As property values continue to rise, getting a great deal requires good planning, patience and plenty of commitment. Here we look at the elements to consider around how to buy property for the best possible price
When you have done your due diligence and appropriate research, and know what the market values are in the area you are focused on, then you will know what you can expect when looking to buy property that fits your plan.
If a property seems cheap for the area – there will be a reason – and understanding any tactic, defect or problem with the property means you can work out what it would take to address it – and if it makes sense for you to do it. If you have to compromise to get a great deal then it’s important you understand any issues very clearly, and what it will cost in terms of time, money and stress to rectify it.
Sometimes unrenovated properties just need a fairly straight-forward tidy-up – such as a lick of paint and new furniture. Others have hidden issues – old boilers, electrical problems, even structural problems such as deteriorating or moving foundations, or a roof that needs to be replaced.
If a deal seems too good to be true – it probably is – so be sure to have a professional and accredited inspector ready to do a thorough inspection – and talk with them and the relevant member of your property team to make sure you clarify all the pros and cons before you buy property. The risk of a seemingly cheap price is jumping in too fast before you understand why it is cheap. Bear in mind though, that once you do have a clear understanding of the defects with the property, then these can be used to negotiate and to successfully reduce the asking price.
At the same time – as an investor you need to be aware that the asking price may not be the final price – in a rapidly appreciating market, it is the other buyers that can often bid up the price of a property, and determine what is actually achieved for it. So it’s important to be tactical, know what you are looking for, and be able to move quickly when you do find it.
Tactics when looking to buy property
What is the sellers motive? For property sellers their motive tends to be one of three typical things:
- They want to achieve the highest price and are not in a hurry
- They are in a hurry to sell – maybe they have committed to another property, or their circumstances have changed and they need to move quickly
- They want privacy – so they would prefer a quiet sale without advertising and fanfare.
Getting clear on what the property sellers motive is, allows you the buyer to better understand what will satisfy them. Keep in mind that their motives can change over time – if the property has been on the market for some time, for example, they may feel that the market is slowing, or they are asking too high a price.
Your property adviser, who may negotiate for you, has a wealth of experience in how to uncover and monitor these motives – and so can save investors a lot of money by knowing what to offer, when and how
Once you know what the vendor is after, you can tailor your offer to suit their circumstances. There may be other factors than just price when it comes to why they will sell to you. They may want a minimum of fuss and a speedy transaction, they may be attached to their neighbours and like the style of you and your family – they may even want to stay in the property or area and rent there. By having a good relationship with their property agent, and asking the right questions, the buyer can get an inside run on a good property – and create an enticing proposition to the seller that suits their agenda.
If your finance is ready and you are confident about the pros and cons of the property, you may be in a position to offer an unconditional contract to the seller. If an alternative offer from another buyer is conditional to finance, or inspection for example, the vendor is far more likely to take your offer. You just need to be very careful though – as if finance falls through or a new major issue is identified – you may find it difficult to get out of the contract.
As a buyer you need to understand the selling agent and their role in this. Selling agents negotiate many properties a year, and are most experienced in getting the best deal for their client. If you are not a seasoned industry professional, you could easily end up paying more than what a property is worth due to their tactics in getting you to move fast or make a higher offer than is necessary. At the same time, bidding too low and missing out on a well suited property in a hot market can set you back – as you can find that the price of similar properties increases dramatically in a matter of months.
Using a professional buyers agent who knows the market well, and how to negotiate with sales agents, and works with your key interests in mind, becomes a seriously good investment when looking to buy property
They can give you the re-assurance to help you be in a position to take decisive action at the right time – and represent you at the times you need them.
Your key interests include knowing what price you should pay when looking to buy any property and sticking to it
As a property investor, it rarely makes sense to over-pay for a property – if you have patience, and not get emotionally attached to one property or other, you can be in a stronger negotiating and ultimately financial position. By law, a selling agent must present any contracted offer to the seller, and so resisting pressure from the sales agent and sticking to a realistic price offer is an important strategy.
You want to buy property well, but you don’t want to be too aggressive in making low offers if there are other buyers out there who are prepared to pay more than you. It is a balancing act – you need to understand the scenario, be realistic, and be prepared enough to be able to make decisive moves at the right time – whilst maintaining positive relationships along the way.
We recommend working with an independent, experienced and trusted property adviser and buyer to help you get the right property and the right price to suit your particular circumstances.
Get in touch and we will can help you through the process to make sure you buy property at the best possible price.
