Market-driven vs developer situation discounts
Brett Alegre-WoodChairman, YPC Group
Hey guys,
Well things are really starting to get back on track now and we are starting to see a relatively unfamiliar sight as we negotiate for property -- the 'market-driven discount' (particularly in the London marketplace).
Let me explain.
The past two years have seen a massive amount of turmoil in the marketplace. Buyers have been rare and hard to come by for developers. The market was desperate to attract buyers right across the board. In situations like this, the discounts are always the biggest as developers feel driven to drop prices and offer massive discounts. Up to about 35% off a current RICS valuation at its worst in fact!
You need to stay educated...
Grab my FREE weekly property mastery e-newsletter and learn the very same information many have paid thousands to learn. It's valued at £199 per year and each week, I'll teach you everything I've learned while building the portfolios of thousands of my clients over the last 15 years. Learn from my experience and avoid making the mistakes I did!
You'll learn all this and more in just the first 3 weeks of this newsletter:
 Plus, a special bonus: you'll receive Brett's regular video updates, delivered straight into your inbox, where he turns on his video camera and decodes the week's property news for you!
|
Join our newsletter list for FREE today and you'll receive as a bonus a complimentary copy of Brett Alegre-Wood's best-selling book The 3+1 Plan!
You'll learn the safest time-proven strategies that will guide you and grow your portfolio during any economic boom, bust, recession or downturn.The 3+1 Plan is a step-by-step guide that will show you how, with just four properties, you will be able to fund the lifestyle you have always wanted. Even before you retire! Immediately you register for our newsletter we'll send you the PDF download link for this award-winning book so you can start reading right away...
| ||||||||||||
| |||||||||||||
These are known as market-driven discounts.
The other type of discount is when a developer or vendor has a special need to make sales. It might be an end of year target that needs meeting, the last plot on site or simply a monthly goal. Whatever the reason, this is when we see the developer situation discounts. The great thing about these is that when times are tough in the market, they can add onto the already-generous market driven discounts.
Interestingly though, we're seeing the developers get more and more aggressive with their pricing. Stock discounts have remained but off plan discounts have dropped to reflect an upturn in the market, especially in London.
We have 20 offers for off plan deals out at this very moment in and around London ranging from 10-18% discount, but guess what? Most developers are coming back with 5% maximum. Such is the current state of market driven discounts.
They're doing this because they know:
they don't want to build if they aren't making a nice profit,
that the market is returning and they know that by completion prices will have increased.
We even had a developer put his prices up by Â?15k - Â?40k per plot on us because he was so optimistic about prices!
At the end of the day, it doesn't matter what the type of discount you get because as long as you buy it below value. It also doesn't matter if prices have dropped -- it's always below value: today's value. This is the only way to lock in a profit at the purchase which is after all what the game is all about.
If you want to take advantage of some of the market driven and developer situation discounts then give the team a call on 0207 812 1255.
Live with passion,
Brett Alegre-Wood
Reader comments for the article 'Market-driven vs developer situation discounts'
You're invited to join in the discussion of this article. Do you have advice to share? An opinion or some feedback that adds to the discussion? Feel free to add it below! (Please note though that ALL comments are checked before they're posted.)
Brett reporting from Malaysia, should we open up an office in Malaysia?
How will the Euro affect you as an investor?
Is it realistic to have cashflow positive investment property 100% of the time?
How Much Capital Do You Need To Get Started In Property Investment?
How Quickly Should An Investor Build Their Property Portfolio?
Brett reveals London's newest, still-unknown hotspots in new video