link to in the show notes. 

Many of these homes were built to address housing shortages after the Second World War and have now been standing for many decades.

And that’s an important point.

Non-standard construction does not automatically mean defective construction. Some of these properties have performed perfectly well for generations.

The challenge is often less about the building itself and more about how lenders, surveyors and insurers perceive the risk.

For most homeowners, the biggest issue is mortgageability.

When a buyer relies on mortgage finance, their lender ultimately has to be comfortable with the property being used as security for the loan.

The truth is that the majority of lenders are likely to outright reject mortgage applications on non-standard construction properties.  Others may be prepared to consider them, but often require larger deposits and may apply additional underwriting requirements.

The result is a much smaller pool of potential buyers.

You may agree a sale with someone who believes they’ll be able to obtain a mortgage.

The survey is carried out. Questions are raised about the construction, even if only certain parts of the building are non standard. 

The lender then reviews the report and suddenly the transaction slows down, or falls through altogether.  Unfortunately, we’ve seen this happen multiple times over the years.

In fact, the biggest challenge when selling a non-standard construction property is often not finding a buyer.

It’s finding a buyer who can actually complete the purchase.

So what are your options?

The first is the traditional estate agency route.

If the property has the appropriate documentation that specialist lenders are satisfied with and is located in an area where demand is strong, a conventional sale may work perfectly well.

However, you should be prepared for a potentially longer sales process, additional scrutiny,  specialist surveys and more extensive conveyancing and valuation checks before a buyer is able to proceed. 

The second option is a direct cash sale.

For some sellers, particularly those prioritising speed, convenience and certainty, this can make sense.

A cash buyer removes mortgage risk entirely and can often move much more quickly.

However, it’s important to understand how these transactions are typically priced.

Cash buying companies are taking on the remediation, future lending or resale risk alongside the holding costs associated with the property.

As a result, offers on non-standard construction homes are often substantially lower than those achieved through open market sales.

And in many cases, the discounts can be significantly greater than those typically associated with standard brick-built properties.

That brings us to the option we generally recommend in most circumstances: auction.

Auction provides access to a completely different buyer audience.

Rather than relying heavily on mortgage-funded owner-occupiers, you’re exposing the property to investors, developers, landlords, specialist purchasers and cash rich buyers who are often far more familiar with non-standard construction.

Many of these buyers have already assessed similar properties before.

They understand lending restrictions, insurance considerations, repair costs and the necessary refurbishment requirements.

And most importantly, they’re making those assessments before they bid. The legal pack should be made available upfront and any reports will be reviewed in advance.

Buyers carry out their due diligence before auction day rather than after agreeing a sale.

Once the hammer falls, contracts are exchanged immediately with completion due after 28 days.  That reduces the risk of transactions collapsing to pretty much zero.

It’s also worth remembering that many fast sale companies ultimately sell these types of properties through auction themselves.

The difference is that they first purchase the property at a discount, build in a margin for risk and resale, and then market it to the same investor audience.

By going directly to auction, sellers often have the opportunity to retain more of that value themselves.

Of course, every non-standard property is different.

A repaired pre-reinforced construction property with the correct certification may attract a much wider audience than an unrepaired example.

Some construction types are more widely accepted by lenders than others. Location, condition, tenure and pricing all matter.

That’s why when non-standard sellers contact Property Solvers, we assess each property on its own merits.

The key takeaway is this. Non-standard construction does not make a property unsellable.

It simply means that the sales strategy needs to reflect the realities of the buyer market.

The more restricted the buyer pool, the more important it becomes to target the right audience from the outset.

And for many non-standard construction homes, we often find that auction remains one of the most reliable ways to achieve that.

At Property Solvers, we’ve worked with a wide range of non-standard construction properties over the years and are always happy to discuss the options available.

A big thanks for watching.

If you found this useful, please like the video and subscribe to the channel for more practical property and housing market insights drawn from over 20 years of experience in the sector. 

See you in the next one…