baldpate
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Post by baldpate on Jan 16, 2017 10:51:49 GMT
This new loan is to go live at 3pm this afternoon (16/01/2017). It is to complete the purchase of a plot of land, without planning permission, recently bought at auction. The land is offered as 1st charge security for the loan. Funding Secure have ascribed to the security a value of £83K, giving a LTV of 65%. No justification for this value has been given : no formal valuation by a qualified person, no statement even of the amount paid at auction by the borrower. The only external supporting information provided is a link to the auction website, which gives only an auction 'guide' price of £25K. fundingsecure : please tell us how you justify the valuation £83K |
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r1200gs
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Post by r1200gs on Jan 16, 2017 11:16:52 GMT
The first thing that struck me, is who buys a property at auction and then looks for a way to pay for it? That alone put me off. The second thing was there is surely no way of valuing this. I never saw a link to the auctioneers, but perhaps ask them what it sold for? Nothing on their website? Give me a clue? :-)
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gurberly
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Post by gurberly on Jan 16, 2017 11:24:55 GMT
It's not a dissimilar approach taken with the recent FS loan 1136495004 - Property Loan - Henley-in-Arden
The client has successfully purchased the property at auction and requires the funds to complete.
Once purchased the client will apply for planning permission to build 5 new houses and once confirmed he will re-finance through a new development lender.
Similar area... Same borrower?
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baldpate
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Post by baldpate on Jan 16, 2017 11:51:02 GMT
I have no issue with the buy-at-auction-then-get-a-loan approach. It's the fact that there is nothing whatsoever supporting the stated value! The Henley-in-Arden loan was at least supported by a 'proper' valuation.
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stub8535
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personal opinions only. Not qualified to advise on investment products.
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Post by stub8535 on Jan 16, 2017 13:08:24 GMT
I can confirm the price paid was £83,000. I called the auctioneer this morning.
This does not equate to its " independent valuation" as it went to market guided at £25k. Knowing the main road it comes out onto and looking at access and parking/ garage spaces I can see problems with planning. Personal opinion only.
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baldpate
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Post by baldpate on Jan 16, 2017 13:58:01 GMT
Well done, and thank you for obtaining that information stub8535 . Now why didn't fundingsecure provide that information? |
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ozboy
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Mine's a Large One! (Snigger, snigger .......)
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Post by ozboy on Jan 16, 2017 14:40:03 GMT
Good work stub8535, we all very much appreciate you posting this information.
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mikes1531
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Post by mikes1531 on Jan 16, 2017 16:28:43 GMT
They did! Or at least they had by the time I looked at the loan. Perhaps it was added after the messages above were posted. On the Assets tab of the loan it now says... ... and the link takes you to the Auctioneer's web page. From there you can click on 'past auctions' and you can see the £83k auction result. It's hard to understand why the plot went for so much more than the guide price, but ISTM that there must have been someone other than the borrower willing to pay £80+k for it. My first reaction upon seeing the map was a concern about access, but it looks like there's just enough to squeeze in a driveway. Looking at the adjacent plot sizes, it looks like there's room for 2-4 similar houses, depending on the size of the gardens, or perhaps one very large one. It would be quite secluded and could therefore be a desirable location. I did have to laugh at the photo FS have included. It's quite dark, but all I can see is a lot of overgrown greenery!
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baldpate
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Post by baldpate on Jan 16, 2017 17:50:00 GMT
They did! Or at least they had by the time I looked at the loan. Perhaps it was added after the messages above were posted. I swear it wasn't there when the loan first previewed - honest Guv! I used Google streetview to snoop around a bit. The street sign for the access road says it is a Cul-de-sac. Unfortunately, the google snoopmobile didn't deviate up the access road itself, but if you zoom off to an overhead view of the site it does look pretty overgrown. Difficult to see exactly what the access is (there seem to be garages blocking the end of the cul-de-sac?), but whatever it is must be pretty restricted - I had doubts about getting heavy vehicles/material/equipment/spoil on & off site. I bet there will be lots of objections from the inhabitants of the access road!
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stevio
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Post by stevio on Jan 16, 2017 18:07:13 GMT
Its standard practice for a developer to use a pot of cash to buy at auction and then look to refinance the purchase. Auctions payment terms are too short to arrange finance. The pot of cash can then be used elsewhere (another auction or development).
Auctions often go for multiples of the guide price, but this is just an indication of what it sold for on the day
Again, the lack of valuation maybe due to the speed the borrower requires the funds - traditional finance would require a valuation and lots of paperwork and numerous hoops
I too would prefer a valuation, but this is obviously not what FS is willing to require to lend. Therefore we are left having to evaluate it taking no valuation into account
Are their comparable sales available on the web?
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stub8535
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Post by stub8535 on Jan 17, 2017 19:36:06 GMT
I was also concerned at the way some of the boundaries have seemingly pushed out onto common land. Not unexpected round Birmingham as ciuncil dont bother to monitor. Hopefully solicitor is on the ball.
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