Just because a property has been refurbished doesn’t mean it is a good purchase. And it definitely doesn’t mean that it is a “Best in Breed” property, i.e. the type of property you should be acquiring.
I say this because currently some people are paying massive premiums and making expensive blunders. Yes, even in a market that is apparently very weak and buyers have the upper hand.
As an example, an apartment in Mayfair has just sold for £3,931 per square foot. It’s in a nice building, the apartment has been nicely refurbished and has air-conditioning which is becoming ever more important. And £3,931 per square foot is not a record price in Mayfair by any stretch of the imagination.
BUT…, it is a record price for this building. Indeed, the previous record was £3,931 per square foot. So, not a disaster, you might think. Except that was achieved four years ago in a stronger market and it was a better apartment for various reasons.
And there’s more. That previous record was 44% higher than the next most expensive property in the building. In short, it was an anomaly. And, no, there has not been a significant upgrade in the building or street that would merit such a discrepancy.
It is a classic example of a buyer looking at one comparator and thinking he/she knows what they’re doing. Did the estate agent know this? Yes. But he had no obligation to mention the relevant comparators. And he didn’t. Because he is legally obliged to achieve the highest price possible for his client, the seller.
Of course, there are several ways you can be fooled into overpaying. This example is just one of the more obvious ones and hopefully you won’t make it. Nevertheless, the simple fact is that the information asymmetry in the prime London property market does not favour buyers even in a buyers’ market.
Yes, even the most naïve negotiator can achieve a discount, but is it a discount to fair value and is it even a property you should be offering on in the first place?
These are just two of the many questions buyers fail to consider and which the estate agents take advantage of for their clients, the sellers. They know what you don’t know. It is not your fault. It is the way the market is structured. But there are techniques you can use to level the playing field.
So, if you have a question about anything covered here, simply email jeremy@mercuryhomesearch.com.
