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Key Points Of Today’s Property Market

By Andy Shaw | January 23, 2010

Originally Posted 15th July 2008

What is today’s market?

Stated another way the question is – ‘Is there really a property market?’

The media would have you believe that ‘THE MARKET’ fell by a X percent last month and it has fallen by X percent since this time last year. So what does that actually mean? It means that those who still have property for sale on the market and must sell are willing to slash prices, and those who would sell in the ideal world but are not that concerned if they don’t, are simply staying put. So if only 5 or 10% are in a position that they must sell, are they speaking for the entire market? The media would have you believe so.

If you say that of all the people who would want to sell (being ‘THE MARKET’), 20% of those people had to sell, and 80% don’t, but would like to. Well currently the 80% have all gone home leaving the 20% (this is an exaggerated figure, it’s probably nearer 5 – 8%) to set the market price. So what is ‘THE MARKET’ then, the 20% or the 80% or the collective 100%?

If we said that it was 20% that had to sell and the market fell by 10% then effectively that could be made to read that the market has really fallen by just 2% as a whole. At the end of the day I think it was Mark Twain who said it best, ‘there’s lies, damned lies and statistics!’ Frankly, that is not as important as the next point.

The whole point being it is a buyers’ market right now, and the value of a property is what someone is willing to pay for it when the other person is ready to sell it. As for actual value well, that’s a different story and is still down to how we structure our valuations.

Where to focus your main efforts

For the last few years I have been proving to countless people that there really are deals around all over the place and that you really can buy property extremely below perceived market value prices. People would come to see me, still not believing it was possible, and then leave with seeing me find property right beneath their own noses that they had looked at before and still didn’t recognize as a deal.

In today’s market anyone should be able to identify a motivated seller, but for those who can’t, they are the ones sitting on their roofs contemplating whether or not to jump! Today the territory has changed shape somewhat, people are finding deals more easily, but that doesn’t mean they are able to get their money out.

And frankly, in times of potentially rising rates, this is a very dangerous time to be taking too many risks, which is why I have said in several articles to really push the vendors down on price. As what can really look like a deal today, even though it is £20 – £40k cheaper than a year ago, may still not actually be a deal as the real deal to be had was at £60 – £70k discount and actually the £30k discount which they bought on was really £10k above the price they should have paid…

If they need to sell, then they will cut their prices – just remember don’t offer too much to start with; you can always go up but if you try and go down that’s when bad feelings can really start to cause problems.

Today the real skill is getting your money back off the table at an interest rate that you aren’t so scared of that you wait with baited breath on the first Thursday of each month to see if they’ve kept the rates on hold! What we are doing is knocking money off of the vals we think we can achieve and wherever possible using a 75% remortgage lender and making it work from there. This is to try and protect ourselves from the unexpected 9 months in from when the sale is agreed.

In today’s market with a severe lack of available products you cannot risk taking on a deal without having at least a very good exit strategy for your cash (there is far, far less certainty in the exit route for cash than there was at this time last year, which is why this area needs real care). If you have ended up getting cash tied up then look at it as if it is just part of business and direct all your efforts to raising extra cashflow to protect your exposure. When you have done that return to solving the problem of tied up cash, possibly by buying a property so cheaply that it will release enough excess cash to recover the original tied up sum, i.e. your aggregate over two properties will be that there is no cash tied up.

So if you are starting out, then you simply have to do great deals (they are even easier to find than they were 12 months ago, believe me!). If you have cash exposed, then you need to focus on cashflow and other deals to use aggregate mortgaging to release exposed cashflow.

Re-programming the negative anchor

One of the hardest of all the battles you have to fight is this one. Frankly it is the real barrier we all have to get over before we can see clearly. I was fortunate enough a few years ago to be able to see the media for what it was, and watch how it affected my opinion of things without a care to the outcome of my life.

In today’s world it is impossible to turn on the news without hearing a negative about the property market, I even find myself being sucked by this energy vampire. After each negative news update, we are all told that it’s really, really bad news. Pretty soon we believe it! So each of these is a negative anchor which we must clearly see for what it is and re-programme our minds.

Now here’s where neuro-linguistic programming comes into play, so that you can use it to see the positive from these situations and use the law of attraction to get what you want.

When a news item explains why something is bad, instead of accepting it at face value, why not look at how you can exploit the problem for the benefit of yourself and your family? As with every problem the seed to the solution lies within the words being used to describe the problem. So if it’s bad news for you then it’s probably worse news for someone else, so you can therefore help them out of their problem for a profit.

You need to position yourself as the solution to all of those people with problems, and therefore every time you see a negative news item then realise that this is good news for you and your family as it is helping you to find more problems that you can solve for people at a profit.

In a nutshell, if it’s bad news on the TV then that is good news for you and your family. Your job is just to identify why and then figure out how to use it.

Finally…

Did you know that last month while mortgage lending fell to an all time low, or thereabouts, personal loan borrowing went up by £1.6 billion and credit card borrowing went up by £600 million.

Does anyone know why?

A bottle of champagne to the first person who gives me the right answer (that is if anyone gets it, of course :-) ). I’ll give you a clue; it has something to do with a falling knife.

Best wishes

Andy

PS Just in case you missed it that means it’s a good time to apply for credit, just not mortgages.

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