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Found 3 results

  1. Hello, I have question for anyone who wants to contribute please.... How do you value a property in a 'hot' or quickly inflating market? For the last year or so, I have found it really challenging to confidently assess the value of residential property in the UK. The normal method I would use, which is mainly Rightmove/Zoopla sold prices for the street and immediately surrounding streets has started to bear very little resemblance to what properties are selling for in the current market. I started to pay more attention to the 'Under Offer' section on Rightmove to get a sense of buyer demand on pricing, but for most properties this is currently significantly higher than sold prices...showing that demand is causing fast inflation in most areas. I would previously usually ignore 'For Sale' prices as these are estate agent valuations, which are generally optimistic and often end up being negotiated down or reduced by the seller. However, it does seem in the current market that there are less properties being reduced in price than in previous years. As the majority of properties are bought with residential mortgages, RICS surveyors are obviously approving the valuations on these properties, even though they are often 10-30% higher than the previous sold prices in that local area. I would really like to get a better understanding of how this calculation is made. Are there certain tools, methods, formulas etc (other than the ones I mention in this post) that can be used to confidently tell that a property is correctly valued when it is priced significantly higher than previous sold prices in that area? I always used to ignore the Zoopla home values estimates https://www.zoopla.co.uk/home-values/ - these are so wide ranging that I felt I couldn't use them to accurately predict what most properties would sell for. However, recently I realised that they presumably include 'under offer' prices and some element of % market inflation into their value calculations...and now I am actually finding that the 'High' estimate in this tool is a closer indication to what most properties are selling for than using Rightmove sold prices. Do you include an element of market forecasting in the valuation, as a way of future proofing the risk? For example, if the Savills residential property forecast for that region shows a predicted 4% increase in the next year...would that be used as a buffer to offset the lack of proof available from sold prices due to the inflated value being paid for the property? It seems that as long as the mortgage deposit (e.g. a minimum of 10% for residential and 25% buy-to-let) is more than the uncertainty or margin of error around the valuation, that lenders are probably not too bothered about inflated values, because they know they could repossess the property and sell it for enough to cover their costs and profit? Obviously this scenario is very bad for the property owner who overpays and then has to sell but unfortunately one of the consequences of a housing crash. Finally, auction guide prices. These would usually be set at least 15-25% below what the same property would achieve on the open market, based on sold prices. However, I have recently looked at some new listings for upcoming auctions and many of the guide prices are higher than Rightmove sold prices for the area. This suggests to me that even the 'discount' end of the market is undergoing such strong inflation that valuing a property is more of a leap of faith than a considered calculation at the moment. How do you know that the prices properties are selling for are not overly inflated and would cause negative equity if the market crashes in the next few years? Obviously choosing high yielding BTL properties with the intention of holding them long term would mitigate this risk to a certain extent...but it would mean you wouldn't be able to remortgage to withdraw funds for further investment for potentially quite a long time. Any feedback and advice would be appreciated please. I am interested from both a BTL and flipping perspective, but also as a home owner. Many thanks, James
  2. Hi all, Just helping to enquire on behalf of a friend of mine here in Hong Kong. They are in a position where they hold a flat containing subdivided rooms and have a mortgage on the property. These flats have been refurbished to an exceptionally high standard last year and they are now considering their options in terms of extracting the equity. Just wondering whether there is the option to remortgage the property without raising too much suspicion and whether anyone can assist with this. From what I understand, the property strictly speaking is not fully compliant to local regulations, but has been refurbished according to the general trend in the area in terms of having an "HMO style" property. The reason why the large majority of these types of apartment are not done according to the local regulations is because of the vast costs associated with it, thus making the option unfeasible for the majority of investors. If they were to consider remortgaging the property to extract the equity, this would require a valuation to be completed as part of the process. In turn, they would have to invite a representative to carry out the valuation. Could this indirectly initiate legal action against the owner? Just wanted to be aware of any repercussions. Thank you in advance for any advice.
  3. Hello there, Re: How to calculate evaluation for a property that has been converted to flats when there are no other similar properties on the neighbouring streets I want to make an conditional offer (subject to building inspection survey) on a property that has been converted into a block of 5 studio apartments but I am hesitant as I don't know how the property would be valued by the bank. The property is based in Liverpool, postcode L7 and I will be using a mortgage. The gross income is £25,000 per annum and is fully tenanted. I have done the numbers and if my offer is accepted then the ROI would be 22%. (This is assuming that no extra capital expenditure is required). When I do my analysis, the expected cashflow and ROI meets my criteria. But I don't know how to value the property as there are no comparables nearby of a similar property. The other properties on that street are 3 and 4 bed houses. Therefore, I don't know what the bank would value this property and I don't know if/when I can get my money back out. This is an issue as I need to raise the cash to invest in this property through private loans. I need to raise £64,500 to pay for the deposit, stamp duty etc.. Not knowing how the property would be valued by the banks, means that I am uncertain on when I can pay back my investors. How does the bank value properties that have been split into blocks of flats? Many thanks for you help. Regards, Margaret
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