HIDDEN COST OF THE PROPERTY CHAIN

[Mortage Advisor Magazine, Tuesday 3 January 2006]: The market may be stabilising but is now a good time to sell? We look at how best to do so in the current climate.

It’s no secret the market has taken a downturn in the past year or so, which means house prices have suffered and sellers have been faced with achieving lower asking prices for their properties. With the market now having levelled off – prices fell by just 0.1% this October compared to 0.6% in October 2004 – and fears of a price crash allayed, both buyers and sellers should be feeling more confident about entering into transactions.

The figures support this view. The number of buyers registered increased by 2.1% in October, when it fell by 3.8% the previous year, while the number of properties listed rose by a smaller amount – 1.9% this year compared to 5.6% in 2004. This means the gap between the number of properties for sale and the number of buyers has narrowed and there has been an increase of 5.9% in the number of sales agreed, compared to a decrease of 1% the previous year.

The Royal Institution of Chartered Surveyors’ (RICS) most recent housing market survey with figures for September also showed that the sales to stock ratio has narrowed, dropping from 30.3% in August to 29.9% in September, and that new instructions from sellers fell for the first time in one-and-a-half years, indicating that with fewer worries about a crash they are feeling less of an urgency to sell.

However, both surveys continued to show a drop in house prices – Hometrack showed a decrease of 0.1% in October and 21% more surveyors reported a fall in prices compared to a rise according to RICS. This is because there are still more buyers than sellers in many areas, resulting in a buyer’s market and putting them in a good position to negotiate. Price achieved as a percentage of asking price stood at 93.1% this October compared to 93.7% in 2004. Prices will continue to move downwards in areas where this continues to be the case.

Do your homework

While Hometrack’s figures present a national picture, it’s important to remember the housing market operates very much on a local level, so what is true for the country as a whole according to averages may not be the case where you live. The market in some parts of London, for example, is relatively balanced.

“It’s not a buyer’s or seller’s market at the moment,” says John East, manager of the Surrey Quays branch of Kinleigh Folkard & Hayward estate agents in south-east London. “There have been no house price drops this year but there may be more of an imbalance in other areas. Where there is lots of choice it would indicate that prices are weak but in Surrey Quays there isn’t much at the moment.”

In parts of north London, however, there are a lot of properties for sale. “The market is good in that people are more confident,” says Joanna Haydon-Knowell, co-director of JHK estate agents in Muswell Hill and a spokesperson for the National Association of Estate Agents (NAEA). “However, buyers are being picky and looking at quite a lot of properties in case anything better comes along.” This means your property would have to compete with the many others on the market.

Contacts

Hometrack
0800 019 4440
www.hometrack.co.uk

JHK
020 8883 5485
www.jhk.co.uk

Kinleigh Folkard & Hayward
020 8780 3535
www.kfh.co.uk

NAEA
01926 496800
www.naea.co.uk

National Homebuyers
01444 257111
www.nationalhomebuyers.co.uk

OEA
01722 333306
www.oea.co.uk


The differences between areas mean it’s essential you research the market in yours by seeking advice from a number of local estate agents and choosing one to sell your home carefully. Going for one that is a member of the NAEA and, even better, a member of the Ombudsman for Estate Agents (OEA) as well, means they will operate according to a strict code of conduct. Don’t automatically choose the one with the lowest fees, as often you get what you pay for, and make sure they will monitor the sale after an offer has been accepted.

Price control

So where buyers have the upper hand, how can you get the best possible price for your home and sell it as quickly as possible? One of the most important factors is making sure your property is correctly priced in the first place so will sell within a reasonable amount of time. Market forces can mean estate agents are tempted to overvalue properties to compete with other agents for instructions, so get two or three valuations to get a good idea of its value and request proof.

“Ask the agent for written comparables of that type of property at that price,” says Joanna Haydon-Knowell. “If they can’t, don’t trust what they’re telling you. It’s unfair of estate agents to give valuations that are too high as it gives sellers false perceptions of the price they will be able to achieve.” Psychological factors are also important – £199,000 sounds like a more attractive price than £200,000, for example.

Having realistic expectations to start with will also mean you won’t be holding out for a higher offer that might never come. “Many people have inflated ideas of what their property is worth and get dejected even though they have had realistic offers,” says David Harber, operations manager at National Homebuyers, which will buy your home from you if you are having difficulty selling. “Finding out a genuine value for your property will help you decide whether to accept those offers.”

Top tips for selling

Research the market in your area by talking to estate agents and visiting house price websites such as Hometrack.

Choose an estate agent that is a member of the NAEA and/or OEA and that you can be sure will follow the sale through to completion
Make sure your property is realistically priced by getting at least three valuations and asking estate agents to back up what they say with written comparables.

Ensure your home is clean, tidy and uncluttered and that rooms look fit for the purpose they are advertised for.

Generally speaking, if your property has been on the market for two to four weeks it’s likely it has been sufficiently exposed to the market to have attracted the best offers possible. So, if you’ve had plenty of viewings within this time, don’t have many others lined up and receive an offer, it’s likely to be a fair one and worth seriously considering. If that buyer is part of a chain, make sure your estate agent has checked all the links in it before you accept and listen to their advice.

Make an impact

When there are a lot of properties on the market, it’s important yours stands out from all the others potential buyers will be viewing to get them to come back a second time, so make sure you present it in the best way possible. “There should be minimal clutter and rooms should look fit for their purpose – a room advertised as a dining room should have a table and chairs in it, for example,” says John East. “Buyers should be able to walk into your home and see it’s clear, clean and tidy.”

While the state of the market will affect how easy it is to sell your property, you may be unable to wait until it’s improved if you need to move at a certain time. It’s also difficult to predict what will happen to the market in future, although it’s likely to remain stable for a while. “When we enter a new year the market is difficult to anticipate,” says John East. “However, it’s likely to stay balanced and sellers can be sure of getting a good price for their home.”

As long as you do your research, ensure your property is realistically priced and present your home in the best light possible, selling your home should be a painless exercise.