The Risks of Back to Back Property Deals in the UK

This is now the second time we have been approached for a back to back property deal. As Back to Back properties can be profitable to the party who wants to do a back to back, but there can be pitfalls and the process could be described as high risk, high reward for the owner of the property.

The Investors attempt to buy a property at a discount then instantly sell it on or remortgage it for the full value to make a profit or raise capital.

As always would suggest you always run by any agreement that you might be asked to sign….

The solicitors response…

It doesn’t include any consideration, which makes me question how enforceable it is.

Moreover, there’s no indication of what the buyer gets out of it. The buyer clearly doesn’t intend to buy the property themselves (which is the normal purpose of an option) because they’re going to create a “slick” marketing campaign, presumably to attract a third-party buyer. So what do they get out of it? A fee, presumably, but that’s not defined anywhere in the agreement.

Transaction Documents are very loosely defined as well. So we deliver the contract, etc. to the buyer’s solicitors and they do what with it? If they decide to behave very unethically, I suppose they could sell the property to a third party buyer and keep the proceeds, because there’s nothing in this option which guarantees you the proceeds of sale once you turn the contract documents over to the buyer’s conveyancer.

Personally, I would not agree to anything like this

We had an individual completely waste our time with viewings then drop a document for us to sign:

 

The way I dispose of this type of property is through a sub sale (back to back) transactions. A sub-sale is where a seller contracts to sell a property to an intermediate buyer who simultaneously (on the day of purchase) sells it on to the ultimate buyer. Back to Back transactions are very common with investment sales and we have a proven track record of carrying these out to a high standard.

Back to back transactions approximately 20 years ago had a bad name i( still do)n the market because during this time people were able to hide things within in contracts such as deposit. However, nowadays, this not the case at all. During all of our transactions, we are willing to let solicitors view the other contracts to confirm they are both the same. The only two things that are redacted are the sales price and the client names. This is ensures that there is clarity during the transactions and everything is ethical(sure)?

I understand that you and your solicitors have not been involved in back to back transactions before, therefore I recommend  that you speak with our solicitor XXXX (cc’d) who will be able to confirm the process is straight forward. I am happy to organise a joint call for ease. 

As a Chartered Surveyor and Investment Consultant, providing a first class service and having ethical values are the most important and it is mine, as well as XXX intentions to ensure all of our clients walk away happy with our service

As the property world is small, we reached out to colleagues and they came back to avoid these people who offered the back to back.

Word of wisdom- Pass on Back to Back deals.

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