What does 'Guide Price' mean when buying a property?
Find out what Guide Price means when you are buying a property. 'What does Guide Price mean?' plus over 150 other property related terms and jargon in plain English
Guide Price
If you've been looking at properties which get sold at auction then you'll have seen they are listed with 'Guide Prices' but what does this mean and what should you expect?
At auction two prices are used for most properties
- Reserve Price - The vendor will not sell if bids do not reach this price.
- Guide Price - the price the auction house expects the property to sell for .... sort of ....
Yes, that's what Guide Price is supposed to mean but in reality auctioneers abuse it and will use a figure much lower than what the property is most likely to sell for.
Why? Bums on seats! If you have been looking for a house and the type you are after on the location you are after all seem to be about £100,000 but then you see an auctioneers brochure listing what seems to be your ideal place with a Guide Price of £75,000 then what are you likely to do?
Then things work like all normal markets - cram lots of eager buyers into one place at one time and hope they get carried away with themselves in the manic bidding atmosphere. The truth is they often do and some properties sell at auction for a higher price than they would when listed with an estate agent.
A property on the open market gives potential buyers time to think things over. In an auction room being indecisive for a few seconds will lose you your des res and that sense of urgency makes people bid more than they would offer via an agent.
Last week you thought £100,000 was pricey, in the auction room you end up paying £110,000!
Only once in a blue moon does a property sell at or near the guide price so keep your expectations realistic. Auctions are not the home of bargains that they once were.
For the full detail on buying at auction pick up a copy of my book How to Really Buy a Property
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How to Really Buy a Property
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"... the market works over the short term and the long term;
The difference between property bubbles and property booms;
Why it can be a good idea to buy when prices are falling;
The principles of buying a property to let and what the text books don't tell you;
Ways to get on the property ladder..."
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Chapter 1:
The First Questions Are For You
"... financial commitment, and risk, is about to get even larger.
Many might say they are only purchasing because they need a home but without a doubt they would not want its value to be half the buying price when they come to sell.
You may be tempted to think about asking someone "Is now a..."
"... Rent? -
Even if you believe property prices are going to move down this does not always mean you would be better off to wait. That kind of thinking leads to a common error made by those renting who forget to take into account their current costs while deciding whether or not to buy.
Here is..."
"... is a simple example. A couple are renting for £1,500 per month in a property worth £250,000. They believe property prices will move down 10% over the next two years so they will wait until the value is £225,000. But in the meantime they will spend £36,000 on rent. A mortgage could have cost them about £12,000 over the same time..."
"... they are right about price movements then by renting they have lost £24,000 (£36,000 - £12,000) and saved £25,000 by not buying. Overall they are better off by only £1,000 and all this time they have not been in their own home. If they are wrong and prices move up their loss is substantially..."
"... My Motivation to Buy? -
The press and the media are obsessed with property prices. The hankering question asked month by month revolves simply around whether or not prices will rise or fall and for many buyers this overwhelming storm clouds their own considerations.
In reality many people..."
"... assumption is that when property prices are moving down only the insane or the risk hungry investor are out buying. But in reality falling markets are often seen as a window of opportunity for those looking to upsize. Even though their current property is worth less, so is the type of property they are looking to buy, and the cash difference is actually..."
Chapter 2:
The Media and Property Prices
"... generally only when a whole economy goes into a major recession.
What sources the media use when reporting property prices and why these can be misleading;
How media reports are often out of sync with the actual market;
How property prices rise and fall all..."
"... reporting property prices and why these can be misleading;
How media reports are often out of sync with the actual market;
How property prices rise and fall all the time;
How the media manipulates figures to create headlines;
How to know which journalists report accurately;
Spotting..."
"... is a 'news' story and what is a 'new' story;
Real examples of where the press has mislead buyers and sellers.
- What the Media Use to Predict Property prices -
There are many sources of data to tell journalists what is happening to the housing market. Here are just a few:
Land..."
"... are many sources of data to tell journalists what is happening to the housing market. Here are just a few:
Land registry;
Asking prices (as reported by agents);
New applicants registering (as reported by agents);
Mortgage application numbers (as reported by lenders);
Average incomes..."
"... most frequently misleading reports are based on land registry, a popular source because their figures are definitive. Definitive, but out of date. Even so this is how the media reports versus the reality of the annual property cycle in which prices rise and fall twice a year (the Annual Property Cycle is covered in the chapter Understanding the Property..."
"... figures are out of sync with reality because in November and December the value of offers agreed are generally falling but the media reports the completions from the autumn when prices were going up. When the spring arrives offers agreed are rising but the media reports the completions from offers agreed in December and suggests prices are moving down. As summer starts they report prices rising even though offers agreed are falling. In short those who write articles based on land registry data are always about two to three months behind the real market where deals are being done...."
"... out-of-sync reporting is summarised on the table below:
Season RealityLand Registry
Media
Spring
prices Rising
prices Falling(Winter Completions)
prices Falling
Summer
prices Falling
prices Rising(Spring..."
"... on the table below:
Season RealityLand Registry
Media
Spring
prices Rising
prices Falling(Winter Completions)
prices Falling
Summer
prices Falling
prices Rising(Spring Completions)
prices..."
"... Registry
Media
Spring
prices Rising
prices Falling(Winter Completions)
prices Falling
Summer
prices Falling
prices Rising(Spring Completions)
prices Rising
Autumn
prices Rising
prices..."
"... Registry
Media
Spring
prices Rising
prices Falling(Winter Completions)
prices Falling
Summer
prices Falling
prices Rising(Spring Completions)
prices Rising
Autumn
prices Rising
prices..."
"... Rising
prices Falling(Winter Completions)
prices Falling
Summer
prices Falling
prices Rising(Spring Completions)
prices Rising
Autumn
prices Rising
prices Falling(Summer Completions)
prices..."
"... out-of-sync reporting is summarised on the table below:
Season RealityLand Registry
Media
Spring
prices Rising
prices Falling(Winter Completions)
prices Falling
Summer
prices Falling
prices Rising(Spring..."
"... out-of-sync reporting is summarised on the table below:
Season RealityLand Registry
Media
Spring
prices Rising
prices Falling(Winter Completions)
prices Falling
Summer
prices Falling
prices Rising(Spring..."
"... Falling
prices Rising(Spring Completions)
prices Rising
Autumn
prices Rising
prices Falling(Summer Completions)
prices Falling
Winter
prices Falling
prices Rising(Autumn Completions)
prices Rising
Outside of..."
"... Registry
Media
Spring
prices Rising
prices Falling(Winter Completions)
prices Falling
Summer
prices Falling
prices Rising(Spring Completions)
prices Rising
Autumn
prices Rising
prices..."
"... Registry
Media
Spring
prices Rising
prices Falling(Winter Completions)
prices Falling
Summer
prices Falling
prices Rising(Spring Completions)
prices Rising
Autumn
prices Rising
prices..."
"... Rising
prices Falling(Summer Completions)
prices Falling
Winter
prices Falling
prices Rising(Autumn Completions)
prices Rising
Outside of misreporting the annual cycle the media also likes to manipulate any statistics it can to..."
"... out-of-sync reporting is summarised on the table below:
Season RealityLand Registry
Media
Spring
prices Rising
prices Falling(Winter Completions)
prices Falling
Summer
prices Falling
prices Rising(Spring..."
"... of misreporting the annual cycle the media also likes to manipulate any statistics it can to make a story, and property is always a good story. Sometimes it may just be poor reporting and research that leads to headlines of "Property prices leap 20%" but when reading media articles about real estate values there are several ways to know if the story is worth the paper it is written on...."
"... investigate the figures yourself. House prices do not rise consistently month after month as we will see in Chapter 4: Understanding the Property Market. Global events also cause fluctuations that either change or exacerbate the cycle. An example of this occurred in 2003 where the war on Iraq caused prices to drop by around 10-20% in central London. The war over, prices corrected themselves and then in the spring of 2004 rose another 10%. This lead the media to report that "House prices are rising by 18.5 per cent a year - Are we heading for a crash?" (The Independent, 3rd April 2004). Enough to make anyone think the market was over cooking itself. What the media didn't consider was that half of the rise was down to a recovery of the falling market that had occurred earlier due to people's fear over the war...."
"... even in a market as large as London, using data from 2001 to 2015.
Property prices move up and down all the time on a regional level and this provides plenty of fodder for journalists to get attention grabbing headlines
Taking the raw data from the graph it is possible to report the above..."
"... headlines
Taking the raw data from the graph it is possible to report the above in the following ways:
"House prices crash more than 5% in less than 6 months" using Q3 2001 to Q4 2001
"London market moving up more than 10% per year" using Q3 2015 to Q4 2015
"House prices static for months"..."
"... than 6 months" using Q3 2001 to Q4 2001
"London market moving up more than 10% per year" using Q3 2015 to Q4 2015
"House prices static for months" using Q2 2016 to Q4 2016
At an even more local level the media also loves to talk about "hot spots" on a month by month basis as if this..."
"... Q4 2016
At an even more local level the media also loves to talk about "hot spots" on a month by month basis as if this were some reliable guide as to the best areas in which to invest. price movements at this level are however, even more erratic as the following example shows.
At a local..."
"... positive and negative
Taking the raw data it is possible to report the above in the following ways:
"SW4 house prices crash more than 10% in less than 6 months" using Q1 2003 to Q2 2003
"SW4 house prices boom by over 40%" using Q4 2011 to Q2 2012
"SW4 house prices static for over 12..."
"... above in the following ways:
"SW4 house prices crash more than 10% in less than 6 months" using Q1 2003 to Q2 2003
"SW4 house prices boom by over 40%" using Q4 2011 to Q2 2012
"SW4 house prices static for over 12 months" using Q1 2003 to Q2 2004
In other words, no matter the headline you..."
"... in less than 6 months" using Q1 2003 to Q2 2003
"SW4 house prices boom by over 40%" using Q4 2011 to Q2 2012
"SW4 house prices static for over 12 months" using Q1 2003 to Q2 2004
In other words, no matter the headline you are after, you can find it in the data if you want to. The trouble..."
"... where the media do actually quote a source, do the obvious and find out how reliable that source has been in the past. As an example, in the Autumn of 2004 the Nationwide Building Society reported that property prices had fallen for "the first time in three years". This was certainly true according to their own records of what they were lending on. That was the key - what they were lending on...."
"... were lending on.
The definitive figures from Land Registry which included what everybody else was lending on and what had been bought for cash actually showed property prices had fallen twice in the last three years (and four times in London over the same time period!).
Sources of data..."
"...Sources of data from a lender can be very useful but they can also be distorted, often because of marketing or policy changes by that lender. It could have been, for example, that over these three years the Nationwide had been trying to attract more affluent borrowers and so as a result the value of property they were lending on was continuing to increase month after month. If this was the case the data would be a good reason to give everyone in the marketing department of the Nationwide a bonus but it does not accurately reflect true property prices.
..."
"... prices.
Further to the above point investigate how the source has come to their figure. This is crucially important. Take the headline, "Property prices expected to fall 30% in next two years". Read the text a little more and find the part, "according to the company XYZ".
Company XYZ..."
"... rise above 10% and
if the Bank of England increases interest rates to 10% and
if unemployment rises above 15% then
Property prices will reduce by 30% over the next two years
There is nothing wrong with this research and it may be very well argued but there can be plenty wrong with the..."
"... Saturday 3rd April 2004 The Independent Newspaper lead with a front page story that asked "Are we heading for a crash". Correctly they assigned quotes from the Halifax which said the rises were "just another milestone" but then perhaps the journalist became frustrated that no one would support his headline. He continued, "Some commentators believe that present house values are unsustainable and the only question is when, not if, the market will crash" but did not give any idea who this panel of experts were and where they got their information. The only quotable source he found to back up this view was a stock broking company which tried to compare house prices to..."
"... the same media outlets are quite ready to contradict themselves as in the case of the following headlines from the BBC:
1st March 2005: "House prices show slight increase"
4th March 2005: "UK house prices slip in February"
31st March 2005: "House prices dip worst in a decade"
5th April 2005:..."
"... themselves as in the case of the following headlines from the BBC:
1st March 2005: "House prices show slight increase"
4th March 2005: "UK house prices slip in February"
31st March 2005: "House prices dip worst in a decade"
5th April 2005: "House prices stage rise in March"
and so..."
"... from the BBC:
1st March 2005: "House prices show slight increase"
4th March 2005: "UK house prices slip in February"
31st March 2005: "House prices dip worst in a decade"
5th April 2005: "House prices stage rise in March"
and so on!
While the BBC, in recent years, has improved the..."
"... increase"
4th March 2005: "UK house prices slip in February"
31st March 2005: "House prices dip worst in a decade"
5th April 2005: "House prices stage rise in March"
and so on!
While the BBC, in recent years, has improved the quality of its headlines to include their source, this..."
"... equity, when the price of someone's home becomes less than the value of the loan they took out to buy it, is ever popular. As we have already seen, at a local level, property prices rise and fall all the time. This means there are always people in negative equity. Those who take out 100%+ mortgages are immediately in negative equity but there is little talk of it in the press when the overall market is..."
"... if it is time to scare monger about borrowing more than your property is worth (especially when the price of the property goes down) it is not hard to find one person in that position if it is fashionable enough to do so. If you can't find someone ask your sister's friend to pose for a photograph and then make the rest up, few know how to check the authenticity of a name and most simply want to gasp at the terrible..."
"... person needs to sell
It is not possible to rent the property out and cover the mortgage
There are not enough buyers on the market to achieve the price necessary to cover the repayment of the loan
For all of these to coincide is very, very rare and generally only when a whole economy goes..."
Chapter 3:
Making House Price Predictions
"... he might be right and then we will all lament how we should have listened to him all along... Who makes house price predictions;
What is the track record of RICS, the Nationwide, the Halifax, the Council of Mortgage Lenders, Hometrack, Capital Economics and..."
"... make predictions.
The British public have an insatiable appetite for property price predictions. This is hardly surprising since for many their home is also their largest financial investment. For others getting on the ladder is a constant preoccupation.
The media is only too happy..."
"... media is only too happy to oblige with regular stories based on the calculations of "experts". In Chapter 2: The Media and Property prices misreporting by the press, and the reasons they do it, is covered. But who are these organizations that they use and how accurate has their track record..."
"... have, more often than not, got it wrong. This year I've put that all into a graph!
Every year big names in the housing market make property price predictions but as you can see they are rarely on the mark!
For clarity where 'real' price changes are stated these are from the Land Registry..."
"... but as you can see they are rarely on the mark!
For clarity where 'real' price changes are stated these are from the Land Registry and the predictions of each party are their first predictions, not ones that they updated during the given year.
- The Royal Society of Chartered Surveyors..."
"... Chartered Surveyors (RICS) -
RICS system for predicting the future would have most statisticians turning pale. They simply ask their members "how they feel". If most are optimistic they believe prices will rise and if most are pessimistic they say prices will fall.
Strangely it actually seems..."
"... are pessimistic they say prices will fall.
Strangely it actually seems to work but only to the extent that they have been quite successful in staying on the right side of zero - they say prices will rise and they do, they will fall and they do.
Despite not being particularly accurate RICS..."
"... Nationwide has been collecting house price data since the early 1970s. As a lender they are able to see the number of applications coming in for approval and this gives an indicator of changes coming in the market. If less people are applying the market is beginning to slow and hence house prices may fall, so long as you assume supply remains..."
"... Unfortunately this simple "supply-demand" argument does not always work. If demand slows prices can only drop if supply remains the same or increases. But unlike fruit and vegetables houses are not perishable goods and so, as seen in 2009, supply can dry up as well and match the lack of demand.
..."
"... predicting.
- The Halifax -
The Halifax and the Nationwide are both famous for issuing their monthly year on year price change data. And historically they both have sound data on a national scale but accurate predictions have eluded the Halifax as well.
So much so that in recent years..."
"... so that in recent years they have started to forecast wide bands ... which isn't really forecasting at all.
In 2013 the Halifax kept to their wide -2 to +2% while prices rose 4%.
This wide range of possible price rises did pay off in 2018 when they predicted increases of "between 0 and..."
"... all.
In 2013 the Halifax kept to their wide -2 to +2% while prices rose 4%.
This wide range of possible price rises did pay off in 2018 when they predicted increases of "between 0 and 3%". prices rose 1%.
- The Council of Mortgage Lenders -
Like the Halifax and the Nationwide the..."
"... approach was used with a forecast of "may fall a bit or stay flat" which may not even technically be a forecast!
For 2013 they went for a no change prediction. prices moved up 4%.
For 2014 the CML started to predict volumes of mortgage lending instead of house price moves and for 2015..."
"... 2013 they went for a no change prediction. prices moved up 4%.
For 2014 the CML started to predict volumes of mortgage lending instead of house price moves and for 2015 limited their forecast to "more slowly".
From there on they rarely made widely reported predictions.
-..."
"... price moves and for 2015 limited their forecast to "more slowly".
From there on they rarely made widely reported predictions.
- Housepricecrash.co.uk -
Set up to discuss the impending house crash that was about to happen in 2004, and then 2005, and then 2006, etc. The site bought..."
"... up to discuss the impending house crash that was about to happen in 2004, and then 2005, and then 2006, etc. The site bought together lots of data from 2004 onward to prove prices must decrease. For many years they had an unstoppable belief that values must fall 50% and that this will generally happen at a rate of 10-15% per..."
"... historical data was not in their favour but in 2008 prices did start to fall and at 13% it finally matched the 10-15% prediction which prompted a raft of media reporters to suddenly hail Davis as the man who knew. But his forecast was actually for a 40-50% drop between 2008 and 2011 and in reality the market only moved 4% down over this time period before..."
"... the market only moved 4% down over this time period before recovering.
He has since removed this forecast and his name from the website which should perhaps be more accurately renamed wewantahousepricecrash.co.uk
- Jonathan Davis Wealth Management -
Davis moved on from..."
"... renamed wewantahousepricecrash.co.uk
- Jonathan Davis Wealth Management -
Davis moved on from housepricecrash.co.uk and started to be quoted as 'Jonathan Davis of Jonathan Davis Wealth Management.
Never one to give up Davis predicted a 10% drop in 2011 itself which was far from..."
"... an interview with Channel 4's 4Homes in 2012 he made a specific point that "Next year, all regions will fall in price ... It's a nonsense to say – as I hear every day – the London market is strong". His 2012 prediction was a decrease of 10% while prices actually rose 2% with London being one of the strongest performing..."
"... prices actually rose 2% with London being one of the strongest performing areas.
On Sky News in January 2013 he forecast a 5-10% drop over the coming year but twelve months later property prices were up 4%.
With such a bad track record Davis is a very good example of the media continuing..."
"... this they issue predictions which have largely been conservative but wrong.
By 2014 Hometrack showed signs of giving up the prediction game by limiting their forecast to a "prices would continue to increase".
- Capital Economics -
Perhaps the most well known gloom-sayer is Capital..."
"... -
Perhaps the most well known gloom-sayer is Capital Economics, advised by Roger Bootle. They tend to predict price decreases almost all the time. And when house prices are decreasing they predict even larger falls. Their track record for accuracy is disastrous as the following shows:
..."
"... decreasing they predict even larger falls. Their track record for accuracy is disastrous as the following shows:
Predicted a 20% fall between 2005 and 2007. prices rose 15%.
In December 2004 Ed Stansfield (spokesman for Capital Economics) said "our forecast of a 20% peak-to-trough drop in..."
"... 20% fall between 2005 and 2007. prices rose 15%.
In December 2004 Ed Stansfield (spokesman for Capital Economics) said "our forecast of a 20% peak-to-trough drop in average house prices - remains on track." prices rose 15% over the next two years.
At the start of 2009 they predicted a fall of..."
"... drop in average house prices - remains on track." prices rose 15% over the next two years.
At the start of 2009 they predicted a fall of 20% for the year. prices remained static
In December 2007 the BBC reported "To date they have been about as wide off the mark as is..."
"... December 2007 the BBC reported "To date they have been about as wide off the mark as is possible." Which puts it mildly and questions why they are still asked for their views. Ironically after nearly a decade of predicting a crash, and as house prices stood on the precipice in April 2007, Ed Stansfield from Capital Economics said "It gets to a stage when you can't keep saying a crash will happen while prices keep on rising". The following year prices dropped..."
"... will happen while prices keep on rising". The following year prices dropped 13%.
For 2010 Capital Economics made their strangest forecast yet. prices would "drop by 10% or flat-line or keep on rising".
But as you see from the graph they have have slowly given up on predicting big..."
"... a local level it is actually impossible to do what Zoopla tries to do. As any statistician will know there must be at least 30 pieces of data before anyone can start any accurate number crunching. For a particular post code then we need 30 transactions every month to create the data needed. So if we take, for example E3 3NH we find there have been no transactions in the last 5 years. There is nothing that can be done with this data (or rather lack of it) and so any price predictions based on them are..."
"... we zoom out to get more data, say to E3 only, we get the volume we need (over 3,266 sales in the last 5 years) but now the information has lost it's meaning for specific properties on specific roads. We can come to a fairly accurate estimate of average local prices but there is no way of knowing how that relates to an individual property - unless every home in the postcode was..."
"... there is no way of knowing how that relates to an individual property - unless every home in the postcode was identical.
- So Who Can Make House price Predictions? -
In general the answer is no one. Property prices, like stocks and shares, have too many factors in them and many of these..."
"... House price Predictions? -
In general the answer is no one. Property prices, like stocks and shares, have too many factors in them and many of these are purely based on confidence and emotion - both of which can be highly irrational in a positive or negative sense.
- The Hidden Agenda for..."
"... are purely based on confidence and emotion - both of which can be highly irrational in a positive or negative sense.
- The Hidden Agenda for Making House price Predictions -
So why do organizations continue to make predictions? Put simply it is because we want them. But always remember most..."
"... Alternatively Housepricecrash.co.uk, as it's name implies, Jonathan Davis and Capital Economics would like to see values drop so they can be vindicated. Like a man who tells you it is going to rain tomorrow, they know they will eventually be right, even if it is only a light shower once a month.
..."
"... to ask organizations and individuals for their views, even if their track record for accuracy is highly dubious.
- UK House price Predictions and the Regions -
More than ever, since the start of the Credit Crises, property prices in the United Kingdom have fragmented and so..."
"... than ever, since the start of the Credit Crises, property prices in the United Kingdom have fragmented and so predictions at a national level hold little value to buyers. in 2012, for example, London property prices rose nearly 9% according to Land Registry while Scottish properties dropped 3%...."
"... according to the Nationwide's price data if the potential owner of an average UK property had been listening from 2003 to the start of 2011, and had been waiting for prices to drop as Roger keenly and consistently predicted, then on an average property he would have been £44,000 worse off. So why a media organisation as prestigious as the BBC would suggest that we should have listened all along is a little strange, to say the..."
Chapter 4:
Understanding the Property Market
"... on this is and how it affects the market see Chapter 6: Property Bubbles and Market Crashes Property prices since 1975;
What drives property prices apart from salaries;
What will happen to property prices over the long term;
What is happening to the..."
"... market see Chapter 6: Property Bubbles and Market Crashes What drives property prices apart from salaries;
What will happen to property prices over the long term;
What is happening to the supply of new properties;
The likely..."
"... What will happen to property prices over the long term;
What is happening to the supply of new properties;
The likely effects of Brexit and Covid 19
The difference between..."
"... likely effects of Brexit and Covid 19
The difference between national and regional property markets;
How real property prices actually rise and fall every year;
When you should shop for a bargain and when you should shop for choice;
How you can end up trapped in the property..."
"... is amazing how many people delay buying because they believe the market is falling, or rising too fast, or the market is steady and so may fall, and so on. In their defense they are encouraged to do so by the media which loves to paint all price rises as worrying and all price drops as the possible start of something..."
"... particularly well to headlines. It is crucial therefore to understand that:
The current trend is for prices to continue to move up due to increasing demand for property and restrictions in new supply.
Regionally markets move up and down all the time but this is rarely reported.
The..."
"... new supply.
Regionally markets move up and down all the time but this is rarely reported.
The market has a traditional cycle that means that prices do move down quite regularly, usually twice a year.
- The Current Trend in the National Property Market -
The amount of land available to..."
"... amount of land available to build on is restricted and the number of people who want to live in the UK is continuing to increase. One overriding principle to remember, in London, is that property prices have risen, almost continuously, since the end of the Second World War. In some parts of the city they have doubled every ten years over this period...."
"... the problem by showing the decrease in the number of new homes being built over the last forty years:
Property prices: Land Registry. New homes built: GOV.UK - Net Supply of Housing
The credit crisis has decreased the number of new dwellings still further as construction companies..."
"... demand for individual dwellings.
The Office of National Statistics predict this number will rise to 10.7 million by 2039
- Brexit and House prices -
There has been an expectation among some groups that Brexit would lead to lower house prices. This was broadly based on the idea that..."
"... and House prices -
There has been an expectation among some groups that Brexit would lead to lower house prices. This was broadly based on the idea that if the UK had control of its borders this would reduce net immigration and so decrease the demand for housing.
There is some logic to..."
"... why previous patterns will not re-establish themselves.
In short, over the medium term, high immigration numbers look set to continue post Brexit providing increased demand on the housing market. In other words … higher prices.
Immigration aside some commentators pondered the idea that..."
"... aside some commentators pondered the idea that Brexit would trigger a recession that in itself would bring down house prices. However most economists never viewed leaving the EU as a recession causing event in itself suggesting instead that it would only lead to lower levels of growth over the long term...."
"... itself suggesting instead that it would only lead to lower levels of growth over the long term.
As such a Brexit induced recession looks unlikely and so does any substantial fall in house prices
- Covid 19 and House prices -
The long term effects of the massive economic shock that came..."
"... growth over the long term.
As such a Brexit induced recession looks unlikely and so does any substantial fall in house prices
- Covid 19 and House prices -
The long term effects of the massive economic shock that came with numerous lock downs is still hard to predict. The UK economy has,..."
"... now dealing with other after shocks such as high inflation.
In any normal times such a recession may have lead to a fall in property prices but there are actually a number of factors at play here which point to increases instead.
We would expect people, in normal times, to push what they..."
"... This is why we have the strange situation that the economy may be in (and out) of recession but house prices and the stock market continue to grow. For many savers property offers a place where their funds will at least keep up with inflation. Inflation which simply eats away at cash in the bank.
..."
"... will at least keep up with inflation. Inflation which simply eats away at cash in the bank.
The Covid related recession was fairly short lived so any substantial decrease in house prices is unlikely.
There is another argument that the government is keeping the economy alive via huge..."
"... borrowing remains historically low and there have been periods in the past when the UK economy has continued to grow even when debt was over 200% of its GDP so again it is difficult to see how this situation alone could trigger a recession that would be strong enough to bring house prices..."
"... the only Covid related factor that could effect house prices is a general rate of inflation higher than house price inflation. As of Spring 2022 that hasn't happened (House prices rose around 10% in 2021 while inflation stood at around half this at the end of December). If it were to occur it would only help reduce house prices in real terms as long as most people received pay rises in line with the higher inflation rates and there is little on the horizon to make that a realistic expectation...."
"...
- Property Market Summary -
All this points to long term price rises but we must be very clear here. Long term does not mean continuous, just that property prices will be higher in ten years time than they are now but there might be falls along the way.
As a perfect example most people..."
"... a perfect example most people believe property prices in London rose non-stop between 2000 and 2008 (when the Credit Crisis began) but the truth is very different. prices fell three times. Once in 2001 by 6%; then again in 2004 by 3% and once more in 2005 by 4%. They were not year on year falls but quarter on quarter so the graphs that most of the media use for reporting showed..."
"... media use for reporting showed nothing.
These fluctuations continue to this day.
The basic principles of demand and supply and all the basic economic data points to long term price rises for properties.
- The Difference with Local Property Markets -
National property prices dominate..."
"... - The Difference with Local Property Markets -
National property prices dominate the headlines and can often eclipse all else. But only investors search on a national level, most buyers are looking to purchase in a particular location.
So while, on average, property prices might..."
"... while, on average, property prices might increase or decrease - what happens on a regional basis can be quite the opposite of the national picture. Individual areas can experience their own booms and busts which leave some reaping extraordinary short term profits and others languishing in negative equity for years. These stories are rarely reported because, to the media, they have too small an audience to be..."
"... incidents often happen in 'up and coming' areas which experience waves of interest and a classic case is the London borough of Clapham. In 2001 it was seen as 'the next hotspot' following a major investment by the supermarket Sainsburys. Buyers rushed in pushing the price of two-bedroomed flats up twenty percent to around..."
"... the interest was short lived and the properties soon lost over ten percent of their values. Buyers at the peak were left in negative equity until 2004 when the area truly started to come of age. In a heated Spring market the same properties reached peak prices of £270,000 before once again falling back in the Summer and then recovering in the Autumn...."
"... happened between 2001 and 2004 demonstrated a mini boom and bust on a local level. It happens continuously across the country and is noticed only by those it affects. For the many who owned properties in Clapham over a longer time period, they may never have even known they were in negative equity as by 2009 the average price had risen to..."
"... November and December are like June and July. If you want a bargain and don't need choice get out there. A low offer but the promise that the vendor could have the money by Christmas will be temptation and as most other buyers are saving for the festivities you can expect to negotiate a low price.
..."
"... is a trap here that no end of first time buyers fall into. They go out looking in November just to see what is around and get an idea of prices. They decide to wait until the New Year to see more choice. In the New Year prices are rising. Everything they view is worse than what they looked at before Christmas but costs more. They keep looking and prices keep rising. They decide to wait for prices to fall which then starts to happen in the Summer. Now there is nothing to choose from and what is available, even at lower prices is still more expensive than what they saw before Christmas. They wait until Autumn but prices then start to rise again and although they may make offers, they base these on the Summer market and they are outbid by other buyers. Before they know it they have been looking for a year and spent thousands more pounds in rent. A £200,000 property now costs £220,000. All told the year has easily cost them over £30,000 in rent and lost capital gain. Defiantly some change areas and start the whole cycle all over..."
"... on the next page as a representation of what happens.
Despite what the media reports, prices actually rise and fall throughout the year. These changes reflect the way buyer and seller priorities change on an annual basis.
This is a rough outline and not to be taken in absolute terms...."
"... is a rough outline and not to be taken in absolute terms. Sometimes, for example, there are more properties on the market than there are active applicants. The pattern in the graph also represents 'price agreed' - what is actually happening in real time. Experience teaches you the traditional cycle but there is no resource on the web or otherwise to tell if, for example, the market has reached the bottom of the summer slow down or the top of the spring rise. The figures that you see reported statistically are usually completions or mortgage applications and these can refer to sales which were agreed any time from one week to six months..."
"... - Variations in the Annual Property Cycle -
The annual property cycle is knocked off course from time to time by outside events which cause a loss of confidence in property, just as some events cause the price of stocks and shares to plunge.
Recent examples include the 9/11 attacks on the..."
Chapter 5:
Is the Property Market Overvalued?
"... not seem to apply;
How the market innovates;
When historical data can be misleading;
Why applying logic doesn't work;
Why calculating price per square foot doesn't work;
The true story of a buyer who paid twice the asking price.
- Modelling the Property Market -
First time buyers..."
"... data can be misleading;
Why applying logic doesn't work;
Why calculating price per square foot doesn't work;
The true story of a buyer who paid twice the asking price.
- Modelling the Property Market -
First time buyers and amateur investors tend to have a habit of modelling..."
"... and utterly wrong.
A perfect example was the Nationwide, much of whose business rests on the property market. In January 2013 they predicted house prices for the year would be static. According to their own records prices actually rose 8% in the following 12 months.
Capital Economics, a..."
"... actually rose 8% in the following 12 months.
Capital Economics, a major think tank with massive statistical resources at their disposal, predicted property prices would drop 20% in 2009 but they did nothing of the sort and remained static.
And they can just as easily be wrong in the..."
"... they can just as easily be wrong in the other direction. In late 2007 most lenders were predicting a market where prices would remain static the following year. By March they were all revising their forecasts again. The effects of unknown global events made prediction a very rough guess at..."
"... of unknown global events made prediction a very rough guess at best.
A full analysis of the 'property experts' used by the media and their track records up to 2012 is in the chapter Making House price Predictions
True Story - pounds per square foot in Kings Cross
Tanya wanted to buy..."
"... wanted to buy a two bedroom 890 square foot flat in the Ice Wharf development by Kings Cross. The property was on the market for £290,000 but this was beyond her budget. She spent hours on the internet investigating the sizes and prices of other flats in the area and came to the conclusion, with the help of a large spreadsheet, that the going rate for a flat in the area was £269 per square foot which meant the property she wanted was really worth about..."
"... put lenders and property sellers continue to find ways to ensure prices can continue to rise over the long term. In the 1960s this was the introduction of the mortgage. Highly unpopular at the time, when debt was frowned upon, they have now become a way of life and allowed property prices to rise faster than..."
"... Work -
One of the key measures commentators on the market use when speculating the future of the housing market are long term averages. For example, the logic goes that if the average property price has reached four times the average salary then real estate values can no longer move up.
But..."
"... afford to buy.
It was not always like this. At one time an apartment in the city centre was affordable but there came a moment when prices went beyond the local population and instead of falling back as economic models said they should, they just kept on rising.
And if that was the..."
"... New York, could the same not eventually happen in London, Manchester, Birmingham or any major town or city?
- The Connection Between Average Salaries and Average Property prices -
Average salaries and average property prices are in fact only related in the weakest of terms. Ask any..."
"... and Average Property prices -
Average salaries and average property prices are in fact only related in the weakest of terms. Ask any statistician to find you the correlation (connection) between the two and they will conclude it is extremely low.
Broadly this is because the..."
"... perfect example of this is North Wales where properties captured the imagination of residents from Manchester, Birmingham and London who purchased cottages for their weekend breaks and vacations. It wasn't long before locals were priced out because the market was, and remains, driven by 'foreign'..."
"... populations.
- Buying for Retirement -
This can be seen at work in Norfolk and Cornwall where large numbers retiring from the cities cash in their properties and purchase houses in more distant locations moving prices beyond the means of locals.
- Buying to Let -
This is especially..."
"... is especially prevalent in university cities and towns. Nottingham, for example, has a large student population and this attracts investors from richer cities such as London. Their earnings and purchasing power cannot be taken into account, neither can their numbers be predicted. In cities such as New York these investors have priced the local population out completely so the large majority of people expect to rent for their entire life. There is no expectation that prices will reduce so that they can..."
"... credit crisis which started in 2008 also demonstrated this effect. Many foreign investors saw British property has a safe haven while stocks and shares were volatile. Switching their funds to UK bricks and mortar may have had an impact in the way real estate prices did not waiver that much during the..."
"... the same way that buyers can drive the price of property above local affordability (on paper) there can also be scenarios where property prices are well within the grasp of the population but they just don't want to buy. In Germany, for example, there is a culture of renting with someone else taking care of the maintenance. Statistically property prices should rise dramatically as there is a large gap between prices and the buying power of purchasers but it doesn't as actual demand does not..."
"... favourite measure is to look at averages in historical data. For example taking the Nationwide's house price data from 1974 to 2010 the average rise per year is around 4.5%. Therefore we can conclude any annual rise above this is a sign of the market overheating. Or the long term average for mortgage debt is x% of GDP and so any figure above this must mean there are too many..."
"... property we can also produce meaningless information. According to the Nationwide the average price of a UK home at the end of 1999 was £74,683 but the average for the ten years before was £56,713. So it should follow that house prices would decrease back to their 'long term' average but they..."
"... it comes to making models and predictions even some of the most seasoned economists have come unstuck because of the way they apply logic to the housing market. Logic in economics has strong foundations and can be seen in daily life. If tea becomes too expensive people switch to coffee - substitution. If the price of petrol rises, consumption does not drop dramatically - elasticity of demand. And of course if property prices start to decrease people should stop buying -..."
"... Life is short - prices may be going down and it might be possible to buy the same property for less next year, or even the year after. But for the many who are buying a home that is two years of their life that they will spend in someone else's property and that is two years too long.
The..."
"... and, especially if an entire family is on the move, the potential loss is worth it to avoid the hassle of a double move.
True Story - Paying Double the Asking price
A house ideal for a well-to-do family had come onto the market in Kensington. prices were generally stagnant and the press..."
"... house ideal for a well-to-do family had come onto the market in Kensington. prices were generally stagnant and the press was full of stories about an imminent crash but this did not stop three parties all offering on the property at the asking price of £1.1 million. The vendor decided to ask for sealed bids. Each of the three parties would put forward their best offer and the highest bid would get the..."
"... In the event the highest bid was £2.1 million, nearly twice the asking price. When the buyer was asked why he had made such an offer he replied, "I want this house as a place to bring up my family over the next twenty years. By then I expect it will be worth about £2.1 million".
He..."
Chapter 6:
Property Bubbles and Market Crashes
"... markets;
Why the UK has never had a property bubble;
When the figures cannot be trusted;
Understanding the statistics;
How demand can fall but prices remain static.
In previous chapters we have seen that it is almost impossible to understand, let alone predict, property prices to any..."
"... In previous chapters we have seen that it is almost impossible to understand, let alone predict, property prices to any great degree of accuracy. The occasional person or organisation that does get it right once is then, more often than not, unable to repeat their success.
We have..."
"... bouts of over confidence and under confidence.
In the good times most people start to get carried away. They buy shares because the stock market always seems to be going up. They buy property because newspapers report ever rising prices.
To start with these increases are real. As a..."
"... cycle is moving into its' boom period.
Eventually there is an event, such as the global credit crisis of 2008, which shakes confidence out of the system, and a bust occurs. Shares slide, property prices sink and the economy moves into recession.
At this point, en masse, the population is..."
"... moves into recession.
At this point, en masse, the population is under confident. Concerned for their own lives and financial security they become over cautious and everything from the stock market to an apartment's selling price are below what they should be.
But economies move on and..."
"... some are lucky, some are not.
No matter what is printed on these pages, if you own one property or a portfolio and prices are rising, it is difficult to make that selling decision. If it were easy and everyone were level headed there would not be booms or busts.
- Confidence and Capitalism..."
"... of those who live in a country, or even a given location.
The truth is property prices are held up by, and increase because of, confidence. But then so are the stock exchanges, the banks and the whole of the capitalist system.
It is little wonder that Russian socialists during the Cold..."
"... fact, if anything, the crisis of 2008 has shown clearly to what extent nations will go to in order to maintain the essential confidence that glues the system together. In many countries, including the UK, protecting property prices from large falls was part of that plan and a political..."
"... as property bubbles.
For a property bubble to occur real estate must be over valued by the market in isolation. If, in 2008, the economy had continued to grow but house prices had started to drop then it could be said that there had been a property bubble.
A perfect example of a real..."
"... and individuals piled in, driving the share prices of on-line companies sky high, a bubble was occurring. The burn rate theory might have been right, this was new technology and virgin territory. But it wasn't. Investors pulled out, the bubble burst and share prices for many internet related businesses..."
"... early nineties saw houses prices fall as the economy moved into recession and rose as it came out the other side. The same events followed the 2008 downturn and in both cases changes in value from peak to trough were less than 20% . British property follows the business cycle of Boom and Bust rather than a separate and isolated Bubble and..."
"... boom-bust problem can also happen in a specific place or to a specific type of property. In 2001 the London borough of Clapham was tipped as the next hotspot. Young professionals keen to take advantage rushed in looking for two bedroom apartments in particular. This drove the price up to around £250,000...."
"... gradually became clear that Clapham was up and coming, but not that quickly, which caused a bust and two bedroom apartments lost around ten percent of their value. A similar situation in 2004 pushed the price skyward to £270,000 but only for around eight weeks before sinking back to the same value they had been selling for three years previously. In percentage terms these were relatively small changes and so reflect boom and bust rather than bubble and..."
"... is not to say the property bubble concept isn't valid and it does occur. Ireland was a striking example where prices moved up ever higher from the turn of the millennium. The collapse in values, over 50% from their peak, was far greater than the general recession of the country or any reduction in GDP. The business cycle had moved to the bust phases but real estate was much more than just bust, it was a burst..."
"... burst bubble.
Some Bulgarian resorts have also seen bubbles burst as foreign investors got carried away with rapidly rising apartment prices. Property moved far beyond the reach of the local population and when the buyers from abroad began to loose interest, the bubble burst.
- When the..."
"... into account.
The same is true of property prices. The more limited your geographic search, the more wildly the data fluctuates month by month. When less people buy and sell, as was the case following 2008, areas where data used to be reliable became of little worth.
And with every..."
"...
And with every decrease in transactions the possible degree of error increases. This is then compounded by the actions of supply and demand. If sellers don't want to sell or don't need to sell prices will not move down to meet demand. They will wait for demand to recover and move up again.
..."
"... the few who do need to sell must drop their price to meet demand and these are the reported figures. They are however misleading if the majority of sellers would not offer their property to the market at this level. Property has no "sell by" date and so the economic theory of supply and demand can become shaky or even stop functioning in any meaningful way...."
"... and busts are different from bubbles and bursts but they are often mixed up by the media. In Britain there has never been a true property bubble which burst on a national scale but it has happened locally. Instead property prices follow the booms and busts of the business cycle and a way to predict this accurately has yet to be..."
Chapter 7:
Why Buy in a Falling Market?
"... most buyers feel their feet turning cold there are actually very valid reasons to buy in a falling market. This does not necessarily mean prices nationally are reducing because, as we have seen in earlier chapters, local markets fall and rise all the time in a way that can be out of sync with country wide..."
"... want to buy has gone down by £50,000.
By choosing to buy in a falling market they have saved £25,000. A substantial sum of money. This difference is known as the "trading gap" and the more prices fall, the more a buyer will save when up-sizing.
- Why People Trade Down -
Second time..."
"... that have retired are a good example. After years working in a major town or city a move to a rural location is popular. The mortgage is paid off and the price of out of town property is significantly lower. Now it would be prudent, if the property market was falling, to hold off until prices recover and so walk away with the maximum amount..."
"... it time and time again so how can they?
Furthermore by the time the media is reporting a rise in prices the market is already well under way and they will be competing with the stampede of a herd who were also waiting for the same message.
So at some point they will feel values have..."
"... at some point they will feel values have dropped, values may drop further, but they will eventually rise. They also know that they will be in a good bargaining position to have an offer below the asking price accepted. Many see property as a ten year investment so even a 10% loss in the short term will not make a major difference to their..."
"... Let Investors Buy -
As far as purchase prices go their motivation is very much the same as speculators and developers (see above). But as an added bonus they know many perspective buyers have withdrawn from the market and a great deal of these will be looking to rent.
While values are..."
"... there are good profits to be made.
Summary -
Despite the somewhat grave and panic stricken picture painted by the media when property prices start falling, there are actually large numbers of people for whom it is good news.
There is also a substantial body of buyers who are not..."
Chapter 8:
Buying to Let / For an Investment
"... The traditional way to see if a property will give you a good income stream is to measure the yield or return. This is a percentage figure which will help you decide if, assuming the property price does not go up, your money would be better off there or in the bank. The calculation is as follows:
..."
"... would be better off there or in the bank. The calculation is as follows:
Total rental income for the year
x 100 = Yield
Purchase price
So if you were looking at a property that would cost £250,000 and the rent that it would achieve would be £1,300 per month the..."
"... that tend to offer the best yields are those not popular with private buyers. They are the ones that front on to busy roads, back on to railways, sit above commercial premises, are ex local authority, etc. The yield is good because the purchase price is lower for one or more reasons which has removed a large sector of private buyers as likely contenders. Tenants, however, only see a property as temporary and so are more relaxed about taking a view on living in a property that has a negative..."
"... living in a property that has a negative aspect.
You do need to remember that if you buy such a property, when you come to sell you are also going to achieve a lower price than a comparative property in the same area that has no draw backs.
- Killing the Yield and Making a Loss -
Most..."
"... yield is a fair one off piece of maths, prices will rise and so capital appreciation also needs to be taken into account. Many speculative investors for example, will accept a two or three percent yield on properties that they believe will rise thirty percent in value over the next two..."
"... well!
Does the area have or will the area have good transport links - Leyton in East London, for example, is only a few stops on the Central Line from the capital's centre and yet property prices are much lower than areas the same distance from the city but to the North, South or West.
Does..."
"... in North London was a classic example of all these things. It is three stops on the Northern Line from bank, has beautiful Georgian and Victorian Architecture, and a very large high street (Upper Street). These key factors helped the average price of a flat rise from £174,000 to £264,000 between 2000 and 2004. That's a fourteen percent return every year before you have even hung the 'To Let' board..."
"... properties before they are even built used to be a very popular and very profitable way of making a living. It is still very popular, just not very profitable. House builders had always, in the past, accepted the practice of selling off plan at a lower price than comparable properties that already existed in the area. This was in return for buyers who were purchasing something they couldn't see and hoping it would turn out nice. Modern computer technology and advanced show flats have allowed visualisations to become much more detailed, removing much of the risk buyers used to face. Further more popular books trumpeting the profits of buying off-plan have swamped the market with private buyers keen to believe there is guaranteed cash at the end of this rainbow. ..."
"... has all been to the delight of house builders who have increased prices substantially to the point where off-plan can actually be more expensive than comparable properties that already exist in the area . It can often take several years, however, for the market to catch up to these prices and it is now very easy to sit on negative equity over this..."
"... Angel Southside development in North London became available to buy nearly two years before the completion date. Although sales were slow nearly all flats were sold before the building was finished. Several flats then came onto the market for resale but all failed to sell for the price that some vendors had paid two years previously, despite a continually rising market it the area. It took another two years until the values in the local market rose enough to meet the prices some buyers paid...."
"... you are buying off plan be sure to check property prices in the area and no matter how glossy the brochure and how glitzy the show flat is ask the cold hard question: Would I be better off buying something that has already been built? As a double back up make sure you can cover the mortgage for a few months should your purchase be impossible to sell or difficult to rent...."
"...
Most developers sell new sites in stages and if there is a profit to be made, the best buys come in the first release. These can be offered at genuinely discounted prices so the builder can use slogans like 'First phase sold out in 5 days' when they come to selling subsequent stages.
But..."
"... was a development that spectacularly failed to sell well due to the very high prices demanded for off plan properties. The builder did however sell some apartments and in order to improve cash flow completed these first. As a result the flats became available while the communal courtyard was still rubble, the car park was covered in building materials and the whole development was covered in..."
"... better companies become wilder in their claims about profit potential and many new and more suspect businesses also entered the field, all offering similar services. Long before the Credit Crisis struck hundreds (perhaps thousands) were loosing money on purchases that were just simply overpriced, others were falling victim to full on scams where the investment company, developer, insurer, financier and sometimes even the surveyor providing the valuation, were..."
"... is a kind word. In reality people were buying over-priced properties that were impossible to rent at the rate that had been promised because they had simply not done their own homework. They were expecting substantial profit in exchange for no effort or risk on their part and some were stretching themselves financially on the naive assumption that everything they had been told was..."
"... is essential, when buying through a property investment company, to double check all their figures to your own satisfaction and this is something that can be done, in most cases, over the internet. First look at property prices and rentals in the immediate area. Next call local agents to see what actual values are being achieved. For example, is it the norm at the point that you are buying for property to be selling at 10% below the asking price and for tenants to be negotiating 5% off the rental values. These are the real market..."
"...Assume that the best a property investment company can offer you is a discount because you are buying in bulk along with others. Avoid gimmicks such as 'guaranteed rent for the first x months' as these suggest finding tenants will actually be difficult and this short term comfort zone will have been factored in to the sale price.
..."
"... All these things are likely to increase demand for housing but what is rarely considered is how much supply currently exists. If there are plenty of empty properties then all these improvements will achieve is a reduction in vacant homes with any major price increases being very unlikely.
..."
"... even if a large company was to announce it would be creating a presence in the town there is ample stock to soak up this demand and with terraced houses available for as little as £25,000 even a 20% increase in property prices would not make sense in terms of an investment once costs are taken into..."
"... reality buying to let or buying for an investment has always been a tricky business although it is made slightly easier when property prices are continually rising. But if you want to make a purchase that will perform no matter what the market is doing you will need to leave your emotions at the door and make cold, level headed decisions that require a good deal of homework on your part...."
"... would never have to leave his armchair.
This was property investment the way he wanted it - easy and seemingly safe. He did not check prices or talk to local agents about the area or street. He did not even make the four hour drive to visit the site.
In the event the values, both sale price..."
"... the event the values, both sale price and rental, were at the absolute top end of the market and the builders finish was poor which meant a number of items would need to be replaced in the near future. But Anthony had stretched himself financially and had no way to cover the mortgage payments as the properties lay vacant or to subsidise them when tenants moved..."
"... investment company blamed an unusual and unexpected number of properties on the market to rent was the reason he could not now get the yield they had promised in their literature and that there had been a temporary dip in the areas prices which they could not have foreseen. There was nothing in his contract with them that guaranteed anything within the sales brochures so there was nothing he could..."
Chapter 9:
Getting on the Property Ladder
"... out if you are better off buying or renting, even in a falling market;
Why it's worth buying where you don't want to live;
How to outpace price rises.
There are a couple of myths which need to be set aside. Myths that stop many people trying to get on the ladder.
Myth: You..."
"... are usually guaranteed for ten years.
A newly built property's value will change in the same manner as the rest of the market. When prices are rising you are gathering equity (profit) which will eventually become the deposit on your dream property.
Do not however assume that the new..."
"... says the first property you buy has to be one you actually live in? You can, for example, buy a property anywhere you can afford it. Rent it and wait for it to rise in value. You can then sell it or re-mortgage it to provide the deposit and/or purchase price for the place you actually want. Remember a canny buy in a particular area means you could outpace the prices in the place you want to live. For example in the London postcode of E3 between 2000 and 2004 the average price of a flat rose from £108,952 to £178,411 or 64%. Over the same time a flat in SW1, a much more desirable area, moved from £338,632 to £444,654 or 31% ...."
"... idea is slowly beginning to catch on with people not only starting to buy rental investments elsewhere in the city they live in but also in other cities where prices are expected to increase more rapidly such as Manchester and Birmingham. Those who pursue the 'out of their own city' option have become known as Mouse Holders. This is something to do with the way City Mice become Country Mice,..."
"...100%+ mortgages are not the evil that they are painted with but the press does like to jump on stories of people who have used them and then run into financial problems. This is simply confusing very useful products with people who cannot manage their finances. Don't let yourself get confused as well. How the press can manipulate stories is covered in more detail in the chapter The Media and Property prices.
..."
Chapter 10:
Working with Estate Agents
"... to sell?
£250,000 or less
Essential
Don't want to pay the stamp duty
Will do work
No preferance
If it is reflected in the price
This gives any agent a starting point. They can then show you some properties before you revisit the list. You may conclude..."
"... Story - A Property on the Market for 14 MonthsA house had been on the market for fourteen months in Northchurch Terrace, N1. It was placed on the market at £650,000 but this proved too expensive at the beginning. The vendor was not interested in reducing the asking price as she had no mortgage on the property and no urgent need for the..."
"... to bid higher.
One party did think the price was reasonable and offered the asking price. The other two parties believed they were being led up the garden path by the agent and knowing how long the property had been on the market assumed they could get a low offer agreed.
They only..."
"... on the market assumed they could get a low offer agreed.
They only realised the asking price offer from the third party was successful when they were told it had been agreed and the vendor was not taking their interest any further.
- Summary -
There are good and bad estate agents out..."
Chapter 12:
Choosing a Conveyancer or Solicitor
"... not buying with the disadvantageous of you not recommending.
In almost any location the choice of solicitors and the variations in price are mind boggling but there are quick and simple ways to narrow the choice down quickly.
Finding the right solicitor has nothing to do with price, this..."
"... the right solicitor has nothing to do with price, this is truly a field of getting what you pay for. If you are at offer stage and almost all of your savings have been taken up in deposit money and stamp duty it's tempting to try and save a few hundred pounds on the legal services. It's also a mistake that you will kick yourself for as you sit on hold, or wait for your fourth call of the day to be returned, or chase them to raise the enquiries that will allow..."
"... a city centre solicitor should understand the urgency of taking an agreed price to exchange in a highly competitive market. A point often lost on a solicitor in North Wales who may constantly tell you to relax and not worry about anything as he gazes out over the green hills contemplating what to do when he leaves at three o'clock that..."
"... permission from 1903!
Frank and Sarah had offered on a Mansion Block apartment in Clapham. The price was agreed but they wanted to use a solicitor based in Exeter because the firm had been recommended by a friend and was cheaper than any quote they had had from London.
The Mansion Block had..."
Chapter 13:
Your Own Homework
"... on the webpage https://howtoreallybuyaproperty.co.uk/property-resources.php What will happen to property prices where you want to buy;
How to check your credit record before the bank does;
How to find out if a property is in a flood zone;
How to check..."
"... this is a black hole many buyers fall down. There are numerous sources on the web with average house prices, average salaries and a wealth of other data which you can use to start building your own model of what will happen to the market. But these rarely work. A visit to the archives of housepricecrash.co.uk will reveal some very sensibly argued predictions that never came to..."
"... Property for? -
The last time a property was sold (if this happened within the last decade), and the value it sold for, are listed on the Right Move website at https://www.rightmove.co.uk/house-prices.html. In considering the current asking price you should take into account:
How long ago..."
Chapter 14:
Viewing Properties and Making Offers
"... affect on the value
80 to 100 years: again almost any lender will approve this but the perception of buyers may be that it is difficult to resell reducing the number of potential applicants interested. Note that any affect on price here is caused by perception, not reality
70 to 80 years:..."
"... than 50 years: It can now be difficult, but not impossible, to find a mortgage. The lender is expecting you to pay the money back over twenty-five years so as long as there is time to do that and you are not borrowing a large percentage of the purchase price a fair few companies might be interested. For many buyers fear over the ability to sell will profoundly affect the..."
"... all the charges to pay and restrictions to adhere to on a leasehold property it is not surprising that many Leaseholders decide that they would like to own the freehold of the building in which they live. Under certain conditions they have the right to buy the freehold from the freeholder at a "reasonable" price. It's a lengthy procedure but increasing in popularity, especially as it has a perception of adding value or desirability to a..."
Chapter 15:
How to Really Make an Offer on a Property
"... when it is of little financial benefit to them;
What to offer and when;
How the time of year will affect your offer;
When to offer below, at or above the asking price;
How to handle bidding wars and sealed bids;
Why defining your offer can save you money;
What should be in your offer..."
"... at or above the asking price;
How to handle bidding wars and sealed bids;
Why defining your offer can save you money;
What should be in your offer apart from the price;
How to make a low offer seem attractive to a vendor;
Why non-refundable deposits rarely work.
- Listening to the..."
"... put it another way if the Estate Agent is being paid 2% of the sale fee and the negotiator is getting 10% of that then on a £240,000 flat the negotiator is going to be paid £480. If you have offered £235,000 and the negotiator is trying to get you to the asking price he is not trying to get £10 (the commission he would earn on the extra £5,000), he is trying to make sure you do not get..."
"... buyers.
If a vendor is desperate they will still achieve the asking price (or more) if the market is booming. A property may also have been on the market for over a year but if prices have been rising the true value of the property may have been realised just as you start searching.
..."
"... your own desire for the property.
The graph below represents the level of offers versus asking price in an annual market cycle (see Understanding the Property Market) but you should take into account any factors that may have caused the cycle to vary.
Offers agreed above or below asking..."
"... should take into account any factors that may have caused the cycle to vary.
Offers agreed above or below asking price vary throughout the year in an annual property market that has not been affected by other factors
- Choosing your Offer Level -
The following outline the various ways to..."
"... affected by other factors
- Choosing your Offer Level -
The following outline the various ways to offer on a property.
- Paying Below the Asking price -
If you feel that there is a good choice on the market and you could as easily buy the property you are about to offer on as..."
"... for maneuver
In any normal market conditions this should never be more than 10% below the asking price. To go further may mean the vendor will want nothing further to do with you as they feel insulted. You may increase your offer later but he will refuse it on principle.
A very low offer..."
"... the negotiator will then be reluctant to show you further properties and move you to the bottom of his mental list of priorities.
- Paying the Asking price -
In a fast moving market seriously consider this. It is an extremely strong way of saying to the vendor, "I like your property, I am a..."
"... the net and thought, what an undervalued bargain!
A second line in avoiding this is to make your first offer just below the asking price before coming up. Exactly how to do this is explained in the section on pitching your offer below.
In exchange for offering the asking price you should..."
"... In exchange for offering the asking price you should expect, and request, that the vendor withdraws his property from the market although they may not be prepared to do this until you have instructed a solicitor and paid for a survey (i.e. spent some money yourself to show you are serious).
..."
"... do this until you have instructed a solicitor and paid for a survey (i.e. spent some money yourself to show you are serious).
- Paying More Than the Asking price -
No one ever starts by making an offer above the asking price but very often there may be more than one offer at the asking..."
"... one ever starts by making an offer above the asking price but very often there may be more than one offer at the asking price. In this instance a good agent will take the matter to sealed bids whereas a bad agent will start a bidding war. If it sounds like you are heading for a bidding war try and persuade the agent or the vendor to use sealed..."
"... versus the other buyer and when the dust settles they all too often regret how high they went.
In most cases bidding wars lead to an agreed price that then falls through in the cool light of day.
- Sealed Bids -
In this scenario the agent tells all offering parties to come back by a..."
"... two bedroom mansion block flat had been on the market for five months. The vendor had verbally accepted an offer £5,000 below the asking price of £137,500. Another party then offered to pay the asking price. The original buyer was offered the chance to match this which they did and so the vendor, faced with two very similar offers decided to go to sealed..."
"... original buyers had already, to some extent, damaged their standing in the vendors eyes by suddenly coming up with an extra £5,000 but they then compounded this by saying their sealed bid would be £137,500, the same as the asking price and their current offer. The other party offered £341,700 and their offer was accepted. The original buyers then came back and said they would be prepared to offer £343,000. It was too..."
"... could be further from the truth and so pitching an offer in a certain way should ensure your expectations are actually met. Whether or not you are ready to pay the asking price or just make an offer there is a way that is far more likely to work than simply bumbling in with your best and final..."
"... this does not work you can then say, "OK, £250,000 as long as the property is taken off the market and the carpets and curtains are included". Again it's something you would have insisted on anyway and something the vendor probably didn't want anything for. He will go away pleased that he got an extra £10,000 for simply taking the property off the market and throwing in some old carpets and curtains while you get the property you want at the price you..."
"... you be lucky enough to get the property for a lower offer than your top price you can go back to the agent and say, "I am assuming the property will be taken off the market and that the carpets and curtains are included. Can you confirm this?" If there are any problems offer a nominal amount, say £1,000 more to get things your..."
"... agents are poorly experienced or badly trained and not even they know how to really put up an offer. But the way you do it and the way you present yourself can make a substantial difference to the final price you pay. Sometimes it may allow you to get a sale agreed at a price the vendor would not previously have accepted, sometimes it may mean the vendor will sell to you and not someone else (even if the other party is offering..."
"... yourself in the shoes of the solicitor and consider their position. The more the buyer shines in terms of the way they have prepared for the purchase, the more comfortable the vendor is going to feel and the more likely they are to say to themselves, "I wasn't thinking of selling at that price but I will because I feel safer that this buyer is offering a low stress transaction for..."
Chapter 17:
The Property Buying Process in Theory
"... the property and pulls out of the transaction. Innocent comments, profound results.
Lines of Communication (once the sale price is agreed)
You, the Buyer
«»
The Estate Agent
«»
The Vendor
«»
Your solicitor
«»
The vendor's..."
"... solicitor
«»
The vendor's solicitor
«»
«»
Private Sales Only
«»
The parties officially involved after a sale price is agreed are:
You, the buyer
The vendor
Your solicitor
The vendor's solicitor
and the theory of what each party should do..."
"... party actually wants to talk about it. You may be concerned that if you express a wish to exchange quickly the vendor will perceive you as a desperate buyer in absolute love with their property. This could lead to them being slow or lazy in providing paperwork, relaxed that you are not going anywhere. The vendor may not want to tell you that he wants a rapid exchange because he does not want to appear desperate. He may believe that this will encourage you to attempt a renegotiation of the price before..."
"... party is scared to upset the other. This often happens in a market where the 'Balance of Power' is not even (see Chapter 18 by the same title). You may be desperately in love with the property or prices may be rising quickly. As such you do not want to upset the vendor by rushing him and so you tip toe round the issue waiting for a..."
"... are two ways to buy a property. You can purchase for cash or by borrowing. Either way you will need to put down a deposit when contracts exchange and pay the balance on completion. The deposit is normally between five and ten percent of the agreed price although it is possible to exchange with anything from zero to one hundred..."
"... result of the surveyors visit is a valuation. The surveyor will either agree or disagree with the sale price. The latter is known as a down valuation. Most buyers are unaware that, for this visit, the surveyor is not acting for them and can rightly refuse to tell them the result. He has been instructed by the lender (even though you may have paid the lender a fee for the survey) and only the lender can tell you the surveyor's..."
"... can tell you the surveyor's conclusions.
It is worth noting that the surveyor will never say a property is worth more than the agreed sale price even if he believes it to be so. He is only instructed to find out if it is worth the same or less.
The surveyor may decide that the property is..."
"... again it depends on your LTV)
You do not have the right to remain in the country forever
The surveyor is from outside the area and cannot agree with the price you are prepared to pay for the property
The surveyor is from the area but is out of touch with the market so does not agree with the..."
"... area and cannot agree with the price you are prepared to pay for the property
The surveyor is from the area but is out of touch with the market so does not agree with the price you are prepared to pay for the property
The surveyor has just been sued for over-valuing a property and so, being..."
"... not agree with the price you are prepared to pay for the property
The surveyor has just been sued for over-valuing a property and so, being unusually cautious, does not agree with the price you are prepared to pay for the property
There is a problem with the legal paperwork of the property which..."
"... a buyer there are certain inspections that you may want to carry out to make sure the property is in the condition that you believe it to be. The most basic and recognised is a survey. As a cash buyer you may simply want to carry out a valuation survey to get a second opinion of the price you think the property is worth. If you are applying for a mortgage the lender will have carried this out for their own records and will make you aware of the results (see..."
"... causes weeks of delay. It is surprisingly common!
The sale price is too low and the lender, not convinced the vendor can cover the shortfall between the outstanding debt secured on the property and your offer, refuses to release the title deeds
The Vendor has the title deeds but cannot find..."
"... the necessary paperwork to start the process. They did not do this earlier because:
they were not convinced the property would sell at the price they wanted and so they did not want to incur any costs
they had put their property on the market for both sales and lettings and were waiting..."
"... the Contract -
The vendor has agreed to sell to you at a certain price so as soon as the wording of the contract itself is agreed between the two solicitors he can sign the document and simply wait for you to sign yours when all the other paperwork is out of the way.
But many don't and..."
"... of the way.
But many don't and often it is because their solicitor does not push them to just in case there are any changes such as a renegotiation of the price after the property has been surveyed. By doing this, and saving themselves the risk of extra work, there is more risk.
What Can Go..."
Chapter 18:
The Balance of Power
"... Balance of Power has two parts, what is actually happening and who actually has the power versus what both parties (buyer and vendor) believe is happening and who they believe has the power. This means that just because you, as a buyer, may believe the market is moving down and want to renegotiate the price, the vendor may believe the opposite and think it is worth withdrawing from the sale in order to sell again for more money...."
"... that matches your requirements and budget
the market is rising
your rental lease is running out
you have a buyer on your property who has offered an extremely good price and wants to exchange fast
this is your dream property
All of these factors can change very quickly. Imagine you have..."
"... view the property.
Simon was a first time buyer and knew his strong bargaining position. Over a four day period he negotiated through the agent and eventually achieved an agreement at over 10% below the asking price – exceptional for the market place at the time.
The chain moved..."
"... Story - Chipping the price at Swan YardMelissa had made an offer on a one bedroom flat within sixty seconds of an underground station. It was a safe location and the property had been decked out loft style. The owner had been renting the flat but the tenants were shortly due to move out. Concerned at the prospect of paying two mortgages he reduced the price from £220 to..."
"... Melissa's offer came in at £195,000 he was relieved and agreed to it immediately. The transaction moved through to the point of exchange within five weeks. At this point Melissa thought she would take a chance and, giving lots of arguments about a falling market (which did not exist) told the vendor that if he wanted to exchange he would have to reduce the price by a further..."
"... two hours of Melissa attempting to renegotiate the price the vendor had decided that this meant there was no need for him to remain true to his word, if his buyer was not true to hers. He asked his solicitor to retrieve the contract and called the people in the flat upstairs to give them the good..."
"... the good news.
Melissa offered to exchange immediately at the original agreed price of £195,000 but this was still £10,000 short of an offer from buyers who had an excellent motivation to exchange on this particular property. She lost the property and all of her expenses.
..."
Chapter 19:
Time Costs Deals
"... the buyer or the vendor proceeding.
What makes the buyer stop buying
What makes the seller stop selling
House prices Falling
House prices Rising
Loosing their buyer
Loosing the Property they want to buy
Any part of the chain below..."
"... makes the buyer stop buying
What makes the seller stop selling
House prices Falling
House prices Rising
Loosing their buyer
Loosing the Property they want to buy
Any part of the chain below collapses
Any part of the..."
"...David, in the meantime, was close to exchange on his purchase when the vendor pulled out after loosing his job. David called the agent to talk about new properties he could buy and asked after Seymour Street. He was shocked to find that after nearly three months, and in the middle of a busy Spring market, it had not exchanged and immediately offered to pay the asking price.
..."
Chapter 20:
What a Property Survey Really Means
"... is crucial as if the surveyor does not agree with your offer price the bank won't lend. It is also the most valuable type of survey and probably all you need for almost any purchase. Most people are not aware that the valuation survey will also report on anything crucial that should be investigated. If they believe there is a serious problem with, for example, damp they will hold back all or part of the mortgage until it is investigated (see below). It is much easier to read a two page report that is very specific about major issues that will affect value than a fifty page report telling you that the aerial may need re-fixing and one of the windows in the back bedroom needs to be repainted in the next twelve..."
"... will probably come as a shock to find out how the surveyor actually works but it goes something like this. They visit the property and check for any really big problems that will affect value. They then look up and down the street for sold boards and 'phone up those agents to ask them what they have sold. In the modern world they can also check the history of sold properties in an area on the internet. If they find similar properties sold at similar prices they sign the valuation off and you get your..."
"... the absence of sold signs he calls any local agents and asks them what they have sold recently in the area and tries to match it up. There is nothing more to it than that. If you want to try it for yourself find a sold sign, call up the agent and say, "Hi, this is Fred Smith from Island Surveyors, I see you have sold something in the High Street, can I ask what it was and how much it sold for?". You'll get the complete run down including the actual price it sold for, not its asking price. Note that Estate Agents, by law, are not allowed to tell you (a buyer) the actual price a property has sold for until it exchanges as this is confidential information. Agents are however, always trying to please surveyors because they don't want properties down valued, so if you pose as a surveyor you will find out..."
"... one of the biggest waste of times in the whole home buying process. It is a valuation survey followed by a lot of speculation. You are likely to find out fascinating things like screws missing from plug sockets, wood that needs replacing in windows, kitchen cabinet doors that need to be fastened. The crucial thing on this survey is the valuation. If, with all the property defects, the surveyor still concludes the property is worth the agreed price then (unless the vendor is very desperate to sell) don't try to use it for negotiation. If the survey states that 'in it's current condition the property is worth x' and x is the price agreed then there are no grounds for..."
"... the surveyor, carrying out any of the above surveys, believes the property is worth the price you have agreed to pay for it all is fine. If, however, he sees a major problem such as damp around the windows he will suggest that the bank holds back a certain amount on the mortgage until it has been satisfactorily..."
"... retention can be a small amount or the total price agreed (usually in the case of suspected subsidence or other major structural issues). The best way to deal with them is as described in the remainder of this chapter. Take them in your stride, in most cases the issue is much smaller than the surveyor believes and retentions are removed after investigation of the..."
"... and Nicki doubted the difference in the two figures and instructed a second damp proof company who quoted £379 plus VAT. The vendor felt that the buyers were obviously desperate to reduce the price and if it wasn't this they would find something else in the legal paperwork so, having lost confidence in them, withdrew the..."
"... damp and so gets damp specialist in
Damp specialist says £3,000 of work required
Mr X tries to negotiate price, the vendor says , "The damp has never been a problem to me, when I moved in I took a view on it"
Mr X eventually successfully gets £1,000 off price and goes through with..."
"... price, the vendor says , "The damp has never been a problem to me, when I moved in I took a view on it"
Mr X eventually successfully gets £1,000 off price and goes through with deal
Three years later Mr X sells his property
Mr X gets an offer which he accepts
Mr Xs buyer has a survey..."
"... buyer has a survey which shows up damp
Mr Xs buyer gets a damp specialist in who says £3,000 of work is required
Mr Xs buyer tries to negotiate the price, but Mr X is furious
Mr X tells his agent, "The damp has never been a problem to me, when I moved in I took a view on it"
Mr X eventually..."
"... market was moving up.
The vendor eventually became frustrated and withdrew the contract from Diane's solicitor. Five weeks later he sold the property at the asking price and the survey from the new buyer made no mention of the tree or any movement in the property.
Diane ended up buying a..."
"... property.
Diane ended up buying a two bedroom flat with a roof terrace as by this time the price of houses had gone beyond her budget. Ultimately the £800 required to get a Structural Engineer in and show the surveyor was overreacting would have been money extremely well spent. "
- Types..."
"... discussed earlier the surveyor is acting for himself. He treads a careful line between agreeing with the sale price and not getting sued because he missed something or over valued. As a general rule of thumb a large company will be financially stable, well insured and have many surveyors. The result is that when someone from this type of company carries out a survey they will tend to be level headed and, if there are concerns, have colleagues to discuss the issues with and get second..."
"... same issue.
The upshot is all too often that the property is down valued and the bank refuses to lend. There is nothing wrong with the property or the price, its just the surveyor cannot believe what he sees and it looks like madness compared to the prices where he comes from.
If you are..."
"... to do the work yourself after you move in and either:
in a rising market with plenty of other buyers around - if the survey says the property is worth the price agreed, even with this defect, think carefully about renegotiating
in a falling market, depending on the balance of power..."
"... the price agreed, even with this defect, think carefully about renegotiating
in a falling market, depending on the balance of power between you and the vendor, you may be able to negotiate the price to cover the work
Summary -
With all the ins and outs of a survey report the crucial..."
"... all the ins and outs of a survey report the crucial question is value. If the survey report talks about roof or plumbing but concludes that the property is worth what you have offered then trying to renegotiate price is at your own risk. Too many people ignore this fact. Most properties are old, very old, and problems or future works are to be expected. The surveyor knows this and that is why they conclude their report: "In its current condition and in the current market the property is worth £x". And if £x is the price you have agreed with the vendor then so be..."
Chapter 21:
Legal Matters in Property Purchases
"... cost you a fortune;
When to take a view and when to take a stand;
How to stop small details delaying the purchase;
How to exchange within hours of agreeing a sale price;
In Chapter 12 (Choosing a Conveyancer or Solicitor) we covered how to choose a good solicitor that will take your..."
Chapter 22:
Why Vendors are Poorly Prepared
"... vendor may also not have thought through how they will look in your eyes when they choose the selling agent or solicitor basing their decision on other factors such as price, location or recommendations. This doesn't mean the vendor does not have good intentions but because of your limited contact with them it is not always easy to tell if they are messing you around or if the parties they have chosen to represent them are generally..."
"... Story - Carpets and Curtains at Duncan TerraceA buyer agreed to pay £1.325m for a town house in Islington and the vendors solicitor immediately sent across a complete pack containing all the required paperwork. In among this was a fixtures and fittings list which laid out the extra price required for the purchase of the curtains and the carpets. The buyers were angry that the vendors had even suggested they pay an extra £2,000 for these items considering the price being paid for the property. The vendors, on the other hand, had always had to pay extra for carpets and curtains in every purchase they had ever..."
"... property, a structural survey
The reason smart vendors do this is two fold:
They can address any problems which come up in the survey before the buyer does and tries to renegotiate the price
They can give a copy of the survey with receipts for any works subsequently done to your..."
Chapter 23:
Why Vendors Choose Bad Estate Agents
"... in this chapter
The way most vendors choose agents;
Why buyers think some agents have 'more expensive properties';
How the agent's fee affects the sale price;
Spotting agents who pay their staff the wrong way;
Why sales fail more at some agents than others;
Big agents, small agents..."
"... in the area from one agent must be good news
The basic principle when selling anything; a house, a car, a kettle is that: The more people who know about the product (the property), the better the price you will achieve and the faster it will sell.
Many buyers bemoan this fact and often say,..."
"... buyers bemoan this fact and often say, "I bought through Agent X because I really loved the property even though I know they over price". The truth is the slicker agents do not overprice, they simply achieve "a true market value" because the property is bought to the attention of more buyers. They do this through more aggressive staff who call everyone who could possibly be interested and advertise extensively both traditionally and electronically. The unhappy buyer quoted above would be far more unhappy had they never known about their dream..."
"... poor quality agent, in the meantime, has not the means to market affectively either in the media or on the internet and their poorly motivated staff ensure fewer people are aware of the property's existence. There could be twenty buyers who want to compete but only one or two are told that it is there. The result is a lower price for the..."
"... vendor's shoes and you will see that it is actually remarkably easy to choose a bad agent unless you know better.
- The Fee and its' Impact on the Sale price -
The fee that you, the vendor, pay will affect three things:
The price achieved for your property
The quality of the..."
"... know better.
- The Fee and its' Impact on the Sale price -
The fee that you, the vendor, pay will affect three things:
The price achieved for your property
The quality of the staff you deal with (and so the likelihood of exchange)
The quality of marketing
- The Fee and the..."
"... achieved for your property
The quality of the staff you deal with (and so the likelihood of exchange)
The quality of marketing
- The Fee and the price -
The fee paid to a high street agent is a percentage of the final figure that your property is sold for, with a small handful of..."
"... progresses to exchange?
If you managed to negotiate the fee down either the person who came to see you (the valuer) or the agent is weak and lacks confidence. If they cannot justify their fee to you, how well will they justify the price of your property to buyers?
If you instruct a weak..."
"... to buyers?
If you instruct a weak agent that lacks confidence they are likely to get you a lower price. Say its 3% lower than the stronger more confident agent. On a £250,000 flat you have saved yourself £2,500 but it cost you £7,500. You are £5,000 worse off, clever you!
- The Fee..."
"... There is a long way to go between agreeing a sale price and an exchange. The solicitors must be chased and managed, the buyer must be educated, the surveyor must be kept happy, the lender must be pursued and the process must be bought to a speedy conclusion. None of these things will happen if:
..."
"... fail simply read through the true stories in each chapter.
An agent that is prepared to negotiate to a low fee is likely to achieve a worse price for your property and that deal is more likely to fall through before reaching exchange
- The Fee and the Advertising -
Advertising and market..."
"... chosen on the same principle.
Advertising is expensive and so those agents that negotiate their fee too low will have to compromise on this. The result is fewer buyers know about your property and there is a higher likelihood that you will get a poorer price.
If the agent says they..."
"... vendors property in the paper, on a web sites or a set of details in the front window will keep vendors happy, generate some viewings but does not necessarily marry the right person to the right property. The overall aim that agents set out to achieve when they carry out marketing is to demonstrate that they have different types of property, across the price ranges, in a wide variety of areas. In other words: "Whatever you are looking for, we probably had it, have it, or will have it so come and get..."
"... size of an agent's office should only become a crucial deciding factor when it becomes too small. As a minimum check the agent has at least two sales negotiators and a manager. That is two sales negotiators, not sales and lettings negotiators. Any fewer staff than this and holidays, illness or someone leaving will have a dramatic impact on their ability to sell your property for a good price, or even sell it at..."
"... A will justify this scenario by telling you that you have the benefit of two agents or more for the price of one but there are downsides. Firstly, if the commission is being split on a regular basis then by definition the staff must be poorly paid, with all the problems that have been covered earlier. Secondly, you have no idea who actually has keys and an agent you may have decided to avoid is actually on the..."
"... enough the latter part of that sentence is exactly why you should be going on with someone else. A higher fee means their staff will get paid more if they sell your property and neither agency wants to have their nose rubbed in it when the other agent gets you an offer. More motivated staff, more commission on offer and an adversarial environment are all more likely to get you the best possible price and hence why you will find most professional developers and investors almost always use two or three..."
"... almost always use two or three agents.
There are limits however, and you should be very cautious about instructing more than three agents. If three cannot sell your property there is either something wrong it or something wrong with the price.
More than three signs outside the place you..."
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- Agreement in Principle
- Exchange of Contracts
- Homebuyers Survey
- Leasehold
- Sealed Bids
- Sold Subject to Contract
- Sold Subject to Survey
- Subsidence
- Rising Damp
- Land registry
- Asking Price
- Reserve Price
- Guide Price
- Property Bubble
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- Trading Gap
- Property Cycle
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- Retention
- Yield
- Down Valuation
- Lifetime Mortgage
- Negotiator
- Lease Length
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- Pooled Commission
- Joint Sole Agency
- Conditional Exchange
- Under Offer
- Gazump
- Upsizing
- Fall Through
- Agreed Price
- Draft Contract
- Share of Freehold
- Sale Agreed
- Upward Chain
- Cash Buyer Only
- Vendor Suited / Suited Seller
- Bridging Loan
- Credit Check
- Offer Agreed
- Gazumping Insurance
