Selling your home is stressful at the best of times, especially if you are part of a housing chain. You may breathe a sigh of relief when you accept a buyer’s offer; but don’t hold your breath. Recent figures show that up to 35 percent of UK house sales fall through between an offer being accepted and exchange of contracts. This additional element of uncertainty is far from welcome, especially in a housing market already beleaguered by concerns over Brexit.
Spoilt for Choice
In a market flooded by properties, and with the likelihood that your sale will collapse at an unprecedented high, these are challenging times if you are looking to sell your home.
‘Historically, property was very much a seller’s market,’ explains Paul Miller, Head of Residential Conveyancing at Sweeney Miller. ‘Now it’s a buyer’s market. There are plenty of properties on the market, so buyers are not willing to wait. They are more likely to be tempted by another property, or to drop out if the transaction is taking longer than expected.’
The ease with which buyers can browse for property online is also having an impact. ‘With the property websites and alerts,’ says Ryan Eve, Managing Director of Finest Properties, ‘buyers are fully up to date with new properties coming onto the market and can be tempted to view other properties, even after agreeing to purchase something.’ This can be an additional factor in causing property chains to collapse.
No Completion, No Fee
Due to changes in the way some conveyancing firms operate, buyers are able to minimise the initial financial commitment they make in pursuing a house purchase. This makes it significantly easier for them to walk away from the agreement without incurring substantial financial losses.
‘A lot of conveyancing firms are offering “no completion, no fee” ‘, says Paul Miller. ‘In these cases it doesn’t really cost the buyers to pull out. They may stand to lose search fees, but they wouldn’t lose anything in terms of legal fees. So buyers’ commitment level is effectively very low.’
This colourful term may sound like it was lifted straight out of a Roald Dahl storybook, but its implications are far from fairytale. It refers to an increasingly common practice, where a buyer will wait until contract exchange is imminent and then substantially lower their offer.
‘Buyers often use that as a tactic,’ acknowledges Paul, ‘especially if they are in a chain. They know that the seller is desperate to keep the chain together and that it will collapse if the buyer pulls out. This approach is common with property investors in particular. They will do everything they can to delay, then at the last minute say “if you want me to buy, I’m going to drop my price”.
Knowledge is Power
While there is no way of avoiding unscrupulous buyers entirely, you can limit your chances of being scuppered by gazundering by being transparent with prospective buyers from the outset. This way you minimise their opportunities to claim they have just discovered a fault with your property and demand a price reduction at the last minute.
Transparency starts, of course, with a good working knowledge of the features of your property. Being aware of any faults, and hopefully having taken some steps to address them, puts you in a position of much greater power with potential buyers.
‘Being aware of your own property and its defects before presenting to the market can be a real advantage,’ comments Paul. ‘I’m aware that Home Information packs were much maligned, but they did help, in the sense that the seller had already done a lot of the groundwork and was coming to the market from a position of greater knowledge.’
Alex Hunter of Silverstone Residential Surveys agrees. ‘Getting a house sale-ready is definitely something that needs to be considered,’ she says. ‘Sadly, efforts in the past to make this a requirement of sellers, such as through Home Information packs, fell flat as people were unwilling to spend money before even putting their house on the market, creating a negative impact on the housing market.
‘A house is often the most expensive purchase someone will make in their lifetime,’ continues Alex. ‘A lot of common defects that can be disruptive and expensive to repair are hidden unless you know what you are looking for. That is why both buyers and sellers alike would benefit from getting professional advice and knowing from the outset what works need to be done and how much they are likely to cost.’
Know Your Own Worth
Understanding not only what the issues are with your property, but also what putting them right is likely to cost will paint a more realistic picture of its value. You can substantially mitigate the risks of buyers dropping out or substantially lowering their offer post-survey by ensuring that your asking price is realistic in the first place.
‘The key is to ensure that your property is presented as well as possible and priced sensibly,’ explains Ryan Eve of Finest Properties. ‘A huge hurdle in the current market is trying to justify your price when similar properties are being reduced. It’s important to get honest advice from your agent on strategy.’
Invest in Experts
You can vastly increase your chances of seeing your sale through to completion by engaging experts to guide you through the process, and crucially, keep the transaction moving at a good pace.
‘There has been a sharp rise in the use of “factory conveyancing” firms,’ explains Paul of Sweeney Miller. ‘They are a false economy because they use inexperienced law graduates. Often they hit road blocks. You come to an impasse where something that should be done very quickly grinds to a halt because the person on the other side doesn’t know what they are doing.’
Communication is key to keeping the links in your property chain well oiled. Experienced agents and solicitors can ensure that any potential misunderstandings are avoided by providing transparency and keeping your buyers well informed throughout.
Call the Shots
While it is inevitable that property chains will sometimes break despite everyone’s best efforts, being aware of what you can do to minimise the chances of this happening puts you in a position of strength. A useful way to maintain this position is by ensuring that you manage the timescale of the transaction by setting a realistic date for exchange of contracts from the outset. By setting a deadline, you increase the likelihood that the transaction will move swiftly, giving the buyer less room to manoeuvre and ensuring that you, and not the buyer, can call the shots.