Property Magnate's house buying tips

AndrewSmith

I wonder if this is a direct attack on the post I was asked to write?

aloiseb

Now we've had your set of hints on property buying, Propertymagnate, may we please have some of your ideas on selling a house please? I'm feeling profoundly depressed about the prospect of getting enough money for ours to actually buy anything in the new area, after reading your post.

TIA.

Property_Magnate

AndrewSmith,

The post was in no way designed to undermine yours and I apologise if it seems that way. It is purely an alternative view from the point of view of a buyer rather than a seller.

Is their any part of the post you particularly object to?

I have been buying property since 1986 and there is far more information at ones finger-tips now than there ever was before. I offer ideas to save money via research. The best way of saving money is on the price paid for the property. The buyer has far more control over the price paid versus Mortgage Rates and other fees. Is money saving not the purpose of this forum?

Property_Magnate

Andrew Smith,

As stated at the top of the post, the information is aimed at First Time Buyers who tend to look for a home to live in rather than as a BTL or short term investment.

There may be circumstances in which a First Time Buyer should consider interest only mortgages. For example, if they had a good investment vehicle or their future earnings growth was significant. My point is that interest only mortgages should not be used because that's all they can afford.

Fair point?

As a mortgage broker I consider you a seller - you sell mortgages to buyers. I am sure you are fair to your customers but you are still getting paid to provide them with a product. Caveat Emptor.

AndrewSmith

But I am not a seller. Also you do make a direct attack of some of the tried and tested statements I have in my post.

Whilst I accept and respect your opinion, I do not have to necessarily agree with it. Just the fact that I have recieved 22 thanks for it should speak for itself.

I ALWAYS without exception work on behalf of the buyer, even when I previously worked in an estate agency as a broker. It is, after all, the buyer's mortgage that earns me my commission.

The other services described are all given free of charge, and I can see no better way to help buyers, especially first time buyers, than holding their hand and guiding them through the minefield that is purchasing their first home.

I do accept that of course it is best to obtain the lowest price for the buyer, having bought and sold in excess of 20 properties on a personal basis myself in recent years however the average first timebuyer will be looking for the type of property on which the seller will most likely have secured a relatively high level of mortgage borrowing as FTB themselves.

This coupled with the fact that house prices have not rocketed in recent years it is in my experience that the opportunity to get the price reduced dramatically on such properties is becoming more difficult. Bear in mind that I am offering on property for clients on a daily basis usually with about 5-10 clients actively seeking at any one time. So I do have an active overview of the current market.

Research is an excellent idea, something which I encourage all my clients to do, and it should be an integral part of the buyer's process of decision before finally offering on a property.

I thank you for your measured reply.

Andy

AndrewSmith

What you consider me to be is irellevant.

I always, without exception, work on behalf of a purchaser. Yes I receive a commission for the mortgage but I am sure you also earn from buying and selling property. In the same vain that also makes you a seller. No argument.

With regard to interest only mortgages, as a qualified and experienced advisor, not just CeMAP mortgage qualified but also fully FPC qualified and holding AFPC in 3 disciplines I feel that it is incorrect to advise people to 'never take an interest only mortgage'. It really is dependant upon the individual circumstances of the prospective buyer. With the new FSA regulations and guidelines now in place every mortgage recommended for residential purposes has to be justified to the n'th degree, therefore if an interest only mortgage is recommended it will 99.9% of the time be the correct recommendation for that client. At the end of the day what would be the benefit as an advisor to recommend interest only over repayment if it's not suitable? I get paid the same for either and would face financial and FSA regulatory recourse if it could be demonstrated as bad advice.

Not worth giving up 12 years of mortgage trading without a single complaint ever being made, let alone upheld, just for the sake of a 'quick buck and one more mortgage commission'.

Unless you are suitably qualified and have all the facts in front of you it is irresponsible to make such a profound statement, and is misleading to buyers who are seeking genuine guidance.

dander

I'm sorry but I think anyone who advises FTBs to go around offering 20% below not even asking price, but the selling price of similar properties, is living in a dream world, and being distinctly unhelpful. There have been many people on these boards who've been given this kind of advice and can't understand why their offers are never accepted, why estate agents won't return their calls, why sellers get sniffy with them. On most properties an offer like that is wasting everybody's time.

Yes, there will be a few properties out there where the vendors will accept low offers, maybe they just want shot of the property for some reason, debt or bad condition of the property - but these are the exception not the rule.

Far better advice to FTBs would be to look through nethouseprices or some such and get an idea of what properties are really selling for. And work out before you start what type of property you can afford. Be honest with yourself and get realistic. And if there are real bargains on the market - make sure you know why. If a seller accepts a hugely reduced price ask yourself why? See what you can find out before you waste legal and surveyors fees and then discover there are problems you can't afford. If money is tight it often makes sense NOT to buy the cheapest house on the market, but the house that is least likely to generate big bills after the move.

Also remember vendors are not big business trying to rip you off. They are ordinary people like you trying to move house. Why not try being nice! :beer:

Jorgan_2

Property Magnate, I’ve had a chance to read thru your advice buyers & it makes interesting reading.

1) Budget
Can’t fault your advice here.

2) Price assessment
I can’t see how the typical wage stacks up. Say the average house price in the UK is £190,000, the typical wage would have to be over £48,000, based on your calculation.

If, as somebody has said, the average wage in the UK is £23,000, don’t know if this is correct, then the average UK house price would be £88,500.

3) Price Trend
What defines a very fast rise in price? For example, I sold my last house approx 3 years ago, that property resold a couple of months ago and has gone up in value by 16%. My new property has gone up in value by 55% over the same period, based on purchase price & the sold price of a similar property that sold 4 months ago.

Also what is an amateur investor? I have clients who have invested in property over the last 3 years, are they amateurs as they still have day jobs?

4) Marginal Sales
Properties may sell for what appears to be ridiculous amounts to you, to others they have achieved their market value. Nobody forces a buyer to pay over the odds for a property, the majority of buyers will have at least a mortgage valuation, even those who are cash buyers will usually have a survey/valuation of some sort.

House price websites are ok for getting basic information, they do not tell you the overall condition of the property, which is usually the main reason for having a price differential.

5) Look for Flippers
This one seems to be in direct contrast with your user name. Are you against people making a profit from the sale of property. Many buyers don’t have the time, money or the inclination to do a property up. Shows like House Doctor prove this time & time again. People see a house, don’t want to buy it because of its décor, carpets & bathroom, then after a £2k make over, they are willing to offer the asking price. If they had been prepared to do the work themselves they could have knocked the price down by maybe £3-10k and then done the house up to their taste.
Last time I checked we were in a free market economy, do you know something I don’t comrade?

6) Know your Seller
When I bought a property, how much I paid & how much of a mortgage I have it is my business & nobody else’s. If you don’t offer me the figure I want, you don’t buy my house, simple. Knowing how much of a mortgage I have on a property will only tell you if I have negative equity on a property and even with negative equity I may still be in a position to sell.

7) The Offer
I didn’t realise Estate Agents made up asking prices, I thought they used market comparables, based on recent sales, condition of the property, current trends and supply & demand.

Right, I’ve seen my dream property, its up for sale at £110k, I’ve done the research on the net, other properties have sold for between £105-115k in the area over the last 6 months so I know the price is reasonable. However, according to your figures, I have to knock 20% off the asking price, bringing it down to £88k. I know the current owners paid £85k for it 3 years ago, so at least they covered their agents & solicitors fees. I ring the agent with my offer, once they’ve stopped laughing they mention something about a running & taking a jump, there very competive this lot. Anyway, they ring back & say that the offer has been rejected. So I ask to see some other properties they are selling, they tell me not to bother, something about wasting their time & the time of their vendors. So, I wait for the the general public to become more educated in the house buying process, meanwhile interest rates have gone up by 1.5% and I’ve lost the 3year fixed rate I had my eye on.

Andrew Smiths ‘House Buying Tips ‘ sticky in my opinion, offers sound advice to the house buying people on this forum. If I remember correctly it was actually requested by a number of posters. As he says it’s based on years of experience of actually helping people to buy property and there is no substitute for experience. I am an Estate Agent and if people tried to employ the methods that you suggest within any of the companies that I have worked in over the years, they would have struggled to buy any of the properties that they had viewed. As I say, its just my opinion.

AndrewSmith

Jorgan wrote:

Andrew Smiths ‘House Buying Tips ‘ sticky in my opinion, offers sound advice to the house buying people on this forum. If I remember correctly it was actually requested by a number of posters. As he says it’s based on years of experience of actually helping people to buy property and there is no substitute for experience. I am an Estate Agent and if people tried to employ the methods that you suggest within any of the companies that I have worked in over the years, they would have struggled to buy any of the properties that they had viewed. As I say, its just my opinion.

Thanks Jorgan,

It's nice to hear that from your side of the fence you find my advice non-defamatory of estate agents, what I try to promote always is working with the Estate Agents whether buying or selling. It never hurts as a buyer to be seen as serious and build a rapport with the local agents.

I am fairly well known to the local agents in the area, some of which who do not have brokers often call me asking if I know of a suitable buyer for a property they may have just taken on (no I dont receive back handers before the usual broker bashers jump in).

Working with the Agents and building trust and respect with them will not only help smooth the buying/selling process along but will also remove the temptation and suspiscion (I can never spell that bloody word lol) of any wrong doing or underhand dealing.

Thanks buddy

Andy

Pal

I have removed Property Magnate's duplicate post from the house buying sticky and included them in his thread on the same subject. I have also deleted a few posts that did not contain any information as they didn't make sense within the new merged thread.