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How to bag a property bargain in London

by Sponsored Content
16th Feb 18 2:45 pm

…find out why vendors are selling their property

Award winning buying agency, Black Brick has identified why it is important for purchasers to find out why vendors are selling their property. Black Brick have analysed transactions closed over the last 12 months to get a better understanding of who’s selling, why they’re selling, and the magnitude of the price discounts they have been able to secure. Black Brick has identified the 4 D’s – Death, Debt, Divorce or Developer. Is your vendor selling for any of these reasons, or relocation? By asking more questions and finding out why they are selling would make the whole buying process much quicker, easier and possibly cheaper. 

If someone is selling because of the 4 D’s, or relocation, they will be more likely to negotiate and will want a quick sale. In the current market, anyone selling is doing so for a good reason. Looking at figures from the last 12 months, some findings leap out. Professional sellers, either developers (35%) or landlords divesting rental properties (30%), account for the vast majority of properties acquired for Black Brick’s retained clients.

In terms of the price discounts Black Brick have been able to secure, there is a fairly pronounced difference in the groups: they have negotiated an average 8.9 per cent from the prices asked by developers, compared with 3 per cent from those selling an unwanted investment property.

Black Brick Transactions January 2017-January 2018

Seller category % of transaction Average saving from asking price Average transaction size
Developer 35% 8.87% £5.3m
Unwanted investment 30% 3.08% £1.3m
Relocation 20% 5.62% £3.4m
Divorce 10% 4.10% £36.5m
Downsizing 5% 7.70% £5.2m

Camilla Dell, Managing Partner at Black Brick comments: “Our main driver for our clients, is always, if we can, saving them money. So we tend to focus on properties where we see a motivated vendor. These figures from the last 12 months are interesting. 35 per cent of our acquisitions were from professional sellers or developers. This was also the group where we were able to achieve the highest discount from the asking price. This difference is explained by the greater pressure developer’s face to clear stock that isn’t earning an income, and their general nervousness about the state of the market.

“Data from Molior, a leading consultant, supports that interpretation. It found rising levels of unsold development properties in London, with 1,500 complete but unsold properties on developers’ books – up 35 per cent year on year. As we’ve been advising clients for some time, new-build developments that have been completed, or are about to be completed, can provide some of the best deals at the moment.

Landlords made up 30 per cent of our transactions. These investors were looking to exit the market, motivated by tax changes, which have affected this trend, but the savings we were able to negotiate were far less, coming in at just over 3 per cent. Landlords always have the option to re-let properties which don’t generate the capital return they seek, and with interest rates still at all time lows, there is often reduced pressure on this group to sell. Meanwhile, sellers looking to relocate – who represented around a fifth of our transactions – are often amenable to a low offer, given that they tend to be up against tight deadlines and therefore highly motivated. We have been able to negotiate an average of 5.6 per cent off asking prices from this part of the market.

The average transaction size across the categories of sellers also tells an interesting story. It is often said that London is the “divorce capital of the world”. The average transaction size of properties acquired where the sellers were getting divorced was a staggering £36.5 million. Often these properties will not be on the open market, but the sellers have a real reason to sell and so good discounts can be achieved on often rare to market trophy assets. This contrasts with an average transaction size of £1.3 million in the unwanted investment category which largely constituted smaller one and two bedroom ex-rental investments”. 

Savvy buyers are choosing to use buying agents more and more – saving them both time and money.  From these latest transactions Black Brick was able to save its clients 8.5 per cent on Clarges in Mayfair W1, a re-sale by an owner that did not want to complete on their original purchase, 8 per cent on Bina Gardens where the vendor was relocating, 7.70 per cent on a property on King Henry’s Road, NW3 where the vendor was downsizing and 5 per cent on a property in Upper Berkeley Street which was an unwanted investment.

Camilla continues: “At Black Brick, we have always recognised the importance of understanding a seller’s motivation. It informs our negotiating tactics, and can often make the difference between making an offer-price bid, or pushing hard for a discount”.

“It’s something  that an unrepresented buyer finds very hard to discover,” agrees Caspar Harvard-Walls, Partner at Black Brick. “They are either often too embarrassed to ask, or the agent simply won’t tell them. We have the contacts and relationships that can help us find out.”

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