Stop Dropping The Value Of Your Houses At Quick Sales!
While owning a home is a life-long dream for many people, there will always be times when people need to sell their property.
For example, seniors usually sell their old home to move closer to family; or maybe they need the money to pay for senior care. Others, on the other hand, may want to sell a property to get away from debt or because they’re moving to another place.
If these sellers want to sell quickly under these circumstances, they often look for a company that specialises in quick sales in order to sell the property close to its market value – this is the ideal situation. But in real life, the ideal scenario is almost impossible to achieve.
Anne Baker and her husband had been trying to sell an inherited property in Yorkshire for almost one year. They were desperate in getting rid of the property since they were paying insurance and council tax bills on the house. Hence, they sought the help of a firm which specialised in quick sales.
Gateway Homes, a company specialising in quick sales, valued the property initially at £100,000 and offered to sell it within two weeks for a sale price of £75,000. However, after 10 weeks, Gateway Homes had yet to find a buyer and convinced the Bakers to drop the selling price further to £60,000!
Obviously, Mrs. Baker was so shocked with Gateway Homes’ proposal, because they lost over £40,000 from the houses’ initial value.
Peter Bolton King of the Royal Institution of Chartered Surveyors (RICS) explained that accounts similar to the Bakers’ are very common, because not many companies explains the full process of selling at a quick sale.
King added that sellers who want to sell quickly in a difficult market would have to check the fine print of the deal to prepare themselves on how low prices can actually get in a quick sale.
According to a study from the Office of Fair Trading (OFT), some homeowners experienced a 53 per cent price reduction off their home’s selling price by dealing with sketchy quick sale companies.
In one of his podcasts, property investor and mentor Rick Otton discusses how sellers can avoid dropping the price by focusing on the terms. He suggests that affordability isn’t all about how cheap the overhead of the property is. In many cases, affordability is all about convenience.
For instance, a house worth £70,000 seems more attractive than another house worth £80,000 (assuming both are in comparable conditions). However, terms can tip the balance quite easily.
To buy the £70,000 house, the normal process is to get a 20 per cent deposit (£14,000), than have the bank finance the rest. The problem is that spending £14,000 at once can be quite inconvenient for some.
Suppose the seller of the 80,000-pound property offers to spread the 20% deposit in two years (£666.66/month), will buyers opt to buy the house worth 70,000 that requires £14,000 down payemnt or the one worth 80,000 that just needs less than 700 quid to get in? You’ll be surprised how quickly people will go for the 80,000-pound property.
Moreover, in this system, a buyer may be able to cover 30% deposit (1,000/month in 2 years) so that the bank has to finance just 70%. The less the bank has to finance, the lower the interest costs. When doing the Math, it’s possible that buyers end up spending less for the 80,000-quid property by the end of the loan term than the house worth £70,000 bought in the traditional method.
There you go. Next time you decide to sell at a quick sale, don’t focus on the price. Sometimes, offering attractive terms can convince buyers to buy your house at the price you want!