How to buy an apartment below market value

Recommendation points

• New buildings at the initial stage of construction
• Houses for demolition
• Encumbered property
• Social housing

A lot of people simply cannot afford to buy housing at the prices that are prevailing in the real estate market. But you should not despair, because there are several ways to purchase an apartment at a price below market. We will consider them in this article..

Real estate is the most valuable and desirable property for most people. Prices for it are constantly growing, reaching already sky-high heights for many people. For example, in Moscow the average cost of 1 sq. m apartment in August 2014 amounted to 219,183 rubles (5936.4 dollars)!

It is not surprising that many of our compatriots spend their entire lives in order to accumulate funds, which will be enough to purchase their own homes. Let’s see how you can buy an apartment at a price much lower than the market price, thereby saving several years of your life.

New buildings at the initial stage of construction

As you know, in buildings under construction, the purchase of apartments is possible at any stage of construction. The price for it will increase as the object is ready. If at the stage of “excavation” the cost of real estate will be 30-40% lower than that which the seller will appoint after the commissioning of the object, then at the stage of 70-80% of completion the difference in price will be only 10%.

For example, in the Krylatskoye district of Moscow, the price of apartments in a building under construction at the “foundation pit” stage starts from 148,000 rubles ($ 4008.46) per square meter. While the average cost of one square meter of real estate in new buildings in this prestigious area as of September 2014 is just over 199,000 rubles ($ 5389). Savings on the face!

Houses for demolition

The Moscow government has adopted a program for the demolition of dilapidated five-story buildings (the so-called Khrushchev buildings). According to Russian legislation (Articles 32, 89 and 132 of the Housing Code, as well as the law of the city of Moscow “On ensuring the housing rights of citizens when resettling and vacating residential premises (residential buildings) in the city of Moscow”), the city authorities are obliged to provide residents of houses for demolition equivalent housing in a newer home.

Thus, it is quite realistic to buy an apartment in Khrushchev for demolition, the average price of which, according to the Department of Secondary Housing of Inkom-Nedvizhimost, in March 2014 was 8.5 million rubles (230,815.67 dollars). And then get a new apartment instead of her in a monolithic building, the average cost of which in the same period was 12 million rubles (more than 325 thousand dollars). This is 3.5 million in net profit (almost $ 95 thousand)!

True, it is not at all easy to carry out such an operation at the present time. The prospect of such huge gains has generated an increased demand for demolition properties. Therefore, finding such an apartment will not be easy..

Encumbered property

There are situations when people who have taken out an apartment on a mortgage decide to sell it even before the full payment of the loan amount. Thus, this property is still pledged by the bank, so its selling price is much lower than the market price..

For example, currently in Voronezh, a 44-meter apartment pledged by a bank is being sold for 1,827,000 rubles (about $ 50,000), i.e. the cost of its square meter is slightly more than 41,454 rubles ($ 1,122.75 ). While the average price of one square meter of unencumbered housing in the secondary market in this city is now almost 20% higher – 51,576 rubles (1,396.89 dollars).

This way of buying real estate has its drawbacks. These include a rather complex scheme of such transactions, the need for the bank’s consent to conclude them, the impossibility of removing the encumbrance from the apartment until the mortgage loan is repaid, etc., but a very attractive price compensates for all the inconveniences.

Social housing

There are many social programs aimed at providing real estate to low-income citizens. For example, under the Housing program, young families may receive a subsidy for the purchase of an apartment in the amount of 30-35% of its cost.

Of course, because of the huge number of people who want to use this program, not everyone succeeds. But it is definitely worth trying to get cheap housing this way.