Buying at a Discount
Top 10 Things you Need to Know NOW!

1.  To buy at a discount you need to understand what the property is REALLY worth.

2.  Buying property ‘below market value’ does not mean ‘below’ the advertised price.

3.  Discounted properties are often sold via auctions, through estate agents via a ‘quick sale’ and private transactions to avoid people from being repossessed.

4.  It is now illegal to buy property at a discount through a ‘sale and rent back’ scheme unless you are registered with the Financial Services Authority.

5.  Typically, you will need to research over 100 properties for sale prior to finding a property at a real discount. Professional companies review around 150 properties a month to find 1-2 deals!

6.  Companies selling properties ‘below market value’ are not regulated and will often sell you terrible properties that don’t deliver on their promise!

7.  Don’t ever buy a property offered to you at ‘below market value’ without instructing a surveyor yourself (ie not the company’s) to double check the value.

8.  Remember that you are effectively taking money from someone else to put into YOUR pocket, so be sensitive when negotiating directly with sellers.

9.  If you are given an incentive to buy at a discount, for example guaranteed rent or ‘cashback’ this must be declared to your mortgage lender (it is YOUR responsibility to make sure it is).

10. Be aware that if you buy at a discount your lender is likely to have a clause that prevents you from re-mortgaging within six to twelve months to cash in equity.  

A lot of people think buying at a discount is easy, but it isn’t – particularly in our ‘credit crunch’ market when it’s hard to find good comparable property prices.

You also need to be very wary of companies offering you ‘armchair investments’ and ‘below market value’ properties. They often take thousands of pounds off you without finding a property first and then refuse to refund the money when they haven’t found you anything.

New Mortgage rules introduced in the Autumn of 2008 make ‘no or little money down’ and ‘instant equity’ virtually impossible.

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