The papers and news are full of stories about how the London property market continues to soar and how it is outperforming the rest of the UK (not to mention other markets). However, as with most statistics this only tells part of the story.
Yes, good quality properties under £2m are increasing in value rapidly and are selling quickly. The same is true to a slightly lesser extent for properties between c. £2.5m and £5m (the market between £2m & £2.5m is slow due to the increase in stamp duty from 5% to 7% for properties over £2m). When one reaches the house market between £10-£20m there is in fact an oversupply and prices have barely risen and relatively good value can be found and decent prices negotiated.
There are a number of lessons to be learnt from this. One obvious one is to treat the data you read in the press with caution. It is far too general to be of any real use. However, the purpose of this email is to look at how you will need to modify your tactics depending on what is happening in your particular market.
For example, if you are planning to buy a property between £1m and £5m you have to be speaking to – not emailing – the agents at least once a week. It is essential that you portray yourself as an eager, organised buyer who is ready to act swiftly when the right property becomes available. This may sound counter-intuitive because if you want to negotiate a good deal you don’t necessarily want to look too keen. But in this market, your first goal is to actually see the best properties first, because if you don’t then the chances are they will be bought before you even know about them. It doesn’t matter how good you are at negotiations, if you are not seeing the best properties there is nothing you can do.
Now this will involve a lot of calls and viewings that lead nowhere but these are not wasted. It will lead to top of mind awareness. You are in direct competition with a huge number of buyers, but you will be the first person they contact if they know you are organised, serious and are capable of transacting quickly. After all, the agents are on commission and it makes sense for them to target the serious buyers first as they only have a limited amount of time to handle everyone.
As an example, we speak to 236 estate agents at least once per week even though we have been doing this for 12 years and the agents know us well and call us anyway. Who do you think is more likely to see the best properties first? The buyers who speak to ten agents every now and then or us? You have to treat the process like a business otherwise the probability of failure and making an expensive mistake are high.
Of course, in the £10m+ house market, things are a little different and a topic we will talk about next time.