Buy Property at the right price!
There is an old saying in property: “Make Your Profit When You Buy, Not When You Sell”
This is by far the most important tip I can give you.
It is alright me saying that but how do you know if you’re buying at the right price?
Below, I will list what actions you should take so that you can be comfortable with the price you are willing to pay for a property.
Step 1 – Research
Any business will tell you that research is important and property is no different. Whatever your investment strategy is you need to focus on finding out about the property plus the area.
Is there strong or weak sales demand?
What is the average sales price for the type of property you are interested in?
What has been the most recent sales prices?
This is important and there are numerous portals where you can get this information, including Rightmove and Zoopla.
Another tip, always make sure you are getting like for like. It is no good comparing a house in excellent condition with one that needs a lot of work.
The most recent sales price will give you the most accurate valuation, if the sale has been in the last twelve months. Any later sales must be re-adjusted.
Look at what is for sale now in that area and search out to a quarter of a mile. Are there any under offer? If there is, then that can be used as a reference for your valuation.
If you are buying to sell on or flip as we call it then you need to take on even more research.
You need to know what types of properties are in demand ie; detached, semis, terraced or flats. Finding out how long it takes to sell each type of property will also back up your decision.
Professionals such as Estate Agents usually have access to use Rightmove Plus, which gives a best price guide. From there you can see how long a property was on the market before it sold.
Another good portal is Hometrack it has an annual or monthly subscription but if you are serious about your buy and sell strategy then this will worth every penny. Having the right information can save you thousands.
Phone estate agents, and ask them how the market is for your type of property.
Tell them you have a relation that is thinking of selling. If they ask more questions like name, address etc; then just make up a story that you are enquiring for your auntie or uncle and that it is a general enquiry at this stage. I am always good at making stories up for agents.
They smell commission as soon you mention a sale.
If you are investing in a buy-to-let (BTL) then check out the rental demand by using Rightmove and Zoopla. Don’t be frightened to phone letting agents to find out if they have a lot of enquiries.
A note about estate and letting agents. They will sometimes tell you what you want to hear as far as prices and the market are concerned. Please just use their information as part of your wider research.
Step 2 – Inspect
You need to see with your own eyes if the property fits the description.
Is it in good condition? Does it have any structural problems?
If you are inexperienced you might want to take a friend that knows about property or a builder. The latter are usually good judges and can be quick to point out any defects or problems.
I would also advise you inspect the area.
Have a good drive around. Is it a nice area? Do you see any for sale or sold signs?
Print out the recent sold prices and look at those properties. Are they any different than the one you are interested in.
By collating all this information, you should now be able to know if the property is a good buy or not.
If you are buying to sell at what price do you need to buy to make a profit?
If you are investing for BTL then you will now know the rental demand and type of tenant to expect.
Having done your research and inspection and you are satisfied that the property is a good buy and the price you want to pay…then it’s time to move onto the next step.
Step 3 – Negotiate
Here is where you can really make your money.
I am not going to go into detail as there are many negotiating strategies and it depends who you are dealing with as to whether you get a good result…
All I would say, go in as low as you dare. Don’t be frightened to offend!
Just a short personal story.
About fifteen years ago, I sold our family business which included our flat. We lived with my wife’s in-laws for a year as we could not find a suitable property in our home village where we wanted to live.
There had been this property that had been on the market for ages and it was empty. I knew the owner lived a few miles away and had bought it as a part exchange deal. We were not convinced because it faced North and looked dull.
We booked a viewing and to our surprise we were amazed how much light came into the property from the other side and with a lovely garden to boot.
I went into the agents it was on the market for £125,000.
The agent said he thought the owner would take £118,000. Always ignore what the agent says. Test the seller yourself.
I offered £90,000 because I knew it had been on the market a while and the seller wanted rid. The offer was refused.
The agent came back and said if I went to £110,000 I would get it. I left it a few days as not to show any great desire. I then went back in and offered £93,000 I told the agent it was my final offer and if it was not accepted I would look elsewhere.
And guess what? The agent came back and said the offer had been accepted. Happy days it’s now worth over £250,000!
Using the three steps Research, Investigate and Negotiate you should be able to secure good property deals that will give you a solid profit.
Take your time and don’t be rushed by an agent or owner. Always remember it is better to walk away from a bad deal!