How to buy below market value

The mechanics of buying a property below market value are the mechanics of buying any property. What changes is what the seller is buying from you, and therefore which parts of your offer they actually care about. This guide is written for somebody making a purchase of this kind for the first time — whether that is the first property of a trading business or a home bought for less than it is worth.

What the seller is actually buying

In nearly every situation that produces a discount, the seller has decided that a date, or certainty, or an ending, is worth more to them than the last few per cent of the price. Executors want a sale that completes. A lender wants the asset off its books. A seller with a collapsed chain wants the original completion date back. None of them can buy those things at full price, so they buy them with the discount. Why a seller takes less goes through the six situations in detail.

The consequence for you is that your offer is not just a number. It is a number, plus how likely you are to complete, plus when. Improve the second and third and you can win against a higher first — and that, rather than hard bargaining, is where most of these purchases are actually won.

What "cash" and "chain-free" actually mean

These two phrases are used loosely, and using them loosely is how an offer gets accepted and then collapses.

A cash buyer has the money now, in their own hands, and can evidence it. Not money that arrives when another property sells. Not a mortgage offer, however firm. Expect the agent and later your solicitor to ask for statements and for the source of the funds — that is an anti-money laundering obligation on them, not suspicion of you. What being a genuine cash buyer removes is the lender: no mortgage valuation that can come in low, no lender's timetable, no offer that expires.

Chain-free means your purchase does not depend on any other transaction completing. It is a different claim from cash, and the two do not imply each other: you can be chain-free and still need a mortgage, and you can be a cash buyer sitting in a chain. Short-term or bridging finance is not cash either — it is borrowing, it costs money for as long as it runs, and it is a financial decision to take your own advice on. Whichever position you are in, describe it accurately. An offer accepted on a description that turns out to be optimistic is the one that fails at the worst possible moment, and on these sales it is the seller's timetable that pays for it.

Making the offer through the selling agent

Every property we feature is already on the open market with an estate agent. You offer through that agent, exactly as you would on anything else; we are not in the middle of it and take no fee from it.

Put the offer in writing and make it easy to say yes to. An agent has to pass offers to their client, and what their client is weighing is deliverability, so give them the things that demonstrate it: who you are, the price, how you are funding it and the evidence, the name of the solicitor you have already instructed, whether you are in a chain, the timetable you are proposing, and any conditions. Fewer conditions is worth real money to a seller buying certainty — though an offer subject to survey is normal, expected, and not something to give up lightly.

One thing to understand before you spend anything: in England and Wales an accepted offer is not binding on either side until contracts are exchanged. Until that point the seller can accept a better offer and you can walk away. That cuts both ways, and it is precisely why a seller in a hurry pays attention to who you are rather than only to what you have offered.

The survey

A mortgage valuation is not a survey. It is a short check carried out for the lender's benefit, to confirm the property is adequate security. It is not written for you and it will not tell you what the works cost.

A survey commissioned by you comes at different levels, from a report on condition through to a full building survey, and on the kind of property that sells at a discount the fuller version is usually the one that earns its fee. These are frequently empty, old, unmodernised houses with no owner who can tell you anything: nobody knows when the roof was last touched or whether the drains run where the plan says. Where a surveyor flags something outside their scope — damp, timber, movement, drainage, the electrics, the gas — that is an invitation to get a specialist in, not a formality.

Get a builder through the property as well. The cost of the works is one of the two largest lines on almost any of these deals, and a real quote against a real specification is the thing that turns "not yet assessed" into a decision you can actually make.

The solicitor

Instruct one before you offer, not after. Being able to name your solicitor in the offer is itself evidence that you are serious, and on a sale where speed is the currency, a firm that is already engaged is worth more than a cheaper one you have to find next week.

Choose for the property, not on price alone. Leasehold, probate and repossession purchases each carry work that a straightforward freehold sale does not, and a fixed fee that assumes the simple version tends to come with the simple version's attention. Your solicitor checks the title, raises the searches, reads the lease if there is one, examines the ground rent, service charge and any arrears, and looks at whether the landlord is consulting on major works you would inherit. On probate and repossession sales, expect the seller's own answers to be thin or absent, which means the title and the searches carry more of the weight than usual.

How long it takes

Nobody can honestly give you a number on a web page, because a purchase moves at the speed of its slowest dependency and the list is different every time. What is realistic to say is which dependencies exist and which of them you control.

Buying without a mortgage removes the lender and its valuation. Being chain-free removes everybody else's transaction. Those are the two you can remove, and removing them is exactly what makes a discounted purchase possible at all. What you cannot remove: the local authority's search, a management pack from a managing agent on a leasehold flat, the grant of probate on an estate, and your own solicitor's enquiries. Ask the agent and your solicitor what is realistic on the specific property before you promise a date — and then hold yourself to what you promised, because that promise is what you were paid for. Where a deal sheet has been published it carries a project length in months and a holding cost, so a timetable that slips shows up twice.

What we can offer instead of a rule is what we have seen ourselves. Across our own buying in the current, slow market, cash in to cash out — from committing the money to having it back out again — has been averaging around seven to eight months*, and individual ones have come in well under that and well over it. Take it as a sense of scale rather than a timetable. It moves with the property, with the chain, with how much work is needed and with what the market does while you hold it, and both a refurbishment and a lease extension lengthen it. It is our experience of the market as it is now, not a forecast of yours, and nothing about it is something to plan a commitment around: your solicitor and the selling agent are the people who can tell you what is realistic on a particular property.

The particular checks: a short lease

• The exact unexpired term, taken from the lease rather than the listing.
• Whether a lender will lend at that length — and if you might sell it on, whether a lender will lend to your buyer either.
• The ground rent, how it reviews, the service charge and its history, and any major works currently being consulted on.
• Who the freeholder is and whether they can be found. An absent freeholder makes an extension slower and more expensive.
• Whether the seller has already started the extension process, and whether the benefit of that can pass to you.
• What an extension would actually cost, from a valuer who does them. The cost rises as the term falls and climbs sharply once a lease drops below about eighty years. Leasehold law has been under reform, so this is a question for a solicitor and a specialist valuer rather than a guide.

The particular checks: a probate sale

• Whether the grant of probate has been issued and, if not, where the application has got to. A sale cannot normally complete without it.
• Who has authority to sell, and whether every executor has to sign.
• Whether anybody is living in the property, and on what basis.
• That the property information forms will very likely come back "not known", so your survey and your searches are doing the work instead.
• The state of an empty building: services turned off, a heating system that has not run for a winter, and insurance. Under the standard conditions used in most sales, risk passes to you at exchange rather than completion — check with your solicitor what you need in place, and from when.

The particular checks: a repossession

• Exactly how further offers will be handled, and until what point. Get the answer in writing before you commission anything.
• Your own limit on what you are willing to spend on a purchase you might still lose.
• That there is no seller's information, and often no certificates or guarantees for work carried out over the years.
• The condition, including anything that may have been removed, and whether what is left is what was in the photographs.
• Who is setting the completion timetable. On these sales it is usually the lender, and it may not be negotiable.

Before you commit

None of the above is a substitute for your own advisers, and none of it is a reason to buy any particular property. The figures on our deal pages are estimates* published so that you and the people you pay can test them — see how we value a property for what they are built from, and the glossary for anything on this page whose meaning is not obvious.

*Estimates based on comparable sales and local data; not a valuation and not guaranteed. Always do your own due diligence.