Home staging can create buyer appeal

While not new to the property market, home staging continues to grow in popularity among homeowners who wish to optimise buyer appeal and sell their home for the best possible price, within the shortest possible time.

To get the property sold for the best price, the home needs to appeal to the highest possible number of potential buyers. Home staging is used by estate agents as one of their marketing tools to highlight a home’s best features. It is preparing the home for sale by using techniques that focus on improving the property’s appeal and transforming it into a more attractive and welcoming space.

A prime example of staging is a retail shop window using mannequins to display items in such a manner that it allows people to picture themselves wearing the clothes or using the products in the window. Similarly, home staging aims to showcase the home’s best qualities and entice the potential buyer to see themselves living in that home – it creates aspirations.

It is possible to hire professional home staging specialists; however, this will obviously come at a cost. Professional staging can include the rental of furniture or artwork, buying paint or wallpaper, as well as products that may be required to fix up problems such as cracks in the wall or sanding wooden floors.

You can avoid the cost of a professional stager by doing it yourself, making simple changes to your home that could create a big impact. In this age of information, there are vast amounts of content available to help you through the home staging process. There are many websites, television shows and other mediums that you can use to source information that will assist you to get your home ready for viewings.

Don’t know where to start? Here are a few tips that will help you along your way:

Keep it clean
As a first step, the home should be clean, inviting and exciting for potential buyers to view. The object is for buyers to not only want the home but to want it more than any other homes for sale in the neighbourhood.

Getting the carpets professionally cleaned will make a big difference to their appearance and will leave the home smelling great. Taking the curtains down and washing them will also add to the pleasant aroma of the home. Fresh or new bedding will go a long way in sprucing up the bedrooms to ensure they look their best on an open house.

Get rid of clutter
Where possible, reduce clutter and pack away any unused items. Don’t let your personal items detract from the home’s features. If a space in the home is full of items, try and remove some furniture to open the space up a little. While not always possible, ideally it is good to reduce the number of items in the house by around half. This will mean that you will need to be ruthless in the selection process. Hiring a storage unit while the home is on the market will assist in storing pieces that you want to keep, but don’t want in the house.

If there are fewer items in the home, it will appear larger and it will easier to keep clean.

Smells evoke emotion
If the home smells good, it will conjure up positive emotions in buyers, while unpleasant odours often drive buyers away. There is nothing quite like the smell of freshly brewed coffee or freshly baked bread to make a home feel more inviting.

A few updates and adjustments
If necessary, give the walls a fresh coat of paint to inject some colour into the space and revitalise the look. Any small defects should also be attended to, such as replacing a cracked window pane or broken doorknob. During viewings, it’s best for each room to be as open and bright as possible. Turn on the lights and open all curtains and blinds to let in as much natural light as possible.

Unexpected touches
Small changes can make a big impact in how the property is seen by buyers. It is the unexpected little touches that will leave an impression on buyers viewing the home. Some fresh flowers on display, a welcome mat or fresh fruit in a bowl in the kitchen – all these little things combined will add to the appeal of the home and impress potential buyers.

Could this be the most expensive property in Pimlico?

Possibly the most expensive property per square foot sold in Pimlico may not be what most people expect. Sold by RE/MAX Central in Westminster, the apartment which is located in the Pimlico grid, achieved a selling price of £285,000. That doesn’t sound like a lot at first, but it is when you consider that the property is just 8.8 m2, making it around £32,386 a square metre.

Previously owned by British actor Robert Waite, the apartment’s prime location was ideal for commuting to and from various studio and shooting locations around London’s city centre. Initially listed at £299,999, the property took approximately three months to sell because its size made it unmortgageable. “There were two challenges that we experienced when marketing the property, the first being that it could only be sold to a cash buyer because banks were not prepared to finance the deal. The second challenge was finding a buyer who wanted a property of this size,” says Roger Collings, Manager at RE/MAX Central.

The apartment is situated on the second floor of a period building, built in the 19th century by renowned builder, Thomas Cubitt. While it has just 95 sq ft under roof, it does have a roof terrace measuring approximately 13 m2.

Collings says that the property was bought by a couple who plan to use it as a Pied a Terre. “The price the apartment was sold at highlights the demand for property within prime central London. While the number of transactions has dampened, prime central London is still a sought-after address,” he concludes.

Financial preparation will improve applicant’s chances

For the majority of the population, purchasing a property will be the largest financial investment they will ever make, so it makes sense to give the decision the due diligence it deserves and prepare accordingly. Before applying for a mortgage, you will need to ensure that you have assessed your financial situation and answered a few pertinent questions before approaching your bank for property finance.

What is my credit score?

A favourable credit score and clean credit record is a valuable asset when applying for a mortgage. Applicants can obtain a free copy of their credit report from credit bureaus such as Experian or Equifax to assess their financial position.

Any missed, or slow payments will have a negative impact on your credit score. However, it is also important to be mindful of the less obvious credit infractions such as opening too many accounts, and numerous credit enquiries. All of these things will impair your records and could scare off lenders. Reducing the number credit cards you have and ensuring you are on the electoral roll will both aid in boosting your credit score.

What is my annual income?

As a potential home buyer, the maximum mortgage amount that you can qualify for will be based on your annual income, so be sure to include any bonuses or annual investment returns when making this calculation. Mortgage lenders will require proof of income to quantify the mortgage amount, so you will need a P60 form from your employer and possibly three months’ bank statements and payslips.

How much debt do I have?

Another major consideration that banks take into account when determining the mortgage amount they are willing to grant is the applicant’s amount of disposable income. To increase the disposable income you have available, get rid of or pay down debt as much as possible. Lenders will require you to provide them with all the debt you currently have to work out a debt-to-income ratio, which will be used as a tool to determine your level of affordability. Having a lower debt-to-income ratio will be highly beneficial as it will increase the chance of gaining approval for a higher mortgage amount.

What kind of deposit can I put down?

The more money you can put down as a deposit – the better. A larger deposit means that the bank has to finance a smaller percentage of the purchase price of the home, which mitigates their risk. Another advantage is that bank reserve their best rates for applicants with large deposits, resulting in lower monthly repayments.

What is my employment situation?

Most lenders won’t want to provide finance to someone who is in their probationary period, so if you are thinking of changing jobs, rather stay put until after the application. Also, lenders view an extended length of employment favourably, only providing finance to an applicant who has had stable employment for some time. If you have recently changed jobs, rather wait three to six months before applying for a mortgage.

Lenders also view self-employed people as a higher risk, especially if the business is in its developing stages. Applicants who are self-employed will usually be required to provide their  SA302 form relating to the last three years from HMRC, alternatively their full accounts for the last three years.

What can I afford?

Affording a home is more than just paying the monthly mortgage repayment, other costs need to be considered such as utilities, taxes, insurance and maintenance. Owning a home is a long-term investment that needs to financially sustainable for the term of the loan, so it is advisable to purchase a property that you can comfortably afford. Financial preparation is the key to homeownership readiness and will make the mortgage application process far smoother.

Factors that will influence the property market in 2018

It is fair to say that 2017 was a year of much change in the housing market, from the abolishment of Stamp Duty for first-time buyers who are looking to purchase a home up to £300,000, to the new way that landlords will be taxed on their portfolio. One thing is for certain, and that is that the government is doing all they can to ensure that everyone has an opportunity to own a home for the first time. The year was geared towards encouraging first-time buyers to get in the game while getting landlords to rethink their portfolios and perhaps releasing some of their current properties into the market.

Here’s a brief look at the things that happened in 2017 that will influence the market in 2018:

Stamp Duty done away with for first-time buyers

The government’s decision to scrap Stamp Duty for first-time buyers who wish to purchase a property up to £300,000 was one of 2017’s biggest changes in the housing market. In addition to the exemption, rates have also been changed. Now, first-time buyers making a property purchase up to £500,000 will pay no Stamp Duty on the first £300,000 and 5% tax on the amount between £300,001 and £500,000.

New taxing for landlords

Last year also saw the introduction of the section 23 taxation change that will impact landlords. The change will be phased in until 2021 and will mean that landlords will not be able to claim tax relief on their mortgage payments from 2021, reducing by 25% each tax year until then. The change will effectively push landlords into a new tax bracket, which will essentially eat away at potential profits.

Interest rate has gone up

For the first time in a decade, the base rate of interest has increased marginally from 0.25% to 0.5%. The increase means that mortgage repayments will be slightly more expensive going forward.

A change in the rental landscape

Over 2017, the build to rent sector has seen growth, which has created an alternative type of accommodation for tenants. Many of the build to rent developments are owned by institutions such as pension funds and are then let out by letting agencies. At the moment, approximately 55,000 build to rent properties exist in London. Depending on the development or site, the developments offer residents features such as gyms, communal areas and other sought after amenities.

House prices are steady

In spite of both the economic and political challenges of Brexit, 2017 showed that the London property market is robust and house prices have remained steady. According to the UK House Price Index, the yearly average house price growth is up to 5% with 29 of the 32 boroughs in London showing house price growth since January 2017. Steady property prices, favourable interest rates and an increase in inventory are positive factors for buyers in today’s market.

An increase in affordable housing

According to recent budget announcements, the UK government will be focused on increasing the number of affordable homes available to buyers. A commitment has been made by the government to build more affordable housing, designating £44 billion to build new homes, with an additional £400 million to improve existing estates.
Approved schemes will also be pushed ahead as soon as possible to help relieve some of the pressure currently placed on council waiting lists.

With all this change during 2017, it will be interesting to see what we can expect of the next twelve months.

London’s 10 best value-for-money boroughs

In August 2017, the rate of house price growth increased to 5%, with the average UK house price increasing to £226,000. While the north-west of the country experienced the largest increase in property prices, with values going up by as much as 6.5%, London property prices only increased by 2.6%, with the heart of the capital’s financial district experiencing a decrease of 5.6%, which is believed to be a result of Brexit.

With London’s property prices seeing exorbitant growth over the last decade, many first-time buyers have been left on the outskirts looking in. As prices continue to rise, are first-time buyer’s hopes dashed or do they have options?

While London remains the most expensive place in the UK to purchase a home with the borough of Kensington and Chelsea topping the list with an average property price of over £1,3 million, there are some value-for-money boroughs in the east of London that still offer first-time buyers the chance to own property.

The borough of Barking and Dagenham currently has the lowest average house price in London at £285,085, with the boroughs of Bexley and Havering following closely on its heels as a good value for money option for first-time buyers wanting to get into the market.

Based on the UK house price index the ten boroughs of London with the lowest average property prices are:

1. Barking and Dagenham – £285,085
2. Bexley – £334,191
3. Havering – £358,251
4. Newham – £364,137
5. Croydon – £365,445
6. Sutton – £376,836
7. Greenwich – £385,103
8. Lewisham – £407,777
9. Enfield – £407,921
10. Redbridge – £409,248

While all of the boroughs on the list are above the average UK house price of £226,000, they are nowhere near the prices seen in the most expensive boroughs of prime central London, yet all still have easy access to city’s financial hub, making them a great place for first-time buyers who want to purchase a home within commuting distance of the city centre.

High street vs Online – What’s the difference?

Over the last few years, more and more online property sales models have made an appearance in the market sparking debate as to what is a better option – the online model or a high street agency?  While they are perceived to be two entirely different models, the fact is that all estate agency models have an online presence and advertise on property search portals such as Rightmove, Zoopla, etc.

Essentially, what this means is that being online is not what differentiates the two models, but rather it is the level of service that each model provides.

Rather than saying online or high-street, the differentiating term should be Upfront Fee model versus No Sale, No fee model.  The solely online model fills a gap in the market for owners who wish to sell their property themselves without the additional services that an estate agency provides. Once the property is listed on the respective site, the online agency has fulfilled their contractual obligation to their client regardless if the property sells or not. Clients will not pay commission, but they will pay a fee, irrespective of whether the home sells. In a no sale, no fee agency such as RE/MAX, if the home does not sell, they don’t make a penny.  In fact, they will be out of pocket because they would have spent money on marketing the property. They are incentivized to sell the home for the best possible price, within the shortest possible timeframe, which surely is advantageous to the seller.

There are several additional services that consumers get from RE/MAX that they won’t get from an upfront fee agency.

A full service from start to finish

Clients deal with one agent throughout the process. The property sales process can be complicated, so having an agent who can assist, will make the whole process far smoother.

Open houses

Buying and selling property is emotionally driven, it is not the same as picking a retail item from an online catalogue. Most people want to view a property and get a feel for it before they decide to buy it, an agent helps to facilitate that process.

Offline marketing

A No Sale, No Fee agent will have a network of contacts, experience, and market knowledge to successfully round out their marketing plan to ensure the property is exposed to the right target market.

Key pointers during the process

An agent can introduce trusted advisors to deal with the conveyancing and the financing of the property, provide advice on what to do should the surveyor find any issues with the property, make the move-in process smoother by introducing removal companies and providing valuable information about utility companies.

Negotiation

Good No Sale, No Fee agents are skilled, experienced negotiators, which is valuable when trying to reach a fair price for a property that is either being bought or sold.

All of these aspects enhance the client’s experience and make the process easier. Even in this digital age, a value-added service will remain an intricate part of the industry.

How the interest rate hike could impact the property market

The Bank of England Governor, Mark Carney announced in November 2017 that the interest rate would increase from 0.25% to 0.5%. This marks the first time in a decade that the central bank has hiked the rates, which are currently at historic lows.

The rate hike is likely to place further pressure on the market as mortgage costs go up and lending conditions become further constricted.

While rate hikes will have a lesser impact on those who have the cash to purchase a property outright, existing mortgage holders and potential buyers wanting to get their foot in the door will be hardest hit. According to Zoopla, the average price paid for a home in London is £621,881. Under the previous prime interest rate of 0.25%, the mortgage repayment over a 25 period was £2,139. With the hike to 0.5%, the monthly mortgage repayment will increase to £2,205 per month, which means that homeowners will pay a further £20,036 on interest over the term of the loan.

Based on the example, an increase in the monthly mortgage repayment of £66 a month is not substantial. However, it is the compounded effect of a rate hike on all other debt that the homeowner is currently servicing. Many people have high debt levels because interest rates have been so low for so long. As interest rates rise, it will be more and more difficult to service the debt and other household payments. Added to this, if we enter into a rate hiking cycle, we may see more than one increase.

Another effect is that it will be more difficult for potential buyers to show the necessary affordability levels to get their foot on the first rung of the property ladder. Higher interest rates mean that buyers will qualify for lower mortgage amounts. Essentially this means that they will require a larger cash deposit to be able to afford the same property. Before any further rate increases occur, potential buyers should focus on paying down their debt and building as much savings as possible.

Purchasing a fixer-upper

Buying a home that is in need of attention can be a highly lucrative investment. However, this depends on whether you take the necessary precautions and follow the right procedures.

Irrespective of the type of property that you are looking to invest in, it is imperative that you do the necessary research and lay down the groundwork before committing to the purchase. Doing your homework is particularly important when considering properties that would be considered ‘doer-uppers,’ because you will need to pay additional money onto the property to renovate it. Understanding what is a good buy and what should be steered clear of is a key aspect to success when purchasing a fixer-upper property.

There are several advantages to purchasing a home that needs renovation. For a property investor with the capital to spend on renovating, buying a fixer-upper is a way of securing a higher profit margin when they sell the property, provided of course that they are savvy with how much they spend fixing the property.

Another advantage is that there is often less competition in the market for these kinds of homes, which means that they generally sell for lower prices than most of the homes in the area. Again, this increases the potential return on investment – especially if the property is purchased at a good price. A property buyer’s return on investment will largely be based on the decisions they make at the beginning of the transaction. The ideal property might be concealed under the guise of some unsightly features that would normally turn potential buyers away. Buyers looking at doer-upper homes will need to see past the home’s cosmetic appearance and see the home’s true potential.

Here are a few tips when looking for the ideal fixer-upper home:

Location is key

Few aspects will have a greater impact on a property’s potential for appreciation in value than its location. A property’s location determines so much of its current value, as well as its potential growth in the future. From an investment perspective, homes that are in proximity to a range of amenities such as shopping facilities, train stations, business hubs, entertainment areas, and excellent schools generally see a higher percentage of capital growth over the long term than those that aren’t.

The home’s design

Renovating a home is one thing, but completely changing the design of the property can be very costly. It is important that the shell of the home is designed well and laid out correctly. Sometimes it is better for buyers to walk away than to try to correct a bad design.

Overall condition of the home

While certain renovations are manageable, if there are too many defects or possible structural damages, the home may not be worth the money or the effort. A good fixer-upper is a home that is at least in a livable condition. The cosmetic appearance of a home is fairly easy to change. However, major alterations to the home’s structure or foundation require a lot more money and expertise. A home with these kind of issues will be a money-trap rather than a good investment.

Gathering as much information as possible to make an informed decision will pay off in the long run. If you are unsure of anything seek the advice of a reputable contractor to ensure that the home is structurally sound. It better to go into an investment with both eyes open, than blindly hoping for the best.

Beware of a possible double commission scenario

If you are not happy with the estate agent you are using and decide to move to another agency, be sure to give the first agency the appropriate notice period or you run the risk of paying a double commission. This is according to Roger Collings, Office Manager of RE/MAX Central in Victoria.

“There are cases where a buyer views a property but does not put in an offer. After the property has been on the market for some time with one agency, the seller decides to open up the listing to other agencies. After dealing with the second agency, the same buyer goes back to the property for a second viewing – this time making an offer. The previous estate agency can argue that while they did not close the deal, they introduced the buyer and therefore should be paid a commission,” says Collings.

He notes that a situation such as this emphasizes the importance of canceling one contract before entering into another. The cancellation period allows the previous agent to follow up on any existing leads as a result of their marketing. “The notice period is normally around 14 days; however, it all depends on the contract the seller has signed. In some cases, the notice period can be as much as four weeks. Before signing any contract with an agent, be sure to read through it carefully and check the fine print to see what the expected notice period is if you wish to cancel and instruct another agent,” Collings advises.

Even after the notice period, there could be some continued liability to the agent, which again, is determined by the contract. While there is no standard definition of what is deemed to be an introduction, see how the term is defined in the contract. It is possible that the contract defines an introduction as anyone who has viewed the property or even seen the brochure. “If the contract or the agent suggests that you will remain liable for a fee if a person they initially introduced to the property went on to buy it, request a list of the names of those introduced so that you can provide it to the new agent,” says Collings.

According to legislation, any exclusive agency agreement is required to include a double commission warning which states that if another agent introduces a buyer who purchases the property while the agreement is in place, the sole agent will be paid commission, as well as the agent who introduced the buyer. If you decide to instruct a new agent, be sure to inform them of your previous experience and list of names of people who have expressed an interest in the property. “If the new agent is aware of the situation they might be able to strike a deal with the previous agent and work out how the commission can be split between them fairly, rather than a double commission scenario. In most cases, agents will be willing to come to some agreement that will benefit all parties involved,” Collings concludes.

How crucial is your listing price?

A common mistake among homeowners wanting to sell their property in the current market is incorrectly pricing their home. While there are valuations tools available to sellers online, to set the right market-related value, requires specific area knowledge, an understanding of the conditions surrounding the market and insight into the mind of buyers.

A number of aspects affect property pricing, which is why setting the ideal price can be more difficult than it seems in the beginning. Two homes could be situated in the same neighbourhood across the street from one another, but certain distinguishing features could push the perceived value of one up. Determining the perfect listing price can only be accurately done if all the external influences are considered and weighed in.

Pricing a home to sell is an art that takes into account market movement, buyer demand, the home’s condition and yes, its location. Another vital aspect that impacts pricing is the term of the lease, as well as any restrictions it may contain. An experienced, reputable estate agent with specific area knowledge will be a valuable asset when trying to establish the correct listing price.

So, why is it so crucial to price the home correctly? Well, the first reason is that if people view the home as being overpriced, it will be overlooked by potential buyers and will sit on the market for longer than it should. Instead of giving yourself room to negotiate, you are simply making other comparable homes appear to be bargains. Why help your neighbours sell their home instead of yours? On the other end of the scale, pricing your property below its market value means possibly leaving money on the table and sacrificing profit unnecessarily.

So what aspects need to be considered to find the right listing price? RE/MAX London Regional Director, Peggy Su points out three crucial aspects that can’t be ignored when setting a listing price:

Past sales in the neighbourhood

Looking back can sometimes provide some insight into the future. Reviewing the area sales history over the past six months will provide you with insight into what buyers are prepared to pay for homes situated there. Time spent on the market should also be considered, along with the gap between the initial asking price and the eventual selling price.

Other factors that might impact the property’s exact value include its proximity to excellent schools and other sought-after amenities, the condition of the property, its size, finishes and fixtures, and any other features that could set the house apart from others in the areas.

Trends in the market

While elements such as government policy, access to finance and unemployment will impact the property market throughout the country – there are specific influences that impact micro markets in particular areas.These include new companies moving into the area or plans for improving local amenities such as parks or shopping malls.  When setting a listing price, estate agents will look at all the unique elements and consider how they will influence the perceived value of the property. Both the wider general influences and localised factors will affect home’s perceived value among buyers.

Type of property

Is the home a freehold or leasehold property? If the home is a leasehold property, the length of time remaining on the lease will have a bearing on its price in the market. A home with a  lease that is more than 80 years long will be more expensive than one with less. A property with 50 years or less on the lease is generally not mortgageable, so will only be able to be bought with cash. This will dampen demand for the home, which will lower the price.

Listing the home at a price that is ‘just right’ from the beginning is key to selling within the fastest time frame and for the best price – it all about finding the sweet spot or the Goldilocks price. Working with a reputable, experienced estate agent will help to ensure that the home is listed at the correct price from day one, which will make all the difference in achieving your goal.