Buying a home under market price

The effects of the Covid crisis on the property market have defied all expectation, and left us with pent-up demand that is actually seeing property prices increasing in many parts of the country. This is a far cry from the collapses predicted by some doomsayers.

But remember, there are millions of homes up and down the country and the possibility of buying a property bargain still exist.

At Continuum we are looking at buying homes under the market price – and why you may need some expert help to secure a bargain.

 What does market price really mean?

The thing to remember about the market is that anything – from a loaf of bread to a stately home – is worth exactly what someone is prepared to pay for it.

Market forces tend to set a level when there are large numbers of purchases to choose from, as there are when it comes to property.

When valuing a home to provide a sale price, estate agents will simply use their knowledge of the market to see what similar homes in their area have made in the past.

Of course, buyers will almost always make an offer below the asking price. Estate agents may add an extra to the sale price they really expect. This is so buyers can feel good about their purchase after successfully haggling the seller down to the price he was happy to sell at anyway.

This is simply buying at a discount. Really buying a home under market price is something a little different. It means buying a property for substantially less than it might thought to be worth on the open market.

How to buy under market value

But why would a property owner be prepared to sell a valuable asset for less than it is worth?

In most cases an “under market value” opportunity comes from a distressed seller, who needs to liquidate the asset quickly. There are two possibilities.

A private seller may be someone who has run into financial difficulties, such as a homeowner who has lost their job. It could be part of a deceased’s estate where the next of kin simply want to get rid of a home quickly to avoid the costs of upkeep. Or it could be part of an acrimonious divorce settlement.

A distressed vendor could also be a developer who has run into a cashflow shortfall and needs to raise cash in a hurry.

Alternatively, the property may need work, a major renovation rather than decorating, to be habitable.

Whatever the circumstances, it could mean a bargain.

But what about the finances?

Buying a house well below market value is a perfectly acceptable practice – but it can mean problems with lenders.

The funding you need.

Buying a house cheaply may be too good an opportunity to pass up. Bargains exist – but some lenders may not be able to help you buy them with some reasons to consider:

  • If a property can only be sold at a low price now, it might suggest there are fundamental problems which will prevent it being sold in the future.
  • A low price may be conditional on a quick sale, and many lenders simply cannot move fast enough.

Getting the help you need

If you have found a property bargain, it pays to get advice from a whole-of-market mortgage adviser who knows which mortgage lender will be able to help you.

Call us

To arrange a personal appointment with a Continuum expert to discuss mortgage and remortgage deals via video, call us today.

At Continuum, we are independent. This means that our experts can search the entire market and help research the most suitable solution for your next property purchase. Speak to us today.

The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable mortgage strategy, you should seek independent financial advice before embarking on any course of action.

Your home may be repossessed if you do not keep up repayments on your mortgage.

Property valuation is a matter of judgement by an independent Valuer therefore it is generally a matter of opinion rather than fact.


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