Buying a Property Below Market Value: Tips from the Pros

Obtaining properties below market value is an open secret that property investors know is crucial to the success of their investment. But even if the process is regarded as the best way of getting the most from your property investment, there are basic things you need to equip yourself with to enable yourself to make well-informed decisions.

In the midst of stabilising prices of property in the United Kingdom, is buying below market value still possible? Yes, it is – and below market value properties are indeed the perfect way to get started on the property ladder.

While below market value properties might just be your key to success and profit in property investment, do not expect things to be as easy as picking up the phone and calling an estate agent. Moreover, dealing with homeowners in financial distress, tackling the daunting world of auctions or balancing your financing needs are challenges enough to intimidate the less daring property investor. If you are a novice property investor, your best bet with below market value properties comes with repossessions.

Repossessed properties are those which have been put up for sale by banks or lending establishments after the previous owner defaulted in the payment of a loan. Since financial institutions are not in the business of property investment, they want to recoup their investment fast and easy. Thus, they sell repossessions at a price to recoup their original investment which can be well below market value.

Time and time again, property investors have profited from a purchase of a repossessed property. Still, such properties also come with unique challenges that are quite different from a traditional sale. Here are some expert tips on how to determine if your chosen property investment is right for you.

* Inquire into the legalities. It is best to have search’s done on the property you are interested in. Make sure that it is free from onerous charges or cautions other financial liabilities.

* Have an expert conduct an assessment on the condition of the property. The current state of the property is of utmost importance. Do not purchase a property without ever seeing it beforehand. It is highly advisable that you conduct a thorough inspection when you visit the property prior to purchase to determine if it is in an acceptable state.

Also, you can ask the opinion of surveyors and estate agents to determine if the asking price is proportional to the property’s current state. It would also help if you ask for structural reports and review it very carefully. This will help you determine is the price is right and whether or not you will need to factor in the cost of renovation and repairs into your budget.

* Be friendly with the seller. Since the seller or the property’s previous owner is the one with whom you will ultimately be dealing with, it is best to develop a friendly and healthy relationship with him. Strive for a win-win situation in your negotiations and undertakings as you enter into transactions for the purchase of the property. In this way, the entire process will be easier for both parties and you can be ensured that the property will be handed over to your possession in the best condition possible.

* Be realistic with your offer price. Though many repossessed properties are sold for a price well below market value, do not expect the previous property owner or lender to practically give away the property to you. Be realistic. In the midst of today’s stabilising property prices, most of the repossessions are being sold for a cheap, yet reasonable, price. Educated buyers do their research before naming their offer. Endeavour to find out how much is owed on the property and its current market value. In that way, you can come up with an offer that is beneficial for both the seller and you as the buyer.