Five top tips for buying a property project
Thinking of buying a property to improve? Here are five top tips on what to look out for when buying.
1. When prices have risen and buyers on a budget have been pushed further and further out, this can lead to once undesirable areas becoming more popular and improving as a result. If you can spot improving areas, or areas subject to investment and infrastructure changes, it often pays to get on the local property ladder before prices rise. However, if you’re concerned about resale values, be careful not to spend more on a property than it’s worth.
2. Even if an unmodernised property seems like a steal, remember that it may cost more to buy and renovate than somewhere that’s more expensive to buy but needs less work. This is where research comes in. You’ll need to find out how long the property’s been on the market, what position the seller’s in, what comparable properties are selling for and what property prices are doing locally, etc, as well as how much the property will cost to renovate. Ideally, pay for a full structural survey (the RICS Building Survey) and then get quotations for the work needed so you’re realistic about the cost. To get an idea of the cost before making an offer, go round the property with a good builder.
3. Some properties are in such a bad state only cash buyers are welcome. This can also be the case with properties of unusual construction, so if you need a mortgage, you’re more limited to what you can buy. Mortgage lenders usually expect the property to be habitable and although lots of people buy unmodernised properties with a mortgage without a problem, lenders sometimes retain some of the loan until essential repairs are done.
4. Property repossessions are one way to find a bargain, although you may not want to cash in on someone else’s misery. You have to move quickly when buying a repossession, as the seller usually wants to exchange contracts and complete the sale within weeks. They’ll check you’re in a position to do this before accepting, or even considering, an offer, so it’s not a route open to all buyers. It’s also a stressful way to buy, as the property remains on the market until exchange of contracts.
5. Moving quickly applies to buying properties at auction too. You have to exchange contracts on the spot, and complete within a set time, often 28 days, so buying with a mortgage isn’t always possible. Auctions are full of renovation projects and can be a good place to find bargains, providing you don’t get carried away in the heat of the moment and pay too much.