How to Profit from a Falling House Market

Since the end of the second world war, the average British home has doubled in value every ten years – but that’s not going to make you feel better if the market’s on a down turn and you’re watching thousands being rubbed off the value of your house. However, there are ways to profit from a falling property market and Videojug can show you how.

Steps

• Buy really cheap. You can still make a profit in a falling market by property developing – the secret is to use the media panic to negotiate a really good bargain. If you think what you are buying is a bargain, then don’t be afraid to offer the asking price straight away. However, understand that most real estate agents are taught that you will have three offers, so if it’s a normal market, be prepared to offer a little bit below the asking price to start with if you want to get it. Go up a reasonable amount and then be prepared to make a small increase for your third offer. That’s when they’ll think that you’re at your limit.
• Show that you know your market. If you want to make your offer more attractive, you need to give the appearance of being well organised. Look for lots of information and demonstrate that you have done so, including your solicitor’s information, financial details included and also information about properties in the surrounding area, such as sales prices for similar properties. This lets the real estate agent know that you’re serious.

• Add immediate value to a run-down property. Once you’ve bought your bargain, there are some simple ways to add real value. Focusing on fixtures and fittings will add instant appeal to a run-down home. Improve the areas that really do make a difference in the eyes of buyers and attract them:
  1. the kitchen – rip out the old kitchen and replace it; a lick of paint will not do – remember that women are the main purchasers of property and if you do not appeal to their likes, then you may lose a future sale;

  2. the bathroom – make it white, shiny, with a power shower and brand new accessories; and

  3. light fittings – this is the most cost effective way to spruce up a house is to replace the light fittings. Choose something that is very modern, and very trendy. It is the one thing that doesn’t cost very much but it makes a massive difference to the whole look of the house.

• Bet on the market. If you’re worried that your house is falling in value, you can make a bit of money by betting on how much it will go down. You don’t have to nip into you local betting agency to place this bet though; what you do need to do is to invest your money in an investment fund that pays out if the market drops below a certain level. This possibility is available in Britain; it may not be available in your country, so ask your financial adviser for advice.

Tips

• Be patient and don’t heed the panic; jobs, deals and profits are made on panic as much as on the good times. Hang on to your own property if you can during downturns and avoid selling it at a loss or reduced property.
• If you are an owner, rather than selling your property during a downturn, see if you can retain it and rent it out to others. This income will be preferable to a possible loss and in the long-term, your property values will rise again. Remember that during a downturn, more people seek to rent because they cannot afford a mortgage under more restricted lending rules.

Things You’ll Need

• Information about the surrounding area, such as sales statistics, comparative properties etc. and even media clippings where relevant
• Information of value; legal, financial, statistical etc.

ThanksWiki

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