Mismatched mindsets are halting many property sales across the country. The latest residential market review by Hamptons International found that vendors are still intent on achieving high prices, but buyers believe they can drive a hard bargain.
What vendors need to know
‘Sellers are very conscious of what their property may have been worth at the height of the market,’ says Jonathan Cunliffe, head of Savills’ Truro office. ‘Plus, they don’t see asking prices moving much, so they think the market’s fine. But offers are regularly coming in at 10%-20% below guide price, which comes as a real shock to many vendors.’
This issue is illustrated by the latest Land Registry Report on property sales in England and Wales, which shows that, although the average asking price is 3% lower than the 2008 peak, sales prices are 12% less. Ignoring this can seriously jeopardise a sale, according to Garrington’s Andrew Marshall. ‘It mustn’t be forgotten that the majority of buyers is attempting to purchase subject to the sale of their current home-any offer they make will be conditional on this.
If you keep rejecting reasonable offers in the hope of getting a magic number, you may never sell.’ And speed is of the essence in the current climate, according to Nick Wooldridge of Stacks Property Search. Even when a deal’s been agreed, there’s still a one-in-three chance of it not reaching a conclusion, often because the buyer is nervous about the shifting economy. ‘Sellers should try to maintain momentum, be proactive-don’t rely solely on solicitors and avoid being petty about what the buyer can have. Bond with your buyer by listening to his plans and sharing yours, helping him to commit emotionally to your property. Above all, however certain the sale looks, keep working at it; don’t relax until you’ve exchanged contracts,’ he urges.
What buyers need to know
‘With widespread speculation about the global markets, buyers believe they’re in control,’ explains The Buying Solution‘s Philip Selway. ‘However, the market is still dominated by over-optimistic prices, creating a battle of wills.’ Although some sellers are now revising prices, some buyers ‘want to go even further south, which keeps the expectation gap at about 5%-10%,’ says Savills’ Crispin Holborow. ‘If you’re seriously interested in a property and you’ve seen the price come down, it’s worth considering the current guide price-you’re guaranteed a profit when the market recovers, particularly on a high-quality house.’
Haggling may also cause more problems than it’s worth, notes property consultant Tommy de Mallet Morgan. ‘Most buyers are moving for lifestyle reasons, not for instant profit, and although it is possible prices may drop in the short term, so will the value of the home they’re selling.’ Besides, cautions Ed Heaton of Property Vision, the perception that there are lots of desperate sellers who will welcome any offer could not be further from the truth. ‘Some people need to lose a couple of good houses before they realise that quality still sells well.’
Rather than being paralysed by the fear of overpaying, buyers should adopt a different mindset, urges Mr Holborow. ‘Now is a great time to be an investment buyer in the UK: look for properties you know will be saleable in future and ensure the seller has done his homework when it comes to surveys and potential legal issues.’ And at a time when stock is short, Strutt & Parker’s Henry Holland-Hibbert suggests that if you see something you like but have reservations about the price, you should try to look for a compromise on that property rather than move on.
For example, says property finder Colin MacKenzie, ‘if the seller won’t budge on price, see what else they can offer. One of our clients considered a property overpriced a year ago, but changed his mind when it was offered to them with an additional 30 acres.’ However, says Mr Selway, in order to strike a deal without alienating the seller, you need to become the perfect buyer. ‘Get your finances in place and prepare to exchange rapidly. The seller is more likely to go with someone who’s ready to act than with the highest bidder.’
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