Even in areas where the real estate market seems unaffordable, property bargains can be had for those who know where to look. Since there are currently far more properties on the market than potential buyers, even properties found the traditional way may be willing to negotiate to prices well below the asking price (we recommend this provider of glass balustrades). Homebuyers just need to know how to look.
Secret #1: Buy at Auction
It is unfortunate that such a large number of repossessed properties are currently at auction, but it is a windfall for first time homebuyers and investors alike. Properties that go up at auction are often sold for as little as 50% of their value, though not always; the reserve price can be bid up above the value if there are many interested buyers. However, it is common for properties to go unsold, in which cases those who act quickly can secure the deed in as little as a month. Here are the tips to navigate these auctions successfully.
Properties sold at auction may be in poor shape, so it is important to view the property ahead of the auction date. Properties are usually open for viewing the day before the auction is scheduled.
Occasionally, the property may be sold the day before the auction, depending on the auction agreement. It doesn't hurt to ask the auction or property representative at the viewing if this is a possibility.
If the property is unsold at auction, the seller may have given the representative permission to sell at the reserve price for 24 hours following. Check auction sites for unsold properties the afternoon of an auction and contact the representative.
In all cases, a 10% deposit is due upon the entry of the winning bid, so buyers must be prepared with cash in hand. After deposit, there is a 28 day period to pay the remainder either with cash or through mortgage.
Secret #2: Buy Ex-Social Landlord Property
Because of the stigma associated with ex-local authority and previous council housing, these properties usually market at 70% of their true value. Many ex-council properties are in attractive areas, well-kept, and recently renovated. Though the first picture council housing brings to mind is high-rises, there are plenty of ex-council properties that are at five stories or less, and a smaller number of detached homes in surprisingly well-to-do areas.
Be aware that a mortgage for a property above the fifth floor can be more difficult to obtain.
Ex-social landlord properties are usually sold on a long lease (100+ years), though they may be a freehold.
If owning on lease, buyers need to check the tenant agreement very carefully to ascertain what the tenant's responsibilities are and what the landlord has committed to do.
Secret #3: Look for Disadvantaged Listings
Anyone who has spent time browsing an estate agent's listings will notice that two phrases crop up so frequently it becomes a distraction: "sought after" and "well-presented". There are sought after locations and sought after rear gardens, well-presented conversions and well-presented purpose builts as the agent tries to get buyers in for a viewing. The listings will never say "less desirable" or "amazing past the front door", but savvy buyers know that there are certain terms to look for in these listings that hint at a deal:
Partially renovated. This may mean that renovation was begun but not finished, meaning the buyer will need to complete.
Modernisation (updating, redecoration) needed. This means that there are superficial needs on the property, from repainting to new flooring.
Ready to renovate. This hint is a little more serious than needing to modernise. Renovation typically involves new appliances, minor structural repair, and other capital outlays.
Original features. In higher-end properties original features are a benefit. In mid-to-low range properties, they are a deficit.
Rent to buy. Really they'd love to sell it, but are having trouble finding a buyer!
In our opinion... "In our opinion" means that someone has disagreed with them, or could mean that they are skirting the OFT's consumer protection law about misrepresentation.
Cash buyer required. Cash buyer required is a sure sign that the property needs to be sold quickly and will be amendable to negotiation.
Quicker than normal sale. This is less strict than cash buyer required, but buyers should be well-prepared to move quickly with paperwork and financing to take advantage of these.
Vacant. A vacant property is not making money for anyone, and though this is often spun as a plus to the buyer, it usually means that the quicker it is sold the happier the vendor will be.
There are also terms to note if they do not appear in a listing. Vendors who wish to make the process easy will note "no onward chain"; if there is an onward chain, there is greater possibility of a negotiation, within limits. Also pay attention to listings that tell more about the area than about the property. This may be an attempt to get buyers excited about a property that needs work and can be had for a lower than average price.
Secret #4: Look for Properties (Just) Outside Popular Areas
Postcodes affect asking prices much more than they should, especially in London. Often flats on side streets are elevated to the rank of high streets just by virtue of their area code. However, using a postcode map and identifying marketed properties that are just outside a desirable postcode can help buyers who want to live in a specific area avoid paying a postcode charge of ?5,000 or more.
There are new properties entering the real estate market every day, so vendors who are truly motivated to sell are more willing than ever to negotiate. Property buyers who are willing to use a combination of tactics to find their ideal property, from auctions to careful checking of the listings, are likely to hit upon a bargain.
