Valuing buying and reselling residential properties in the current market climate
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Valuing, buying and reselling residential properties in the current market climate. Market conclusions. House prices are definitely downwards, and will continue that way for some time to come We are competing with more properties for less buyers, so we need to be more competitive than ever

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Presentation Transcript

Market conclusions
Market conclusions... current market climate

  • House prices are definitely downwards, and will continue that way for some time to come

  • We are competing with more properties for less buyers, so we need to be more competitive than ever

  • The risks involved with Part Exchange trading have increased significantly:

    • Risk of paying too much

    • Risk of using the wrong marketing strategy

    • Risk of buyer fall through

    • ALL LEAD TO INCREASE RISK OF FINANCIAL LOSSES ON PX


Who and what is shp
Who and what is SHP? current market climate

  • £20m property trading company, launched in November 2007

  • A joint venture between the movewithus and a bank

  • Complete outsourcing of PX from developers - including balance sheet funding and risk

  • Property trading for a fee, rather than buying low and selling high

  • Same model as developers running PX – looking to turn assets into cash for the value we paid for them


How do we work
How do we work? current market climate

  • “Cost plus” fee basis  – not buying low and selling high

  • Underlying asset model – no “plot deal” profit, so must get PX transaction right

  • Risk management approach – segmentation by location, property type, value band, etc, to better understand risk

  • Asset accounting – each property has own budget and P&L

  • Portfolio strategy and underwriting processes – understand the “normal” and deal quickly with the “exceptions”

  • “Pricing-in” the market - understand the “additional” variables and their likely effect


Why am i here
Why am I here? current market climate

  • SHP shows that MWU are not “just a service provider” - we own and manage a portfolio of up to £20m of PX stock

  • Introducing a pure asset trading /underwriting model

  • We understand and have experienced all aspects of PX trading – all in the current market!

    As well as managing our own portfolio, we are currently:

  • Assisting MWU and their clients to move towards a risk management approach


Understanding px
Understanding PX current market climate

  • The longer you hold a property, the less you will get for it!


Understanding px1
Understanding PX current market climate

  • Value and type affect time to sell

  • You can’t win them all – but know how many you should expect to lose


Valuation challenges
Valuation challenges current market climate

  • Source all available relevant information, and use it appropriately to form a sensible starting point to estimate value

  • Lack of comparable transactions – widen the net

  • Using facts rather than opinion or instincts – for accuracy AND conversion rate

  • Pricing in market decline and local market conditions:

    • how long will each property take to sell?

    • what will happen to its value over that time?

    • how much competition does it face?

    • how many buyers are looking?

  • Developers (and their clients) must be able to trust valuations to accept them and the marketing strategy that follows...


Resale challenges
Resale challenges current market climate

  • In this market, only competitive properties will sell

  • PX properties are “trade sales”, so market accordingly to ensure viewings (and hence sales) ahead of the competition

  • Understand realistic resale values range and the effect of time

  • Regularly review where each property is on the time-on-market / likely value line, and act accordingly. Quickly!

  • Keep a constant eye on the competition, and stay ahead of it!

  • We cannot chase “hope values” in this market, if all the evidence suggests a property is priced too high, it most probably is

  • Difficult decisions now will only get even more difficult later!


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