Buying Investment Property at Bargain Price

Gauging the temperature of the property market may be complicated. But when estate agents start talking that buyers are now taking the reins, those who are looking to get excellent deals should pay attention. Recently, agents have been reducing their prices and auctioneers have been establishing lower reserves. On top of that, the property market has experienced a significant drop in confidence. Experts say that all these factors point to a buyers’ market. While many experts agree that the property market is cooling down after undergoing two years of price increases, the National Association of Estate Agents stated that there are many opportunities for those investors who are planning on entering the market now and buying investment property.

However, if buyers are capable of buying without over reaching themselves and are prepared to accept certain risks, such as a dip in the value of their assets, the forthcoming months are deemed to provide an opportunity to evaluate a soft market and most probably grab a bargain home. Investors who decide to make a purchase now should make sure that they have solid financing and they have a sufficient deposit that would protect them from negative equity. It is also imperative to choose locations and properties that maintain flexibility even in rough markets, are attractive to other buyers and provide the potential to add value.

Auctions

Buying investment property at auctions allow up to 40 per cent savings, making them ideal places to look for bargain property. Those looking for properties to renovate, great value council homes, or even properties sold by historic landowners can discover wide selections at auctions. While there are several reasons why properties can go on sale at auction, what drives them are the desire to find a quick sale. The moment the hammer goes down, the property is sold and the buyer is legally obliged to pay the full price usually within 28 days.

Sale-and-Rent-Back / Distressed Sellers

As has been continually reported, there has been an increase in the number of people struggling to keep up their mortgage payments. Those looking to profit from them typically offer a quick sale for cash, or to buy and then let their property back to them. Generally, homeowners sell for 60 per cent to 70 per cent of the value of their property. Such deals normally do not have regulations. Most of the people who sell their property in this manner are those who are close to getting their house repossessed.

Bargaining with Estate Agents and Sellers

Aside from auctions, the soft market also offers other opportunities of buying investment property. One example is negotiating with agents and sellers. While estate agents are all for getting the best prices for the property they are selling, they will be willing to negotiate prices with their clients especially for homes that have been sitting on their books.

When negotiating a bargain, buyers are advised to figure out the very least a seller needs to avoid offending them. This could be 95% of the value. In some cases it could be as little as 50% of the market value. But for a property that needs improvement, particularly one that is taking agents too long to sell experts say it is worth going in low.

Buying investment property is one appealing way to increase a person’s financial worth. But buying it at a bargain price will enhance the investment and reduce the risk of getting caught in a negative equity trap.