publication date: Jan 22, 2010
|
author/source: Kate Faulkner, Property Expert and Author of Which? Property Books
What is Buying at a Discount?
Lets face it, we all want to buy at a discount, but the problem is few people want to sell a property for less than it’s worth!
Buying a Property at a Discount
The first thing to understand about buying at a discount is what a property’s ‘real value’ actually means. It’s important to know first what a ‘discount’ isn’t. It is NOT the amount you pay versus the marketing price ie the price advertised on the internet/via the estate agent.
Working out a Property’s True Value
A property is initially worth what a buyer is willing to offer and seller willing to accept, however as people tend to need a mortgage to purchase a property, professionals get involved and the property’s value can then be reduced based on the information experts such as the mortgage lender and surveyor believe the home is worth. Finally the final value comes back to a renegotiated price.
Example of a Property’s True Value
If a property was advertised at: £150,000, here is how the property’s true value could be arrived at:-
Buyer offers: | £140,000, but it’s rejected by the seller |
Buyer makes a new offer of: | £145,000, which is accepted by the seller |
Buyer applies for a mortgage: | Property is valued at £142,500 as they find evidence of damp |
Independent Surveyor: | Property valued at £140,000 as they find evidence of damp and some structural work is required |
Buyer revises offer: | £138,000, in view of the work required, but the seller rejects this offer |
Buyer finally offers: | £140,000, as they really want the home and the seller accepts |
So in this case the property was advertised at £150,000, but the final agreed ‘true value’ was £140,000.
To secure a discount on a property you would need to make an offer BELOW £140,000, not the £150,000 it was advertised for as this is typically a ‘marketing price’ not necessarily the true value of a property.
NEED HELP FROM THE DESIGNS ON PROPERTY EXPERTS?
Email enquiries@designsonproperty.co.uk for a one of our FREE Property Checklists.
Do you have a property question? GET AN INDEPENDENT ANSWER! ASK US via our PROPERTY FORUM, email enquiries@designsonproperty.co.uk or call 0845 838 1763.