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Property prices being driven down by finance

It comes to no ones surprise that lenders play a big part in setting a property’s price.  If lending dries up property purchases stop occurring and only forced sellers sell to the highest bidder, usually the one with commercial finance.

 

Does this present an opportunity to the man on the street?  Boy does it!

 

As lenders tighten the screw there is only one real loser: The vendor.  But considering the vendor will usually be a forced seller the vendor could very well be the lender themselves! i.e. the property is a repossessed property by the bank and they are trying to sell it to someone else who will take on a debt to buy it.

 

So do we care if the vendor suffers?  Well to be blunt of course not.  When we go and buy anything all we care about is getting the best price.  As a buyer we want to be in a strong position and we want the seller to be in a weak position.  This ensures a keen price for the buyer i.e. YOU!

 

So it is simple.  With the lack of buyers out there due to finance we are finding ourselves sort of on our own.  We have professional investors and professional sourcers (including the Ahuja Group) buying on behalf of their client base. 

 

My client base have access to finance that professional investors have access to through my preferred broker.  A novice investor who wants to get a look in will have to go through a steep learning curve to arrive where my clients are currently.

 

So now I believe 40 is the new 30.  What I mean is:

 

40% BMV is the new 30% BMV!!!!!!!

 

This is what the forced sellers have to accept or near abouts to get deals sold.  Now if you do get 30%+ BMV you have done extremely well.  Getting anything with this sort of discount is amazing.  However we are gunning after 40% BMV.

 

This means even when a lender only offers 50% LTV finance you can still buy a bargain property by only putting down 10%.  Let me show you. 

 

Lets say that a property today valued at £100k we find for you for £60k.  it is a bargain right?  We go in for lending and the lender comes back and says they will lend 50% of value.  This means they can offer you £50k lending.

 

Now would you pass up the opportunity of getting a property at a 40% discount just because you have not got £10k?  You would be mad!  Remember the £100k value is today’s value.  Not last year’s valuation or list price.  Today’s value.

 

So how do you get £10k? 

 

Beg? No

Steal? No

Borrow? Yes!

 

Speak to my in-house broker.  She will help you.  Discounts will hit historic levels and we are gunning after them big time.  My office have a quota of placing at least 100 offers per day on properties.  Okay most will get thrown in the bin (others will abuse my staff!) but some, just some will get accepted.  It may only be 2 or 3 properties but they will come.

 

It is these that will come to you as a client.  Bargain properties.  If you can appreciate that the credit markets are in a bit of a turmoil and you are prepared for a rocky ride then you will have a gem of a portfolio.  When I say gem I mean really really cheap properties which when people ask you how much you paid for them you can answer them which will have only one effect on the recipient: Jealousy!

 

Property prices are being reset again.  Are you ready for it?  Tell me your name, email and tel number and one of team will help you build a portfolio that I keep banging on about!

 

Ajay

 



Posted on: 8th Jul 2009




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