Whitehot property

Introduction - What is a whitehot property?

‘whitehot property’ is a term often used in the property industry to describe a home that a housing developer or a financial institution must sell and is therefore priced realistically to achieve a quick sale. This includes the sale on behalf of a homeowner who, for whatever reason, needs to sell their property quickly and will accept a more realistic price in order to achieve a quick sale.

Origins of the term

The term ‘whitehot property’ has become more prevalent since mid-2007 due to the instability of the property market. Before the market slowdown, developers and financial institutions would acquire property through various means without having to worry about achieving a quick sale. As the market slowed and it became harder and harder to sell property, developers and financial institutions had to make sure that their properties were marketed at a price that was likely to sell in difficult conditions. These realistically priced properties became known as ‘whitehot property’.

Where do whitehot properties come from?

Housing Developers

When a client purchases a new home from a property developer, their existing property is often used as part-payment for the new property through a part-exchange scheme. After the sale has been completed, the developer is left with a second-hand property. To make available the capital tied up in the property, developers usually put it on the market at a realistic price to achieve a quick sale.

Financial Institutions

Building Societies and any other Mortgage Lenders acquire property through repossession, prepossession or probate.

• Repossession refers to a financial institution taking back a property that was either rented or leased in a transaction or used as collateral after the occupant can no longer keep up payments. In order to release the money tied up in the property and achieve a quick sale, the financial institution will usually market at a price that is likely to sell.

• Prepossession services give homeowners on the verge of repossession a last chance to sell their home quickly at a price that will sell in the current market. The homeowner usually downgrades their home and uses the money made from the sale of their property to repay their debts and avoid repossession.

• Probate refers to the sale of a property of a deceased occupant. To release the capital tied up in the property quickly and without prolonged hassle for any grieving relatives, the property is usually marketed at a price that is likely to sell quickly.

Why are they attractive to buyers?

whitehot properties are particularly attractive for the following reasons:

• The owners are not worried about making a profit; just making a quick sale. This means that they will usually accept a price for the property that may be lower than equivalent properties in the area.

• The uncertainty of property chains is eliminated as the buyer is purchasing a property directly from a financial institution, not another home-mover.

• The sale of the property is usually managed by a property sale specialist, eliminating the possibility of unmotivated vendors slowing up the sale process.

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