The Role of Estate Agents in Property Sale

In the UK the vast majority of property sales are made using estate agents. People looking to sell their home will use estate agents to advertise and attempt to find a buyer for their property. At the same time individuals searching for a new home will commonly visit their local estate agent. What is the purpose of estate agents and what are the benefits of using them?

The first stage in the sale of any property is to set a valuation. This is a crucial step in being able to find a buyer for the home. Most estate agents are able to carry out property valuations or at least able to find a professional to perform the valuation on their behalf. Valuation professionals can obtain qualifications from the Royal Institute of Chartered Surveyors or from the National Association of Estate Agents. When valuing the property the price needs to be set at an amount low enough to attract a buyer but also sufficiently high the home seller isn't losing out.

Once the property has been valued the next role of the estate agent is to advertise the property. The agent will begin by creating promotional material for the home. This will involve compiling a description of the property that will include photos, measurements and floor plans.

Attracting buyers for the property through advertising is the most important role of the estate agent. To receive high levels of interest in the home the advertising must be of a good quality and should be targeted to reach the appropriate potential buyers. The type of advertising that is appropriate will vary according to factors including price and location. Typically the home will be advertised using traditional methods such as newspapers as well as more recent methods including the internet.

If the estate agent has been successful with the advertising of the home then the next stage will be to arrange viewings. Most estate agents will prefer to conduct the viewings themselves although some will leave this to the home owner. Different agents will have their own style of conducting viewings but whatever the approach the aim will be to achieve a sale.

Land Buying Scam

I highlighted back in December the existence of some very dubious land buying schemes. Whilst other less reputable landlord sites were promoting them and no doubt taking large commissions from these dodgy companies, Property Hawk advice was unequivocal "don't touch them with a 'barge poll'" we said. Now I have learnt from the BBC that Action Jack a company marketing plots of land is the third company to be wound up by the Insolvency Service for corporate abuse. This company acted as the broker for The English Land Partnership (ELP) the organisation that owned the land. The Insolvency Service now part of the DTI is currently taking action against another 21 companies involved in similar land marketing schemes.

Land as an investment
There is no denying that land like property land has been a fantastic investment over the last 10 years. The simple reason for this is that it is treated as a residual cost by developers when doing their development sums. This means that a developer will work out how much it costs to build a development, together with other associated expenses such as finance and profit. They then calculate the total value of the project.

The difference between the two is the amount they can afford to pay for the land. Therefore, as residential values have continued to soar and despite build costs also rising; it has meant that land values have largely continued to rise in line with house prices. In many cases they have actually outstripped house prices as eager developers compete with each other to get 'there hands on' more and more scarce plots of land. This scarcity factor is reflected in the varying proportion that land makes up of total costs in different parts of the country. In the north land costs will typically contribute 40% of the price of a new property. In London and the South-East where land is scarcer, this figure would typically be nearer 60%.

Value reflects use
The value of land however largely reflects what you can do or build on it. This is controlled by the planning system and means that there is effectively a dual pricing structure. Most land is without planning permission and is in agricultural use. The value of this land reflects the economic outputs of its use. In the case of agriculture this is not a high value economic use as only relatively modest profits can be generated from large areas. This is reflected in the current value of agricultural land of between £2-3k per acre.

However, where planning permission is granted for a change of its use for say housing development, its value is transformed in an instant to reflect its development value. Residential building land can be worth millions of pounds per acre, often over a hundred times its agricultural value.

Dual pricing
This dual pricing structure represents 'on the face of it' a great opportunity for speculators to make vast profits by buying land cheap and then waiting to receive planning permission. It sounds simple. It's not; as a town planner I have been involved in the whole tortuous process of land becoming zoned as development land.

The process can take 5 or more years to be included in the Development Plan for the area. Even areas of land on the edge of an urban area have no certainty of being included for development and political maneuverings means that land which is initially included can be removed as potential development right at the end of the allocation process.

Option agreement
All this uncertainty together with the amounts of time and money that is involved in promoting potential development sites through the process means that many sites are bought or optioned by house builders or specialist development companies with access to the necessary expertise and finance. An option agreement incidentally, is where a landowner agrees with a developer to give them the right to buy the land for a set period of time and sometimes at a pre-determined price. This gives the developer the potential to buy development land without tying up all their capital and also gives the landowner a capital sum irrespective of them being successful in their land being designated for development.

Land investment scams
This all brings me back to the reason for this article, which is two fold. Firstly, it is to educate you a little in the 'mysterious' ways of the UK planning and development system. Secondly, it is to warn you of the many land investment scams that are doing the rounds. I was recently alerted by an e-mail from another landlord site that has sent out a marketing e-mail of a land investment scheme being promoted by Leaders in Land. This scheme is not alone.

All you need to do is enter 'land investment' in Google to be bombarded by companies pertaining to offer irresistible opportunities for investment. The scheme in question is typical in that it offers to sell investors a plot of land for tens of thousands of pounds with the promise of large uplifts when it receives planning permission. The reality is that these schemes offer little or no chance of receiving planning permission and will stay in their existing or agricultural use for many life time if not for ever.

My advice - don't touch them with a 'barge poll'. If you want to buy land, why pay semi development value for sites which will never be granted planning permission when you can purchase the same type of land at a fraction of the cost at agricultural prices. Remember, a fool and their money is soon parted - so hang on to yours for a worthwhile property investment.

UK Property Prices Fall But Unaffordability Rises

It looks as though it's going to be bad news on the housing market for the next couple of years at least. Property economists at Capital Economics have said earlier this week that it was possible that the credit crunch, coupled with turbulence in the financial markets, and falling consumer confidence could knock 25% off the value of some houses, taking nearly £44,000 off the current average price for a property of £174,000.

The latest property survey indicates that house prices fell by 0.2% in March, with the average value now at £174,100 - a fall of £2,200 since last summer. Records now show a fall in house prices for six months in a row. Data also suggests that prices are falling in just under 29% of postcodes in the country, representing about 7.5m homes.

Other forecasts last week also suggested that house prices would fall in 2008, and experts are suggesting that the increasingly difficult mortgage market will only serve to drive house prices down even more.

However, despite the recent falls in house prices, a recent Housing Affordability Index shows that homes are far too expensive for most families in comparison to their disposable incomes. In quarter 3 of 2007, homes were found to be at their least affordable since the property crash of 1991, although there was a slight easing of the index as prices fell in the final quarter of the year.

Although there are predictions that house prices will fall by 4% this year, rising mortgage costs will keep houses just as unaffordable as they already are.

The influence of the current wave of immigrants on the economy has been in the news recently. Their impact on house prices has been to make them unaffordable for many British families, according to a parliamentary report. The House of Lords economic affairs committee says that immigration will help to push the price of a home to over 10 times the average wage in the next 23 years. By 2031 the British population will be up from 60.6m in 2006 to 71m, exerting 'a significant impact on the housing market.'

The effect of immigration has already pushed the price of a house up to over eight times the average wage. The committee calculates that it would be only 6.5 without the immigration effect.

Free Online Home Appraisals

Getting an appraisal done on your home can be an expensive process. While knowing the value of your home certainly is important, there are other ways to figure it out. You can figure it out by using your property taxes or by contacting a realtor. You can also sometimes get a rough estimate of your home's value by trying one of the many free online home appraisals. Here are a few that you can choose from:

Zillow.com will allow you to enter your street address (including zip code) and zillow will tell you what the historical value of your home is as well as an estimate of the present value. You can also enter in any of your home repairs and remodels and zillow will calculate in the values of remodels in your area and figure it in to the value of your home. It isn't as thorough of a report as getting an appraiser but it isn't a bad start.

Valuemyhouse.com presents users a free house value report. You are provided with a form that asks specific information about your home and its location. After filling in the information, a professional evaluation expert will look it over and send you an estimated value report based on the information you provided. Like zillow, this is a great way to get a rough estimate of the value of your home.

Resource.Realtor.com has a long list of various websites that will help you get a free evaluation of your home. These are links that will provide you with information on how to buy homes, sell homes and how to determine the value of the home you currently own. A lot of the links provide free value reports based on some simple information that you input.

It is very important that you know how much your home is worth. After all, it is the value of your home that will determine how much you can sell it for, how much it will cost to ensure it, and how much you will qualify for in the event that you apply for a second mortgage.

Buying in the Subprime Market

Being the process for buying a home for you and your family can be a frustrating time because of all the paperwork and information you have to take care of. If you have done everything you can to prepare yourself then you need to go and apply at a bank for a mortgage loan. The problem with getting rejected for a loan is that you will not be able to get a home. You should be aware that there is another option for getting a loan for your new home.

Subprime lenders are people that will give loans those who don't have the best credit rating. This is another option for getting home even if you have some bad credit history. Some of the lenders can be part of the mainstream companies and others can be individual companies. Usually these lenders can offer many different types of loans that may be able to fit in with your financial needs on getting a home.

People usually apply for these types of loans because their credit score just isn't good enough to get a loan through one of the more widely used companies. People also apply for these types of loans because they don't have enough to make a down payment that the bank will require them to make in order to get the loan they might be applying for.

There are many advantages and disadvantages to having a sub prime loan. You need to be careful who you loan with and what the background of the company is. These companies look at the same basic things that the usual companies look for. The only different is that these sub prime companies don't have as high of standards for your credit score as the other companies do. Usually when you get approved for a sub prime loan, there will be a higher interest rate than there would normally be with one of the more predominant companies.

There are certain things like taxes and insurance that are usually required in the normal market in order to keep your home and mortgage. In the sub prime market these things are not always required depending on the situation with the person that is applying. Subprime lenders usually base their mortgage rates on the credit score of the person that may be applying. They can also base their rates on how much of a down payment that the person puts down on the home that they are trying to buy. Keep in mind that there rates can be higher because of the fact that you're getting a mortgage in a sub prime market.

Buying Real Estate in a Resort Area

Having sold real estate on Hilton Head Island, SC for the past 30 years, I have learned to ask the questions buyers fail to ask themselves. Many buyers are so focused on their future in a resort community they fail to consider things that will affect their lifestyle once they are here.

Questions to ask prior to purchasing anything in a resort area are:

1. What are the fees for living in a given community? Each community may have its own Property owner association fees to cover common area maintenance, security, pools, etc.

2. Are there covenants and restrictions to the community? Most do and should have them.

3. Are short term rentals allowed? Short term renters are weekly vacationers who check in and out every weekend. This does not allow for a neighborly feeling, plus it can be noisy, especially if there is a pool close by. This great if you want to be in the "action".

4. What amenities do you have living in a certain community? Are these amenities free or is there a cost involved?

5. What are the cost involved with the community club if they have one? What does it cost to join? Is there a monthly minimum in the dining room? Is there a locker fee? Can you have your own golf cart? What is the trail fee for having a cart? Can you drive your cart on the roads in the community? What are the dues? Have there been assessments in the past? Any upcoming assessments? Are there charges for tennis, pools, health club etc.? Who owns the club? Who controls the cost? How much have the dues gone up in the past 5 years?

6. Find out about security for the community. Ask about crime.

7. Is the community open to the public? Does that matter to you?

8. How close is shopping for day to day items?

9. If there is a beach, how close are you, and is there parking available and if so is there a fee?

10. What sort of cost is involved with closing on a resort property? Does the community have transfer fees? Does the town have transfer fees? Who pays these? You will be told the buyers pays these, but I have found this to be negotiable.

11. What medical facilities are close by?

12. What is there for kids to do? You want the grandchildren to come see you, don't you.

13. What type of community do you want? There are two types: Resort/Residential or Residential/Resort, and yes there is a difference. Resort/Residential puts more importance on the vacationer than on the residents while Residential/Resort focuses on the residents.

14. What type of people live in the community and are these the type of people you want to be around?

15. What activities does the area offer? Are there restaurants, theater, churches, clubs and organizations to join etc. You will want more than just a golf course.

16. Does your realtor work for a developer or are they an independent who can show you anything and has no loyalty to anyone but you? How long has your realtor lived in the area? This is very important. You want someone who knows the area inside and out.

17. Ask about insurance and availability.

18. If buying in a condo community, find out who the regime manager is. They are the people who manage the community. Call them and ask how strong the community is financially, what problems they have, do they pay enough to maintain the property the way it should be and how long have they been associated with the community. Also ask about past assessments and the potential for future assessments.

19. Call the local law enforcement and find out if the neighborhood you are looking at has a problem with crime.

20. Ask about traffic during different times of the year.

21. Ask about local government and taxes.

Maximizing Your Home's Resale Value

Today, buying a home is as much a financial investment as it is a practical or functional one. With the ever-changing, fast-paced modern lifestyle, buying a home is more complicated than it once was. To make a good real estate purchase, you should consider more than just the immediate needs or wants of yourself and your family; it's no longer just about the floor plan, the square footage, or the color of the bedroom walls.

Buying a home today is a lot like purchasing stock. Your goal is not just to purchase a home that fulfills your needs or wants for the moment, but one whose market value will increase as time goes on. Though many people don't realize it, a home is often one of the greatest financial assets a family can own. Taking advantage of home equity through refinancing or selling your house can provide you with money that you never thought you had. Such things are only possible, however, if you make a purchase which maximizes your home's resale value.

Three Things to Look For in Resale Value
1. What you pay now vs. What you can get later. Not all bells and whistles increase a home's resale value. A gorgeous view, a beautifully landscaped lawn, a swimming pool - while these are all things which may make a home valuable to you at the moment, they may not necessarily help you sell the house later on. If you pay a high price for extras, you may find yourself having to lose money to attract buyers years down the road.

2. Location, location, and neighbors. The real estate adage "location, location, location," is more than a little applicable here. The immediate surroundings of a piece of property have a very large impact on its eventual resale value. Buying an extremely valuable piece of property may be a bad investment if it is surrounded by properties which are much lower in quality, as they will drag your property values down with them.

3. Look for constant popularity. Some things are - and probably always will be - attractive to homebuyers. These are the type of investments you want to make. Buying a house with at least a two-car garage, multiple bathrooms, and 3-5 bedrooms is usually a good idea; any money you spend on getting these features will most likely come back to you in the end.

Recent events in the real estate market have made many homeowners and homebuyers skittish. However, with some good research and good help, buying a home can still be a worthwhile, satisfying, and even profitable investment.

Buying a Short Sale Home Tips

Why do borrowers want short sale home? They are extremely cheap. It is the cost advantage that attracts the borrowers towards buying these selling homes. Generally you can get a short sale home at 30% cheaper prices as compared to market price.

First point is the time element: You will have to close the deal within 30 days.

Are you having a sound economic condition? Can you really close the deal within 30 days? Think seriously about this point. Once you accept this type of deal there is no going back and not completing deal will involve good amount of loss. The first main tip for buying a home at short sale is making sure that you can really close the deal within 30 days.

What is the meaning of a short sale? Sellers property is mortgaged to a lender.

Lender has agreed to release the mortgage at discounted price. Even if the seller accepts your price, the lender may not accept your price. So the point is two different parties must accept your offer. Seller will have to be in default if his property is to be on a "short sale" list. Suppose that the seller owes more than the current price of the home. In that case there is no possibility of lender accepting fewer prices as compared to the market price.

You will have to check public record. Your agent will have to find out relevant info like, who is in title, whether foreclosure notice has been filled or not and most important of all, how much is owed by lenders. If there are two lenders, your problems become more complicated. Both lenders have to come at a compromise point. Suppose first lender owe $150,000 and second lender owes $30,000. And you offer $150,000 price. Now if all money goes to first lender, then second lender will get nothing. He will not agree to that. How much first lender is ready to give to second lender will determine final compromise formula. This is certainly not easy to achieve.

You must hire an agent experienced in this specific type of home buying. Everything has to be completed in a particular time deadline. You can not afford to miss any important detail in this whole procedure. You can close the home deal in a timely manner with help of your agent. So getting help of experienced agent is second important buying a short sale home tip.

You have to reserve the right to conduct inspections. There will be commission negotiations as lender is not interested in paying and seller has no money. You will have to submit documentation and purchase offer to the lender and also give him deadline for acceptance.