Offer from retirement home developer - what to do next?

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    Offer from retirement home developer - what to do next?

    Hi guys

    We have just had an offer for an option to purchase our family home subject to planning from a retirement home developer. It's all a bit new to me as we've not done anything like this before but currently do not want to use a land agent. I have a few questions:

    1. Would I be right in saying that a conditional contract offer is no better than an option? As developers can put get out clauses in the contract which effectively make it no better than an option? Or should I really be pushing for the conditional contract?

    2. Is it usual for the buyer to pay us a non-refundable option fee up front? Any idea on the going market rates? If they refuse to offer this should it be a deal breaker?

    3. Can anyone recommend a good solicitor around the Midlands who can deal with this?

    Thanks

    #2
    Sorry, not with you.

    You are sitting in your front room, the door bell rings and a man says

    "I give you an offer for an option to purchase your family home"

    Do you not already own your home ? as you can't sell it to them if you don't.
    OR is it one of those scams where they buy it, but let you live there, and if that is the case, kick them out, unless you will pass away soon and want to enjoy the money.

    Comment


      #3
      Maybe I didn't explain properly...

      I have been actively marketing this site to land developers and I've had an offer I want to accept

      Comment


        #4
        I have not done this before but I understand exactly what you need to do
        I would go and speak to a good solicitor - if you have an agreed price you don't need a land agent
        A sale contract conditional on planning being obtained would be my route - with all costs to the developer of drawing it up
        I think a non refundable gesture is a good idea - a % of the purchase price - even if only 2.5 or 5% concentrates their thinking.
        Option fee paid - it comes off the market. Otherwise....
        Also set a timescale - you don't want them to wait 2 years to apply for planning
        Unshackled by the chains of idle vanity, A modest manatee, that's me

        Comment


          #5
          Originally posted by islandgirl View Post
          Also set a timescale - you don't want them to wait 2 years to apply for planning
          It's normally more likely to be 20 years rather than 2 years... particularly if the developer needs to buy various bits of land for a bigger development.

          We don't know enough about this situation - but you're absolutely right, what the OP needs to do is speak to a solicitor as it is crucial that the option is drawn up properly.

          Comment


            #6
            well if it were to be 20 years you would sell to them for a good price with a clawback when it gains permission as a retirement home...
            Unshackled by the chains of idle vanity, A modest manatee, that's me

            Comment


              #7
              Good advice guys...trying to get a decent solicitor on board to usher this through...agreed no need for us to get 2% slashed off the offer price to pay a land agent...plus I don't trust them as far as I can throw them

              The option they've offered is 12 months with a long stop of 24 months if the planning goes to appeal...If it was a 20 year option I'd show them the door

              Biggest concern for me is whether to push for a conditional contract or accept the option. I'm sure it would be easy for the developers to write in get-out clauses into a conditional contract anyway?

              Comment


                #8
                well if you accept the option and take off the market you would need a payment up front (part of which should be non-refundable)
                Unshackled by the chains of idle vanity, A modest manatee, that's me

                Comment


                  #9
                  Some of the comments show a lack of knowledge about what an option is when compared to a conditional contract.

                  An option has to be purchased, so that the land-owner immediately receives a sum of money with the final sale price identified on the option agreement.

                  As long as the option is exercised within the time period specified in the agreement then the seller knows what sum will be paid for the final completion, but immediately receives a sum of money to do with as he pleases.

                  A conditional contract based on gaining a planning permission does not pay the seller anything, other than a refundable deposit that may to be paid to the conveyancer acting for the seller who will hold that sum as agent.
                  If no planning is obtained the seller gets nothing because the deposit is returned.

                  With an option the seller is guaranteed to receive the agreed purchase price if planning is granted, but will always retain the original sum paid to secure the option.

                  The long stop of 12 months is one that I would always include into an option agreement, because an appeal does take that length of time following a refusal by the LPA.

                  The fact that the developer wants to "purchase" an option shows that this is a serious attempt to develop land that includes the seller's land.

                  It is often the best way for the seller to proceed, because the value of land with planning permission will be more than the value of land without planning permission. That will dictate the final selling price to be shown in the option agreement.

                  Sometimes it is worth a developer buying land without planning permission, as long as research suggests that the chance of obtaining a permission is very high.
                  Otherwise the option agreement costs some money, but not as much as unsuccessful land purchases that turn out to be non profitable. Personal experience confirms that fact.

                  Buying houses with large gardens is one way of developing, but the risks are greater than having the house-owner sign an option agreement, even though that will cost legal fees and an option fee.

                  The difference is an option agreement confirms the value of land once it has been granted planning permission. That should help both the buyer and seller obtain what each wants from the final sale if that happens.
                  The seller gets the best price possible for land with planning permission, the buyer is guaranteed a chance to profit from the future development that is being envisaged for the land.

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