Before continuing, ask yourself three simple questions: do you want to miss out on exclusive properties? Secondly, are you happy with the idea of overpaying for your home or investment? Finally, do you enjoy wasting your time and effort?
The answer to all the above should of course be ‘no’. But, frighteningly this is what happens to well over 85 per cent of property buyers in prime central London. The simple truth is that most buyers attempt to acquire property in the same way. Therefore they are guaranteed to achieve similar average results. Therefore what you should do is avoid the following seven common mistakes, which guarantee a poor acquisition. If you avoid these seven mistakes, you are guaranteed to save yourself a huge amount of time, money and stress and be one step ahead of other buyers in your price range.
Mistake 1: Relying On Estate Agents
The majority of properties may be listed by estate agents but you cannot rely on them for a variety of reasons. Firstly, estate agents are employed by owners. They are legally obliged to sell their clients’ property for the highest price possible, on the most favourable terms possible. Secondly, you are not the priority. Each agent can have over 100 buyers registered with him/her. The agent is not concerned who buys the property as long as a full price is achieved for their client, the seller. It is irrelevant whether it is your ideal home or not. Finally, estate agents can only market the properties on their own lists. Although some estate agents share properties these tend to be the ones they cannot sell easily (properties that are hard to sell are either far from being the “best in breed” or are simply overpriced).
Mistake 2: Poor Preparation
This is far from glamorous, but then the essential things in life rarely are. However, if you are not prepared to act swiftly then you are immediately placing yourself at a huge disadvantage and it is likely that you will suffer the frustration of losing your ideal home to another buyer. You can often secure advantageous terms or have an offer accepted which was not the highest put forward if you just quickly. Therefore ensure that you have your finances in place. Instruct a solicitor that specialises in London property. Instruct a surveyor, be aware that you may require not only a building’s survey, but also a damp and timber and drain survey too. Be available, you may need to view properties at short notice, if you cannot do this yourself then have people whose opinion you trust. These are the basic foundation for your success.
Mistake 3: Failing to Hone Your Criteria
Again this may sound like common sense, but huge amounts of your time will be wasted if you cannot provide a clear list of what you require. Simply saying you need a six-bedroom apartment with a terrace in Knightsbridge is not good enough. You need to consider on which floor you want to be on. Are views important? Do you require a concierge? How important is parking? Do you require gym facilities? If it is an investment, what yield do you want? Are you only interested in properties you can develop and sell quickly? What type of property or design do you dislike? Nothing will help you more than honing your criteria because if you cannot give a reasonably clear vision of what you require you are guaranteed to waste huge amounts of precious time on viewing totally unsuitable properties.
Mistake 4: Ignoring The Law of Averages
It is essential that you have total market coverage so that you have first refusal on the best opportunities as soon as they arise. Unfortunately most buyers only register with ten or 12 estate agents meaning they will rarely see any ‘off-market’ properties and considering that there are over 100 estate agents in Kensington & Chelsea alone, the law of averages in not on their side. Most probably you are too busy focussing on business deals and other commitments to have the time to stay in regular contact with all the necessary agents, especially given that you might not even be in the same country. But you must. Unfortunately it is all too easy to assume that keeping an eye on property websites will keep you informed. Unfortunately the best homes are often sold before the agents have a chance to upload them and the most outstanding properties are discreetly marketed and never placed on the websites.
Mistake 5: The “Bernie Madoff” Mistake
Madoff’s investors lost huge amounts of money because they did not have accurate information on what they were investing in. The property market is also opaque. Every home is different, so it is often difficult to find accurate comparable data. However, you need to do as much research as possible to make sure that you are making an astute decision. The basic places to find information include www.nethouseprices.com and www.primelocation.com - use these to find similar properties advertised on the Internet. If an agent is trying to justify the price ask them to provide comparable data (however you must remember that they are representing the seller). If they cannot then the property may well be overpriced.
Mistake 6: Negotiating Weakly
This is a vast topic, which we cannot do justice to here. However, it is a general rule that the person with the best information has the upper hand, so it is essential you do your research. Three more tips to help you: firstly, before you start negotiating set yourself a target or ceiling price based on your research. Commit to not exceeding this. Secondly, always ask for more than you think you can get – this may involve putting forward a low offer or you may ask for furniture, paintings etc to be included. Three, increase your offer in decreasing increments, e.g. £5m, £5.5m, £5.75m, £5.93m. I would strongly recommend you buy a book on negotiations if you have little knowledge of negotiations. This tiny investment could save you hundreds of thousands of pounds if not more.
Mistake 7: Complacency
Five per cent of property transactions fail between agreeing terms and completion of contracts. Most people think the deal is done once the price has been agreed, so assume that they can leave everything in the hands of the solicitors, estate agents and surveyors. This invariably leads to unnecessary complications, which cause stress, wasted time and expense. It is vital that you remain in control of the process. You must co-ordinate the solicitors, financiers and surveyors. Most problems can be avoided by good communication. In some cases they cannot be, and you have to walk away from the purchase, but this should happen far less often than it does.
Jeremy McGivern is the founder of Mercury Homesearch, London’s top high-end property locater. Email him at Jeremy@mercuryhomesearch.com.
