Real Estate Opportunities: When Can You Purchase Property Below Market Value?
Savvy investors are always looking for properties they can purchase below market value. This is because these properties can earn them a good profit once they are ready for occupation. If you are looking to invest in some properties being sold under market value, you might be wondering how you can find them. We are going to look at some conditions that allow investors to get great deals on properties.
When most homeowners relocate, they do not want to have to keep paying for a property they no longer live in. Because of this, they may need to sell their home quickly to avoid paying for two houses. They may also need to sell their old house to facilitate the purchase of a new house or finance their relocation.
For these and other reasons, they may take a lower offer than they would have if they had a lot of time to wait for a buyer offering a higher price.
Separation or Divorce
Divorce often comes with a separation of assets. If a couple owns a property together, they may have to sell it to divide up assets equally so neither one of them gets a bigger share. In many of these cases, the couple opts to sell their property quickly for emotional closure or financial reasons.
These properties are often priced to sell quickly rather than to get the best price possible and this is why it is possible to get them highly discounted.
A common reason for distressed properties is when the owner lands in some kind of financial difficulty. This difficulty can be caused by a job loss, divorce, pay cut or medical condition. Because of their current predicament, they may not be able to keep up with the mortgage, utility or taxes levied on the property.
The owner might decide to sell the property at a lower price before they miss a payment which can hurt their credit score. The owner might also have already missed a payment and worked out a deal with the bank for a short sale (where a homeowner sells a property for less than they owe in mortgage payments and the lender accepts that deal). A short sale does not damage your credit score as much as a foreclosure does and so some homeowners might see it as a viable option.
The Property Needs Work
A property’s condition is one of the most important metrics that determine the value of a property. If a property needs some work done on it, then its value will be far below what you would pay for a similar property that was in a better condition. There are a few common property conditions that can lead to it being sold under market value.
The first condition is updates. Many older properties need to have areas and systems that need to be updated. These can include security, sewerage and electrical systems. Because these properties would take some work before they are occupied, they often attract a smaller pool of investors, but they can be a great investment for those not afraid of putting some money into them.
The second condition is extensive renovations. These properties need a lot more work than those that need updates and this is why they are usually cheaper than the former. These properties might need additions, layout changes, new plumbing, new roofs, changes to the foundation or even gut renovation.
Lastly, we have properties that were abandoned mid-construction. In these cases, the developer ran out of money before completing the project and needs to sell the property to cut their losses. For these properties, the project needs to be completed before the property is ready for occupation.
Because of the amount of work that needs to go into these properties, you should get in touch with a contractor who has experience working on similar projects. To ensure the building is in proper condition once work is done, it is important to urge the contractor to use high-quality building materials from a reputable retailer. It is also a good idea to find great deals on building supplies online to ensure the cost of the project does not drain your resources before the contractor finishes the project.
Retailers such as Armstrong Supplies have everything your contractor needs to complete the extensive work on your new investment. They have a wide range of building supplies including timber supplies, roofing materials, paint, insulation as well as the tools and equipment required to complete the project. By sourcing your building supplies from Armstrong Supplies through their website at https://armstrongsupplies.co.uk, you also become eligible for free delivery for purchases of over £50.
Once a property has been foreclosed on, it becomes the property of the bank. The bank (lender) wants to get rid of the property and get as much as it can out of the property. It is important to note that some of these homes might need a lot of renovations and upgrades because they may have been sitting unoccupied for a long time and the bank has no incentive to maintain them.
A falling out or dispute between partners who own a property in a joint venture agreement can lead to the property being put up for sale. Once the relationship turns too sour to repair, the property might end up on sale as a way to cut ties. A keen investor might be able to take advantage of the situation to grab the property for cheap.
Passing of a Family Member
Another reason why a property may be selling for lower than its market rate is the passing of a family member. In cases where the property was jointly owned, the other party might not be able to keep up with the mortgage. So, they may decide to sell the property before the mortgage payments are due to avoid defaulting. Also, they may sell the property because it reminds them of their loved one or they would like to move to a smaller, more manageable property.
If the property has a single owner, it is often put up for sale as part of an estate sale on their passing. The main motivation for doing this is not to get the most out of the property, but rather to sell the property quickly so the money from the sale can reach the remaining kin as quickly as possible.
Do Your Due Diligence
When looking to purchase property at below market value, you need to know that there will always be something you’re unaware of about the property. Maybe it requires more repairs than you think, or it is located in an area where you might not be able to rent or resell it.
It is therefore always a good idea to do your due diligence to find out as much as you can about the property before you invest in it. This way, there will be no surprises once you have paid for the property and gotten a better look at it.
Finding cheap property to buy is something many of us understand, but many of us do not know where to find them. To do so, you need to keep an eye out on local listings, talk to real estate agents and look for motivated sellers on online platforms.