Research and Facts
In the UK, the real estate industry has been one of the most stable industries that has survived the harsh economic environment for several decades now (Miles 45). The industry has been relatively stable. It experienced its peak in the year 2008. However, from the year 2009 and the preceding 2010, the industry experienced a relative downfall. Consequently, the interest rates also dropped making the return on order on asset investments to be less appealing. The fall in the sterling also made foreign investors to have the notion that the assets in the UK are relatively cheaper. The shares of real estate companies have also dropped in value due to the downfall of the market. They trade at a fraction of what they used to when the market was vibrant selling at a discount to be more appealing to the buyers. Respected investors, analysts, investment banks and real estate agents have publicly announced that the market is reaching the lowest level that has ever been recorded in history (Jones 14). They however predict that the market would improve and stabilize in 2011 due to the several factors, them being the increasing value of the sterling that has been experienced for the last few months.
From the above analysis, investing in the real estate industry at the present moment is a wise decision. While investing in the real estate industry at the present moment, an individual will be taking advantage of the cheap interest rates that are being experienced in the current moment. In addition, many assets are being sold at cheap prices. This is due to the high rates of inflation that are being experienced at the present moment. This has greatly reduced the purchase rates in the real estate industry. As a result, assets in the real estate industry are being sold at prices that are below their market prices. At the present moment, one is able to get the best property at the best price or even cheaper than the market value. This is what foreign investors are enjoying currently in the UK market. When the market will stabilize and prices go up these investors might sell their assets and enjoy abnormal profits.
The property of interest is in Avenue Road, London, one of the best places to own a home in London. Since it is a new house, it does not have any accruing rates, taxes or other related fees. It is therefore a prime property that should be considered for purchase. The mortgage of the house will be insured so that in case of any irregularities in payments or default the property will still be secure. The maintenance and repair costs will be minimal as the property is new. However, in case of any imminent repair and maintenance work, the agent has suggested a good repair and maintenance company with competent staff who have been credited to have high quality work in the area at a good price.
The property is a fully sized house. It is a three-storied mansion that is located at the corner of the street. The house is erected on a 2-acre land. This gives the occupants a huge tract of land to enjoy nature. The front lawn and the back yard offer a pleasant environment and beautiful scenery. The house has a double reception room. This can also be converted to be a full size office. The owner will therefore have enough space to work while he/she is at the comfort of his/her home. It also has a dining room and a kitchen that are fully furnished with state of the art furniture. This furniture is made from hardwood trees that are indigenous to West Africa. It also has a huge TV room. With the use of latest technology, this TV room can also be easily converted into a cinema room once a projector and a surround system are installed. The house also has five principle bedrooms. Each one of these bedrooms contains a toilet and a bathroom. There is also a library. On the backyard, there is a small garden that can be used to grow flowers and vegetables. This brings the country experience in the middle of the city. The property also has a balcony, terrace, mews, a swimming pool and private parking that can accommodate up to six cars. The house is fully furnished and has specious rooms. The house has a state of the art design that is appealing to the eye. There is constant availability of water. The houses have reservoir tanks that hold 50,000 liters of water capable of being used for three months without refilling. There is also piped gas into the house and electricity. The sewer system of the house and the area is very efficient.
The property is located on a favorable for commuting and shopping at Avenue Road and surrounding malls. The area is also very secure with regular police patrol within the area. Only a few incidences of crime have been recorded in the history of the area. From the research conducted, the rent in the area ranges between £ 8,000 and £ 15, 000 per month depending on the size of the house.
Analysis of Value
The real estate market in the UK has been declining for the last two years. This has resulted in a decline in the value of houses and the number of sales made in the country. Valuation of properties has thus become difficult due to the lack of enough data that is required for the exercise. There have been a few sales in the area where the property of interest is located. This has resulted in a lot of difficulty in estimating the value of the said property. It is therefore difficult to ascertain the exact value of this specific property. However, a number of estimators can be used to approximate the value of this property. This is essential in order to ensure that a wise decision is made as to whether purchasing this property is a wise investment at the present moment.
The real estate industry in the UK uses a number of methods to value property. The method that is preferred is the Market approach, although other methods such as the income approach are also used (Jones 132). To be consistent with the traditions of the real estate industry in the country, the market approach was used to value the property.
The market approach values a property with respect to the sales that have been made on properties of the same kind in an active market. This is by far the best method to value an asset especially when there is the availability of the relevant data required for the project. While using this approach, several factors were considered to get the true value of the property. First, the status of the industry was considered. Since the real estate industry was not doing well at the moment, the value of the house was expected to be lower than what it used to be in the previous years. Other factors such as market share and profitability and prospects of growth were also considered. All these factors together with the information concerning the sale of houses in the area gave an estimate of the house. The house was valued at £ 5,500,000. In comparison, the house was being sold at £4,650,000. The house was therefore being sold at the best price despite the market constraints that were being experienced in the industry (Ayadi 221).
Legal Forms
In the process of purchasing a house, several documents have to be prepared. These documents are used to show the legality and validity of the transactions which have been conducted to acquire a house. It is very important to have these documents from a legal standpoint. Closing forms, contract for deed, mortgage forms, owners finance agreements, purchase contracts and sellers disclosure and just examples of the legal forms that are required in the process of purchase and acquiring a house. All these forms should be drafted using a standard format that is accepted by the state. In this case, therefore, the forms should be drafted according to the requirements of the British government. One should stick to these formats because any deviations or irregularities may result in the forms being termed null and void. The forms should be prepared in good time in the course of the purchase.
Works Cited
Ayadi, Ingvar. The impact of a reference pricing system on brand name’s prices: the case of Tunisia. Tunis: Mashall publishers, 2009. Print
Jones, Mitchel. The 21st Century Economy. London: Sage, 2005. Print
Miles, Peters. Planning and Decision Making. Boston: Yale Publishers, 2002. Print