| Comedians have their minds full of lawyer jokes, such | | | | buy-to-let, let-to-buy, and a normal homebuyer's |
| as "What's the difference between a lawyer getting | | | | mortgage. |
| run over and a snake? A snake has skid marks in | | | | A common practice by property developers is to |
| front of it! | | | | attempt to buy under value by 15% (the mortgage |
| One step down from lawyers on the ladder of shame | | | | deposit) or to obtain a 125% mortgage based on the |
| are estate agents. They are the people who sell | | | | first valuation. The concept is that after the developer |
| property. This article talks about how they privately | | | | bought 15% below market value, the developer can |
| push deals to cash buyers, and how developers get | | | | quickly re-mortgage or obtain a further advance and |
| property with "no money down." Property is a hard | | | | recover the deposit sum. This has meant the |
| business, and there are millions to be made and lost! | | | | developer obtained the property without any deposit |
| The free market rests on the common principle that | | | | after the re-mortgage by using the equity. A 125% |
| the best price is found for a product or service. | | | | mortgage makes the assumption the property is |
| Attempts to interfere with that are seen as illegal in | | | | undervalued. |
| many countries. | | | | A common way of finding properties undervalued is to |
| I have for years seen properties sold under market | | | | find properties recently inherited following death |
| value by estate agents. Those sales are done via | | | | (probate), properties being re-possessed, and when |
| social and business contact to cash buyers that the | | | | the owners are overseas (and hence out of touch |
| estate agent has obtained over years. | | | | with current pricing). |
| Recently, I attempted to buy a house and the estate | | | | The Land Registry often provides the sale prices of |
| agent refused to provide any sales details, as I was | | | | houses by postcode, so you can check what is a |
| not a cash buyer. I was so stunned by this, that I | | | | market price within a local area. There are several |
| complained. Following my letter, I was banned from | | | | commercial services offering a similar service, e.g. |
| visiting the estate agents (a national chain) and told | | | | Nethouseprices. |
| they would call the police and charge me with | | | | Once armed with the financing and market details, you |
| trespassing if I breached their ban. This example | | | | are in a strong position to find a good deal. |
| shows how far people will go to make money and | | | | The estate agency business has been rife with |
| motivated me to write this article. | | | | misrepresentation. In an attempt to stop that, the |
| I will briefly outline how financing is arranged for a | | | | Ombudsman of Estate Agents has been created and |
| property purchase. | | | | also there is a professional membership scheme of |
| A cash buyer is someone who does not need a | | | | the National Association of Estate Agents. |
| mortgage. That means someone who has assets that | | | | The 1979 Estate Agents Act also offers protection. |
| can be sold for a cash amount, or he has a house | | | | There have been several prosecutions on the basis of |
| being sold and the proceeds will be available before | | | | discrimination against purchasers. The 1979 Act states |
| the new purchase. | | | | that an estate agent cannot discriminate based on |
| There are plenty of mortgage products available in the | | | | additional services (e.g. mortgages) if could offer. |
| current market. The principal types of mortgages are | | | | Finally, you cannot trust the estate agent. |