Buying Property at Below Market Value

Buying a property is not an easy task, and with the rising costs, the would-be home owners and investors in this market are struggling to find good deals. While these are harder to come by, they are still available if you are willing to do some groundwork and put time and effort into the research stage. Searching for property below market value will significantly improve your investment and diminish the risk of negative equity, since there will be some profit on the sale price to absorb the reduced value. There are several techniques used to obtain property at below market value such as:

Buy property at Auction
Many properties are sold by estate agents at auction, at around 10% to 20% below market value. Be sure to find out why these properties are being sold at auction, rather than through the normal process. There is good potential here and a lot of investors use auctions to purchase properties quickly and under market price. At an auction, you will need to pay a cash deposit of up to 20% immediately if you win. Also, each property needs to be thoroughly surveyed before you can bid on it, and this is expensive and time consuming, particularly for a large number of properties. Therefore, mostly experienced investors buy through auctions, and a first time buyer or a home buyer is best advised to stay away from the process till they gain more experience. There are property advisory services that offer assistance to novice buyers at auctions but I would always recommend extreme caution.

Buying Foreclosure or Repossession property
For the average investor, if the opportunity arises, it is best to buy foreclosure or repossession properties through an estate agent who can get you a good deal without the hassle of going to auctions. You will need to be very vigilant because these properties get snapped up very quickly, due to the likelihood of getting a good price and the reliability provided by the agent or society. Also find out if you need to pre-qualify or set up your finances with a building society before you can gain access to these types of deals.

Property Development
If you have the time, money and interest, you can buy a renovation property and undertake some property development to sell it at a higher price. For instance, you can purchase at $80,000, make repairs worth $8,000 and sell at $100,000.

Property Development Share Scheme ** HOT **
There are a few schemes available where groups of small investors group together to develop a property to sell on completion. This can attract very good interest. It is essential for buyers to get good advice if taking up this option. Alternatively, buyers may take the option of joining a managed scheme. I have taken this option myself as one of my streams of property development. My first project is underway. For a modest investment I am on track to receive 20% return on investment in 6 months. I will update this blog as the development progresses. Of all my investments, this is by far the most exciting and the most promising. For more information on this scheme click here.

Motivated seller
In some circumstances the property owner may want to sell their property quickly. If so, there is an opportunity for a cash buyer to secure a very good discount.

Other than the above modes, you can also use the newspaper and magazines to find properties sold directly through the owners. This can make it easier to negotiate a better price by forming a relationship with the seller. Further, some websites offer good deals on real estate as well as brokerage rates as low as half a percent. Do your homework, put in a little sweat, and you may find yourself sitting on a goldmine.