Welcome
The material on this website is for information only and is not intended as any recommendation or endorsement of any products or companies mentioned. We are not licensed by the FSA to give financial advice, and none of the material on this website ...
News
Property Investor TodayInheritance tax changes to UK residential properties ...Property Investor TodayThe government's decision to drop significant proposals to non-domicile rules and inheritance tax changes to UK residential properties from the Finance Bill 2017 at the eleventh hour leaves many taxpayers in limbo, according to accounting, tax and ...and more »
Is the UK property market used like a political football?Property CommunityAs we approach the next general election on 8 June we will see promises and counter promises regarding planning permission, property taxes and an array of other issues to do with the UK property market. From the national government right down to local ...
Financial TimesUK public finance: councils build a credit bubbleFinancial TimesUK local councils are engaging in what is known in the financial jargon familiar to hedge fund managers as a carry trade — a form of arbitrage whereby they borrow at rates much lower than private sector borrowers can obtain in order to invest in ...
Telegraph.co.ukGrosvenor warns of 'significantly weaker' returns due to London's slowing property marketTelegraph.co.ukHistoric property company Grosvenor has warned of "significantly" weaker returns this year, partly due to the slowdown in London's property market. The privately owned business controls property across the UK, particularly in London. The total return ...Grosvenor Group warns on 'chilling' London property marketFinancial TimesGrosvenor warns on 'cooling' London property marketBelfast TelegraphDuke of Westminster's £12bn property firm hit by London slumpThe GuardianEvening Standardall 7 news articles »
Telegraph.co.ukGrosvenor warns of 'significantly weaker' returns due to London's ...Telegraph.co.ukHistoric property company Grosvenor has warned of "significantly" weaker returns this year, partly due to the slowdown in London's property market.Grosvenor Group warns on 'chilling' London property marketFinancial TimesGrosvenor warns on 'cooling' London property market ...Belfast TelegraphDuke of Westminster's £12bn property firm hit by London slumpThe GuardianEvening Standard -This is Moneyall 9 news articles »
Have you met...
Latest Members:


Meghan


123


Godfery3q


propertyexpert


teddy70421


jeffreyriebec


Brunong1a

 

Factsheets

Email this story to a friend:

Buying Blind – The Facts


When looking through auction catalogues, it can be easy to be seduced by the seemingly 'give away' guide prices of some of the properties featured. Particularly in today's market where there are plenty of repossessions entering the auction rooms, there can often be properties up for auction where the guide price seems a real steal. However, before getting carried away about the possibility of snapping up a real bargain, you should ask yourself why the property is being listed with such a low guide price and as always, DO YOUR RESEARCH! Don't go just on price alone. If the price seems too good to be true - then it probably is!!27-01-2012
Anyone, however experienced and knowledgable about an area, should visit the property and get appropriate advice. Otherwise, what seems to be an absolute bargain, could turn out to be abit of a nightmare.
Let me tell you about a property in Manchester that I came across where the buyer had 'bought blind' and was living to regret doing so.
At a guide price of £5,000 to £10,000 this 3 bed semi detached property seemed a 'no brainer' and the person who bought it only decided to bid on the lot when he was at the auction - making the decision to do so on price alone. What he didn't know (but could have easily discovered with a bit of research and a visit to the property prior to the auction) was that the property has some serious issues:
1. It was very badly fire damaged and needs total refurbishment. It is currently boarded up and you cannot currently enter the property.
2. The adjacent properties are in the same condition - fire damaged and boarded up by the council.
3. The property lies in the centre of a large local authority estate where there are lots of other vacant, burnt out and boarded up houses.
4. Within the estate, the road in which this property stands in really dodgy and people buying on the estate will prefer the nicer areas that don't cost much more.
So, all in all this impulsive 'blind' purchase wasn't the greatest decision even for an investor!
One major issue is that even if this property has the money spent on it to renovate it and make it habitable (which in this area needn't necessarily be a great deal) until the adjacent properties are also restored, their condition will have a dramatic affect on the resale value or rental value of this house. Our owner could do the works and make this property perfectly OK, yet if it is still joined to a fire damaged, boarded up house then this will have a downward impact on the price. Talk about 'Beauty and the Beast'! And given that it is highly likely that the council own the adjacent properties, there is no guarantee that these will be refurbished.
The other thorn in the side is that the property is currently uninsurable and chances are the owner wouldn't be able to insure it until it is safe.
What our buyer should have done
Firstly, he should have visited the property prior to the auction. That way, even given the fact that he couldn't enter the building, he would have seen that the property was badly damaged and, more importantly, that it is surrounded by other similarly derelict properties.
A drive-by viewing would have also highlighted the fact that there were lots of other properties in desperate need of TLC in the immediate area and surely this alone would have raised alarm bells.
He could have spoken to some locals (which he did AFTER the auction) and heard that the area has problems and isn't particularly desirable. Although given the price of properties, it is popular with first time buyers, there are better areas on the estate which don't necessarily command higher prices, so even in a refurbished state, houses in this street are likely to be turned over in preference for better roads.
Had he been an out and out investor and felt that given the refurbishment costs, he could still make money on this house, he may have been better off buying the adjacent properties as well. This way he would have had some control over the resale prices.
But ultimately this is a story of the risks of buying blind and what our buyer really should have done was to keep his hands in his pockets and not to assume that a £10k house is a steal!

Advertise with us  |  Privacy  |  Terms & Copyright                                                                                     Website maintained by USP Networks