Why Selling a Property in Poor Condition is Selling Yourself Short
As an agent it always gives you a sense of excitement when you instruct a property that requires a total refurbishment. That’s because as an agent you usually possess a list of guys that you know are always on the look-out for dilapidated properties. Buyers who have the experience to ‘flip’ a property.
‘Flipping’ is buying a dilapidated property, refurbishing it and re-selling it after 6 months. If as an agent you manage to secure a sale to one of your ‘developer’ contacts, you’d usually get it back on your books in a few months’ time once it’s been transformed, to resell it. Two fees for the same property is considered good business.
The price in some parts of town between a poor conditioned property and a refurbished one, can be staggering. East Dulwich and Peckham have seen significant growth over the last 10 years and both are areas that investors are keen to work in.
Here’s a perfect example of how the prices differ in popular Oglander Road in SE15, close to the Bellenden area.
Sold in February 2020 for £705,000
End of terrace
119 square metres
Sold in May 2019 for £840,000
Mid Terrace
106 Square Metres
You can see from the images that 18 Oglander Road whilst much better, is far from what you’d call modernised. It’s fairly average and also considerably smaller at 106 sqm.
If we apply the size differential, it may have sold for £950,000 if it was the same size as 2 Oglander Road at 119 square metres, and that’s not taking into account the pricing variations between mid-terraced and end-terraced properties.
What would it have cost to renovate 2 Oglander Road?
Looking at the images, I’ll detail an estimate of the works below:
New Heating System – £8,500
Re-wired throughout including new consumer unit – £7,000
Re-plaster throughout – £7,500
New Floors throughout – £5,000
Extension to Kitchen £45,000
New Bathroom – £5,500
New Internal doors – £1,250
New Windows throughout – £6,500
Fixtures and fittings – £3,000
Wallpaper – £1,000
Garden – £4,500
Contingency £20,000
Total – £114,750
If the above level of refurbishment work was carried out, the property could have been sold for closer to £1,200,000 based on other sales within a 0.25 miles radius and of a similar size.
This nicely refurbished 3 bedroom terraced house on nearby Nutbrook Road at a slightly larger 121sqm sold for £1,250,000 in January 2020.
Prices on Nutbrook Road are vaguely similar, and if we re-price 2 Oglander Road in a similar condition at 119sqm it would be valued at £1,229,338 based on a square metre value.
Even using a conservative £1,200,000, that’s an incredible £495,000 more than it actually sold for!
It seems a developer has gotten a brilliant bargain here! This is the reason you should NEVER sell a property in this condition. It’s very likely that only cash buyers were interested due to the condition and I expect most families who might have wanted to live in that road would have considered the level of work too much to consider, especially if they had children.
Our ‘flip’ service
The concept is simple. Our knowledge of property, what style is trending and what ‘look’ buyers want and will pay more money for means we can re-style a property and maximise its value.
If you don’t have the capital, knowledge or know how to maximise the value of your property, we can assist. We’ll may be able to fund the work, style your property, project manage the refurbishment and sell it for MUCH more than any other agent could possibly manage, because we have massively uplifted the value of your property.
Our flip service means unlike the owner at 2 Oglander Road, you don’t end up selling your property at a low market price (avoiding any possibility that you’ll be undersold to a cash buyer or developer). We work with a team of brilliant builders, and our properties are finished to a very high standard.
We don’t believe you should ever sell your property and help a developer to increase his net worth. It’s your property, and you ought to benefit from its full potential.
I have a strong hunch that a large percentage of properties that are sold in a ‘run-down’ condition are sold by those who have inherited the property. They either don’t have the cash funds, experience/know how or time to do anything but sell the property in its current condition. But you can see from the example I’ve given, that could be costing sellers a huge portion of their inheritance.
If you have inherited a property that’s a little worn out and dated and you think its value could be hugely increased from a total refurbishment, but you don’t have the money or experience, get in touch and we can explain what we can do for you.
No Comments
You need to enable cookies in your web browser before you can post a comment. After enabling cookies, please reload/refresh this page before continuing. Thank you.