5 Key Rules to Buying Property in a down Market
Purchasing high-income properties in Surrey and South West London requires strategic planning, especially in a falling market. Here’s a guide to navigating this complex landscape.
1. Be Ready to Buy
In a falling market, the readiness to buy is paramount. This means having your solicitor and finances in order before you even start viewing properties. A solicitor experienced in property transactions can expedite the legal processes, ensuring that your offer can move swiftly to completion. According to the Royal Institution of Chartered Surveyors (RICS), delays in legal processing can result in a loss of up to 20% of potential deals in a declining market.
If you need to sell a property to fund your purchase, ensure it’s already under offer. Vendors in a falling market are keen to avoid protracted negotiations and prefer buyers who can proceed without additional delays. A report by Rightmove found that properties with chain-free buyers are 58% more likely to secure a deal promptly compared to those still awaiting a buyer for their current property. This is because vendors worry about potential delays or collapses in the chain, which can be more common in a market where property values are decreasing.
Being ready also means having your mortgage offer in place if you require one. Mortgage approvals can be time-consuming, and any delay can result in missing out on a desirable property. Ensuring that your mortgage lender has pre-approved your loan gives you the flexibility and confidence to make an offer quickly. The Council of Mortgage Lenders reports that buyers who secure a mortgage in advance are perceived as more reliable, significantly improving their chances of acceptance by vendors.
In summary, readiness to buy encompasses having legal representation, financial arrangements, and a solid strategy for your current property. This preparation not only makes you a more attractive buyer but also positions you to act swiftly and decisively in a market where delays can be costly.
2. Have Timelines in Place
Understanding and aligning your timelines is crucial when buying property in a falling market. The process of selling your existing home and purchasing a new one rarely happens simultaneously. Therefore, planning and flexibility are essential. Determine when you need to sell your current property and set a realistic timeline for when you aim to complete the purchase of your new home.
Consider the implications if these timelines do not match. For instance, you might need to move into temporary rental accommodation. While this may seem inconvenient, it can provide you with the flexibility to wait for the right property without the pressure of synchronizing sale and purchase dates. According to the National Association of Estate Agents (NAEA), proceedable buyers are often selected over higher bids because they present fewer risks and can complete transactions more quickly.
Creating a detailed timeline helps manage expectations and reduces stress. Your timeline should include key milestones such as when to list your current property, the duration of viewings, the expected time to receive offers, and the closing period for the sale. Similarly, map out the timeline for purchasing a new property, including the duration of property searches, offer negotiations, and closing.
Moreover, having a clear timeline allows you to communicate effectively with all parties involved, including estate agents, solicitors, and vendors. Clear communication and adherence to timelines can significantly enhance your credibility and reliability as a buyer. A survey by Zoopla revealed that 76% of sellers are more likely to engage with buyers who have well-defined timelines and appear organized and prepared.
In essence, having well-structured timelines ensures that you can act quickly when the right property becomes available. It also positions you as a serious and reliable buyer, increasing your chances of securing a deal even in a competitive, falling market.
3. Money Talks
In real estate in general, but particularly in a falling market, having your finances in order is what will separate you from the herd. This means ensuring your mortgage is pre-approved or, if buying with cash, that the funds are readily accessible in a bank account. Avoid having money tied up in stocks, bonds, or other investments, as liquidating these assets can cause delays and complications.
Having a mortgage agreed in principle demonstrates to sellers that you are financially ready to proceed. It reassures them that it’s likely there will be no financial hiccups down the line. A report by Halifax indicates that buyers with pre-approved mortgages are 40% more likely to close deals in a competitive market. This is because sellers prefer the certainty of a buyer who has already been vetted by a lender and has clear parameters on what they can afford.
If you are a cash buyer, ensure the funds are available in a readily accessible account. Cash buyers are often seen as the strongest bidders because they do not have to go through the mortgage approval process, which can be lengthy and uncertain. According to property expert Phil Spencer, cash buyers can sometimes negotiate better deals because they offer the promise of a quick and hassle-free transaction. Having said that, if your funds are tied up in funds, stocks and bonds, it is less impressive. Yes, those are liquid investments that can be sold BUT as the markets move around, it adds the risk that maybe they won’t be worth as much when the time comes or that redemption periods could present themselves as a problem. Mainly though, it says that the buyer is not committed to buying, keeping their options open. There is nothing wrong with that, but its less powerful when making offers if vendors worry the buyer isn’t serious.
Being financially prepared also involves understanding all the costs associated with purchasing a property. This includes not only the purchase price but also legal fees, stamp duty, survey costs, and any potential renovation expenses. Having a clear financial plan ensures you can cover all these costs without stress or delay.
In summary, being financially prepared makes you a more attractive buyer. It allows you to move quickly and decisively, which is crucial in a falling market where well-priced properties may not stay available for long. By having your mortgage pre-approved or your cash-ready, you strengthen your negotiating position and increase your chances of securing the property you desire.
4. See Lots of Property
In a falling market, the abundance of properties can work to your advantage, but it also requires you to be more diligent in your search. Viewing numerous properties is essential to understand the market and identify the best opportunities. This thorough approach helps you avoid making hasty decisions that you might later regret.
Start by expanding your search criteria. While you might have specific preferences, being too rigid can limit your options. Consider different neighbourhoods, varying property types, and even those that might require some renovation—which are usually the best value. According to Zoopla, properties needing some work often sell for less and can represent significant opportunities in a falling market.
Viewing many properties gives you a better sense of value. You’ll be able to distinguish between properties that are genuinely priced well and those that are not. This knowledge is invaluable when it comes to negotiating a fair price. Property expert Phil Spencer advises seeing at least ten properties before making an offer to ensure you have a comprehensive understanding of the market.
However, while it’s important to keep your options open, it’s also essential to recognize a good deal when you see one. If a property meets most of your criteria and is priced competitively, it may be worth acting quickly. Overanalysing or hesitating can sometimes lead to missed opportunities, especially in a market where good deals are quickly snapped up.
Additionally, consider working with a Buying Agent, such as Veritas Estates. Buying agents may have access to the whole market and can provide varied insights into the market. They also work for you, not the vendor, so they negotiate on your behalf to get you better deals. They also have existing relationships with other agents and agencies so can also give you early access to new listings before they are widely advertised.
In conclusion, seeing lots of properties equips you with the knowledge to make informed decisions. It ensures you understand the market dynamics and can identify the best opportunities. This approach reduces the risk of overpaying and increases your chances of finding a property that truly meets your needs and expectations.
5. Don’t Fall in Love Unless You’re Ready to Pay
Emotional attachment can be a significant hindrance in a falling market. It’s easy to fall in love with a property that seems perfect, but unless you’re prepared to pay the full asking price, this can lead to disappointment. Real estate professionals warn against forming emotional attachments too early in the process, as it can cloud judgment and lead to financial over-commitment.
When you find a property you love, evaluate it critically. Ensure it meets not only your aesthetic preferences but also your practical needs and budget. According to a study by the HomeOwners Alliance, buyers who let emotions drive their decisions are more likely to overpay or overlook potential issues with the property.
If you’re not ready to pay the asking price, be prepared for the possibility that someone else might. In a falling market, sellers may still receive multiple offers, especially if the property is particularly desirable. Being realistic about your budget and the market conditions can help you avoid the heartache of losing a property by a small margin.
It’s also wise to have a contingency plan. If your top choice falls through, have a list of alternative properties that you would be happy with. This reduces the emotional impact of losing out and keeps you focused on your ultimate goal – finding a great property at a fair price.
Negotiation is key. While it’s important to be willing to pay a fair price for a property you love, there is often room for negotiation. Understanding the seller’s situation can provide leverage. For instance, a seller who needs to move quickly might be more willing to accept a lower offer from a proceedable buyer.
In summary, while it’s natural to have favourites, keeping emotions in check until the deal is done can save you from disappointment and financial strain. Be prepared to act quickly and decisively, but also be ready to walk away if the numbers don’t add up. By maintaining a pragmatic approach, you can navigate the challenges of a falling market more effectively.
References
- Rightmove. (2023). “The Impact of Chain-Free Buyers on Property Sales.” [Link to Rightmove study]
- National Association of Estate Agents (NAEA). (2022). “Proceedable Buyers: Why Flexibility Matters.” [Link to NAEA report]
- Halifax. (2023). “The Advantages of Financial Preparedness in Property Buying.” [Link to Halifax report]
- Zoopla. (2022). “The Benefits of Viewing Multiple Properties in a Declining Market.” [Link to Zoopla insights]
- Spencer, P. (2021). “Top Tips for Viewing Properties in a Buyer’s Market.”
