Exploit The Housing Crash To Your Advantage

Twice I have been forced to accept a sale £10k below the agreed price, because the estate agents were crooks in my opinion,and they don't care if the seller lives or dies so long as they get fat commissions. May they all disappear, so that decent people can sell houses between each other

I believe that one should have to place a non-returnable deposit (of say 5% of purchase price) with the sellers solicitor once surveys etc have been completed. Before this time the house can stay on the market or removed at the discretion of the vendor. Any negotiations about final purchase should be completed following surveys and prior to the placement of the deposit. There should be a definite completion date set beyond which the deposit would be forfeit.

I am speaking as neither a buyer or seller.

It has not sunk in yet. Prices are still too high. The author of this article is wrong, 15% less asking price is not a good deal. In 2001 the same house was worth 45% below asking price, just check on the internet for past sales (eg houseprices.co.uk).

Just think, has the author's salary increased by 30% since 2002 so it is just to pay for a house now 30% than it was worth in 2002?

Anyone who owns property is both a buyer and a seller at some point in their lives, so it should be in everyone's interest to seek a fair and reasonable price for both parties. What goes around comes around. The system in Scotland has helped to keep prices more stable and controlled rocketing prices to a degree. Once an offer is made, it is legally binding, and if accepted,the house is taken off the market until contracts are exchanged. No gazundering or gazumping.

I'd pick up on Terrapin1's point that 'Twice I have been forced to accept a sale £10k below the agreed price, because the estate agents were crooks'

Presumably you picked the estate agents, and if not, had the chance to change or withdraw? I suspect that you went for the cheapest commission, the highest valuation and the smoothest promises about selling your house? Did you even look at an established local agent, (not just the brand name, but the people in it). Estate agents are like IFA's some are without doubt 'crooks', others are property professionals, that have to operate in the same marketplace.

I'm afraid you have no-one to blame but yourself, although if it is any consolation, you also represent the majority of the house buying and selling public!

I agree with most of the comments made. If you can stay out of the market for a while right now stay out until things settle a little. I don't want to bore everyone with my story as it happens to us all but. I have had three firm offers on my house (subject to contract)in the last 12 months each time someone further down the chain has dropped out. Each time it comes on the market again my estate suggests a lower price and each new buyer or so called buyers(mostly time wasters)wants to knock you down yet another 10%/15% or so, having reduced 12% already since last Dec 2007 I have had enough. In my case its time to get out for a while.

In Australia, when we put in an offer, it is typically accompanied by a signed contract. The agent takes the contract to the seller, and if the price is agreed, they sign and the deal is struck. There are usually 2 clausesin addition to the legal requirements. First, you have 1-2 weeks to organise a pest inspection (for termites whih eat whole housees for breakfast). The second clause states the buyer has 2 weeks to prove financing (which will mean they need the lender to conduct their survey for valuation in under 2 weeks.) If these time frames are not met, then the property goes back to market. A typical contract will aim for settlement in 30 days after initial acceptance. All time frames are negotiable at the initial signing but these are typical. Why mention this on a UK board? Well I spent 20 yrs in the UK buying and selling property - one purchase took 6 months to settle. I couldn't believe the efficiency of the Australian process. Just proves that their are better ways that work to everyones advantage than the system in the UK. Time it was sorted out, and no we do not have to organise sellers packs either.

Scotland's system (as I understand it) would work well. They set a minimum price for the house and prospective buyers bid independently and confidentially above that price. On the bidclose date , the seller chooses the favoured bidder (not necessarily the highest) and the contract is struck - moving date set. If no bids received, process can start again with lower minimum price.

The Australian system is best. Definite contract with penalties for non-performance.

The Scottish system is designed for tame sheep consumers - here's a price, now bid higher. The concept of someone bidding lower is totally alien to them. I'll be interested to see what happens now prices are dropping.

As far as prices are concerned they have along way to go yet. New buyers are going to have a far lower level of loan available to them, so the market is going to have to come down to meet them.

As far as bargains are concerned, I've always worked on the principle that a bargain isn't a bargain unless you can afford it.

Why does evryone still believe prices will crash?
I need to look up the detailed figures/dates again, however I believe from what I have read ,even during the last "crash" prices fell less than 3%, and I wish I had been in a position to buy several houses back then as the prices have doubled twice since then, and on average prices rise just over 10% per annum........sorry short on detail, I might be back !
With a shortage of supply, increasing numbers of single people, smaller households, and net increase of people coming in to the country prices will rise again. I may have to wait ten years but they will rise.

Hi, those of you who believe the Scottish system is better are very wrong. I gave up trying to buy in Scotland after 4 years of being unsucessful. I managed twice to be the highest bidder and did not want to pull out of either property, yet I still lost the properties. Greed by people with local knowledge of a rising market, caused my first purchase to collapse when the Solicitor instead of completing the sale, threw me out stating "Conflict of Interest". Secondly, the solicitors not carrying out your instructions. Found out a year later from the Estate Agents why I had lost the 2nd sale. "Oh, your solicitor withdrew from the Sale", was the comment. At one point, to have any chance of being successful in getting a property you had to bid double or even treble the price, which made them as expensive or even more expensive than similar properties in England. Once you sign a contract in Scotland, it can't go wrong. Wrong again, you just need to be thrown out by your solicitor for "Conflict of Interest" and the contract is null and void. If someone then gets in with an offer before your new solicitor puts back in your offer, you have lost the property. If I had to choose which system, English or Scottish, give me the English system anyday, even with its faults. The Scottish system cost me a lot of money and a lot of heartache. Eventually, I was priced completely out of the Scottish market because whilst my money was sitting in the bank or at a Solicitors, the market rose too high and I could no longer afford the properties.

Susan1206, I couldn't agree more. I was about to type a similar comment.

Sites like the Fool always have people who have the people who have made plenty already so they think that any buyer that dares to do anything like gazundering is not very nice. The suggestions are all well and good that one should have to pay a 5% deposit that you'll lose if you gazunder.

But where is the support for the counter action that if one, as a buyer, is gazumped that you should get some financial compensation?

Everyone is out for their own end, which to be totally honest is fine by me, but you can't then take what is said on these boards as being anywhere near objective!

Come on house prices, DROP DROP DROP :-)

Dear YiamCross,
I guess that Gundwane made a reference to continental practices as in France. ie when you make an offer this is a binding contact with 10% deposit. You have then 3 months to sort out the mortgage. The Estate Agent will liaise with the what you call a Notaire. The notaire will sort out deeds, planning, specifics such as survey, Thermits.... On the day of exchange, all is done at the Notaire premises (law representative). If you withdraw from the offer, you loose the deposit to the benefit of the seller. ie, when the offer is made, the sell is quasi garented to go through. Again as mentioned previously by a member, if the market is going down, this may be wise to woke away from a sell or negotiate price reduction with risk to loose 10% deposit !!!!
Basically, when you prurchase a property, first you need to have discussed you need with the mortgage provider, make sure that you have 10% deposit in the bank, find property you want to buy, pay deposit, arrange the finality of the mortgage and garanties, after 3 months (maximum legal time)mortgage provider transfer money to notaire, notaire give all offical documents and keys. All done in max 3 months.
No chain !!! No survey at buyer cost on property that you will not buy.
Also if the seller decides to retract from the offer, there is a financial penalty that also protect the buyer.

Hi Natreney,

Thanks for that.
I don't see much difference, though, except that from your description you would have to commit to buying a property without the opportunity to carry out a survey. Not something I'd like to do but of course nobody makes you buy a survey on a property here before you put your deposit at risk. I just seems a sensible bit of insurance & like all insurance, it costs.
I don't see why there would be no chain. I have a house to sell and I accept an offer from a buyer, who hasn't done a survey or any searches & may pull out if they turn out not to be what he was hoping for but at least I've got his 10% if he walks away. When I've sold it I can go out and buy myself a new house. There's something missing here & I'd expect the furniture storage market to be huge in France.
All this setting a 3 month limit, well again, I've bought & sold 3 times in the last 4 years & if you qualify your buyers properly, manage your estate agent well and have a decent solicitor I would say 6-8 weeks is easily achievable. I bought my first house way back 25 years or so ago in less than 4 weeks.
The only difference I can see here is that if you get stuck with a poor legal advisor or a dodgy notary or if any part of the chain outside your control fouls up, you could lose your deposit when the time limit expires.
But I think there are a lot more differences in France that make a comparison with their property market less useful than it may at first appear. I;m no expert but I think they have much tighter credit control, most people rent and so the volume of people buying and selling is much lower.

I'm about to buy a house. Having agreed the price in July on the basis of completion in 6 weeks, I 've had to wait three months for the vendor's idle, truth-economical solicitor to come up with the contract, replies to enquiries and various other things. In the interim, prices have dropped about 10% or so on equivalent properties in the area. This delay has had a knock on in other areas also, in terms of the time it'll take to do works to the house, to get a builder, to sort out other financial issues...is it fair for me to ask for a price reduction to share the pain of these issues and also reflect the drop in prices that has taken place?

it isnt a done deal until contracts are exchanged.

if you bought something in tesco for £300 and the next day they lowered the price to £200. You would not think twice about taking it back with the receipt and then re - purchasing it at the lower price...

I pursuaded my friend to gazunder saving him £5000 plus Stamp duty as it took him under the threshold.. lets jsut say he was a happy friend!!

okay this is a PERSONAL matter but it must effect other Fools and other peeps, too, so here goes!

on the death of a close relative, if their house is put up for sale at (say) £200,000, then I (obviously) wouldn`t wait until exchange of contracts and say, "oops, sorry, the price is 10% more than agreed"

so why should the buyer be legally allowed to say to me (or another person`s probate), "I`m glad we agreed £200,000, the house is well worth it. Here`s my £180,000 for it, then"?

It`s a ludicrous loophole and nothing to do with supply and demand

(PS: got to agree with TallPaul110 above, too, if the price of a loaf of bread was shown as £1, you wouldn`t take it to the checkout and say to the checkout assistant, "I`ll give you 80 pence for it," would you?!)

I have been involved in the property market for 35 years overseas and in England

A property is only worth what someone is willing to pay for it

I have generally found that most people think that their property is worth more than it really is.

The people you felt that they lost £10k should not have sold if they felt they could get a better price for it

Good point Elainsteed, but I feel that what drives the uk market has more to do with what people can afford to pay rather than prepared to pay.

There is little or no liquidity in mortgage markets, lenders are being cautious with valuations, and are demanding big deposits.

This business of making and accepting offers below the asking price confuses me. Going back to the Tesco analogy, you wouldn't take something to the till and suggest paying a lower amount - you'd either accept and pay the price or you'd leave the item on the shelf. So why do we not work the same way with property? (And cars for that matter!)

This business of it becoming common to make/accept offers below the asking price surely means that those people trying to sell will keep advertising their property at artifically inflated prices just to compensate for the fact that someone will probably make an offer of c.10% below... once they've accepted an offer it's likely they will then try to knock at least an equivalent percentage off the advertised price of the property they're buying just to keep things roughly relative.

So why not just advertise houses at a fixed price? Let people looking to buy decide whether to buy it at the price, or to leave it on the shelf. A price adjustment or a removal from market will always follow if there are no takers.

But I'd bet that this sort of system would make vendors think very carefully about their asking price in the first place if they wanted to be competitive in their local market. Meanwhile, buyers who can't afford it would stop carpet treading and wasting everyone's time as they would know the true asking price (as opposed to the presumed inflated advertised one) from the outset.

Gazumpers, gazunderers, greedy vendors and people making audacious offers are equally to blame for keeping the market unstable. I think a little more transparency, honesty and general common decency in the market would do no harm to anyone.

As one who has had my house on the market since June of 07, and having already dropped the asking price by 40% to what I paid in 04, I view the suggestion to gazunder with great distress. Estate agents do not seem to care whether they sell MY house. If house selling were more closely regulated, it would remove a great deal of uncertainty and anxiety for both parties. I like Graham Miller's suggestion, and I think I like the Scottish system (as I understand it). Why, in England, is a verbal agreement binding for everything except for such a major purchase?

A house/dwelling only has a value when it is on the market, particularly if it is one's only property and home. At that point it seems reasonable to expect that buying and selling prices would roughly equate. The people who buy and sell property as investment and for making money (often with no personal interest in the "commodity") make a mess of things for those who need somewhere to live. It seems to me that greater regulation would reduce the volatility of the "free market", and sticking to the price agreed in the first place would be a valuable first step.

Getting desperate.