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Confused Regarding Auctioneer E-Mail

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  • 08-12-2014 11:22pm
    #1
    Wamba
    Closed Accounts Posts: 18 ✭


    Hi,

    I received a message from an auctioneer regarding an apartment I viewed. I have mortgage approval and the auctioneer was aware of this. The apartment building currently has no management fees, as most of the apartments are owned and managed by the construction company. They are planning to bring in management fees in 2015 however. I am just not quite following the logic in the message, but hopefully you can advise me.

    "My client has just informed me that his solicitors and bankers have advised that only cash offers will be considered given the management company not charging service charges currently."

    What has a cash offer got to do with the management fees? I fail to see the connection.


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    #2
    L1011
    Moderators, Business & Finance Moderators, Motoring & Transport Moderators, Society & Culture Moderators Posts: 67,871 Mod ✭✭✭✭L1011


    Wamba wrote: »
    Hi,

    I received a message from an auctioneer regarding an apartment I viewed. I have mortgage approval and the auctioneer was aware of this. The apartment building currently has no management fees, as most of the apartments are owned and managed by the construction company. They are planning to bring in management fees in 2015 however. I am just not quite following the logic in the message, but hopefully you can advise me.

    "My client has just informed me that his solicitors and bankers have advised that only cash offers will be considered given the management company not charging service charges currently."

    What has a cash offer got to do with the management fees? I fail to see the connection.

    They likely (And with good grounds, I'd suspect) believe that a mortgage lender will refuse to lend in this situation.


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    #3
    Wamba
    Closed Accounts Posts: 18 ✭Wamba


    Can we not just factor in average management fees in our plans?


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    #4
    MarkAnthony
    Closed Accounts Posts: 6,934 ✭✭✭MarkAnthony


    Wamba wrote: »
    Can we not just factor in average management fees in our plans?

    The issue is that if there are no management fees something very fishy is going on. Mortgage lenders will run a mile as should you.

    There is potential for the apartment to be unsaleable therefore if you stop paying your mortgage and they need to repossess it, they will be unable to sell it, thus making the loan a very bad risk.

    Does that clear it up at all?


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    #5
    the_syco
    Registered Users Posts: 37,295 ✭✭✭✭the_syco


    Wamba wrote: »
    "My client has just informed me that his solicitors and bankers have advised that only cash offers will be considered given the management company not charging service charges currently."
    The management company not charging may mean a couple of things;

    No sink fund; should something like the roof get riped off by high winds, the people on the top floor will have to fix it themselves (could be seen as an "act of god", and thus not covered by insurance).

    No block insurance; can't see banks giving a mortgage because of this (pipes leaking due to bad weather, etc, would have to be paid by the tenants).

    It may also be because other properties got turned down by banks due to a few things not done correctly, or flat out missing, so they've decided on saving both parties the hassle, and asking for cash offers only.

    I'm guessing because of this, the prices seem "good"?


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    #6
    Wamba
    Closed Accounts Posts: 18 ✭Wamba


    Thanks all for your help thus far.

    The auctioneer told me that the reason there are no management fees is that 95% of all the apartments are owned by the one man, and so they just haven't brought them yet. Would that be a valid reason?

    If I ask whether there is block insurance and a sink fund, and get a satisfactory answer, would this be considered ok by the bank then?

    I already have mortgage approval, is this something I should discuss with the bank?


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    #7
    D3PO
    Registered Users Posts: 7,879 ✭✭✭D3PO


    Wamba wrote: »
    Thanks all for your help thus far.

    The auctioneer told me that the reason there are no management fees is that 95% of all the apartments are owned by the one man, and so they just haven't brought them yet. Would that be a valid reason?

    No it wouldn't be. They are legally obliged to have a management company. If there are no management fees being paid I very much doubt there is a management company

    If I ask whether there is block insurance and a sink fund, and get a satisfactory answer, would this be considered ok by the bank then?

    I already have mortgage approval, is this something I should discuss with the bank?

    seriously OP think with your head and not your heart even if a bank was crazy enough to grant you a mortgage for this (and they wont) you would be very foolish to buy.

    draw a line under it and look for something else to buy.


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    #8
    Eldarion
    Registered Users Posts: 484 ✭✭Eldarion


    It does sound like you're getting emotionally / unreasonably attached this particular place. This is a red flag that you're trying to explain away that you really should just run from. It's too big and too long lasting a decision for that kind of thought process.


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    #9
    L1011
    Moderators, Business & Finance Moderators, Motoring & Transport Moderators, Society & Culture Moderators Posts: 67,871 Mod ✭✭✭✭L1011


    Wamba wrote: »
    Can we not just factor in average management fees in our plans?

    That is entirely not the reason a mortgage lender wouldn't lend.

    Its the extremely unsure ownership position - remember you are buying an extremely long lease, not anything physical, and that lease is from the management company - and other reasons that could make the asset either worth less or nothing such as the sinking fund and block insurance mentioned


    Just walk away - even if you someone convince the bank to lend you are at serious risk of having bought in to Priory Hall Mk2 here.


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    #10
    the_syco
    Registered Users Posts: 37,295 ✭✭✭✭the_syco


    Wamba wrote: »
    The auctioneer told me that the reason there are no management fees is that 95% of all the apartments are owned by the one man, and so they just haven't brought them yet. Would that be a valid reason?
    I read that as "the guy who owns 95% of the block told us to **** off when we asked him for money".


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    #11
    Wamba
    Closed Accounts Posts: 18 ✭Wamba


    Thanks guys for the useful information, if anyone is interested I can report back with further information, as have sent a list of questions regarding this to auctioneer.


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    #12
    D3PO
    Registered Users Posts: 7,879 ✭✭✭D3PO


    seriously your being very foolish even going down this path, not to mind wasting your own time.

    Start thinking with your head and not your heart.


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    #13
    draiochtanois
    Registered Users Posts: 2,655 ✭✭✭draiochtanois


    This post has been deleted.


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    #14
    TheDriver
    Registered Users Posts: 12,417 ✭✭✭✭TheDriver


    boards.ie is a great place for getting unemotional, sensible, detached advice. I would take this advice and don't walk but run.


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    #15
    D3PO
    Registered Users Posts: 7,879 ✭✭✭D3PO


    TheDriver wrote: »
    boards.ie is a great place for getting unemotional, sensible, detached advice. I would take this advice and don't walk but run.

    exactly we have nothing to lose or gain here but the OP seems determined to ignore the advise. That's their prerogative, if they did somehow manage to buy this property though id be very unsympathetic if down the line they came back on here with some kind of sob story as a result of this mess.


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    #16
    Wamba
    Closed Accounts Posts: 18 ✭Wamba


    Hey Guys, I am really grateful for your advice, and am in no way dismissing it. Based on what you have all said here, I am not going ahead with this place obviously, I just wanted to investigate further anyway. This apartment is only one option, and I am just continuing to investigate what the actual position is, rather attempting to plough ahead regardless. I contacted the company that has taken over the block, and they informed me that they have taken it over 6 weeks ago. They are planning to introduce the service charges, and associated management company rights in January.


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