Entries Tagged 'Property' ↓

According to the Nationwide, house prices in the UK continued falling in October. Property prices fell by 1.4% this month, increasing the annual rate of decline from 12.4% to 14.6%.

The Building Society stated that the price falls were being driven by the drop in sales, currently at their lowest for 34 years. The price of an average house is now £158,900 - nearly £30,000 less than a year ago.

Recent figures from the Bank of England show that mortgages approved, but not yet lent, were down by two-thirds on the levels of a year ago.

The credit crunch continues

Unfortunately, the crisis in the banking system is showing little sign of improvement, despite the dramatic interventions of central banks and governments around the globe. Banks are still restricting their new mortgage lending, a trend which is likely to continue in the next few months.

On a more optimistic note, interest rates are likely to continue to be cut sharply, as recession bites.

Unless a house is sold, any increase or decrease in its value is purely an ‘on paper profit or loss’. You could borrow against the value of your house, you could be taxed on it (if you were to die and pass it on to next of kin), but unless you actually sell it, the change in value is of no major relevance to household finances.

Changes in house prices are not taken into account in calculating the rate of inflation. Neither do mortgage repayments figure in that calculation – surprising considering that they form a significant proportion of the monthly outgoings of the average family.

For most people, the prices of buying and selling in the housing market are relative. If your house drops in value, it is likely that the new house that you are purchasing will have dropped in value too. The key factor is the difference between the two - the amount you have to borrow in order to make the move.

The ups and downs of the housing market

There have been 11 years of increasing house prices. Properties in the UK have nearly tripled in value over that period. We have now entered a period of rapid downturn where property values could fall by up to 50% from their peak last year. The people likely to suffer the most are those who purchased houses in the last three years and are now experiencing negative equity, those who borrowed against the value of their home to finance their business, to buy a second home or to pay off debts. Many will find that they paid more (and in many cases borrowed more) than their homes are now worth.

Again, for the majority whilst their houses are now worth less, when the time comes to move, the house they want to buy will also cost less. As a consequence, they are unlikely lose out overall. The upside of the drop in house values is that it will make things easier for the first time buyer, the lifeblood of the housing market.

Even in a depressed housing market it is still possible to sell your home. The following top tips will boost your prospects:

1) Due to the “credit crunch” it has become harder for property buyers to find mortgages. The knock on effect is that it is more difficult for vendors to sell property. For anyone who has managed to secure a mortgage loan offer, it is a buyer’s market. It is important to price your property correctly. The best way to achieve this is to look around at all the estate agents working in your area, examine the property in their windows and establish which agents are successfully selling houses like yours. Also look at the property advertisements in local newspapers.

2) Get at least three valuations on your property. To ensure a sale, consider undercutting the asking prices of similar properties in your area.

3) Look into selling your house at auction. This is an increasingly popular way of selling properties. Many television property programmes now feature Real Estate auctions.

4) The next thing to sort out after the price is the presentation. Because you need to impress your buyers, you are going to have to put in the work to ensure that your house has kerb-appeal, and is immaculately presented.

5) The approach to a house is all important. If you have a drive or parking area to the front of the house, make sure that it is clean and clutter free. Tidy up the garden, front and back. Make sure that the windows are clean. On the inside, it is mainly the condition and appearance of the kitchen and bathroom that will determine how fast you sell your home. The number of useable bedrooms is also important. “Depersonalise” is the operative word. A fresh neutral décor works best. The kitchen needs to be spotlessly clean, with cutlery, utensils and crockery neatly stored away. The same holds true in bathrooms. If you have a box room, empty it out as much as possible to maximise space. If you need inspiration watch the “House Doctor” or similar TV house makeover programs.

6) If your house is still not selling after its makeover, then you may have to consider dropping the asking price - but talk to your estate agent for feedback first. Ask them for ideas and suggestions for what you could do next - but remember, it is in their best interests to keep the price as high as possible because then they make more commission.

7) If you do decide to cut the price of your house the best thing to do is to take it off the market temporarily. Leave it off the market for a month or so, and then re-advertise it at the new price with a different agent. This should attract a set of fresh buyers who think that your property is new to the market.

Dealing with Estate Agents

It is very important to bear in mind when dealing with an estate agent that their primary client is the seller and not the buyer. If you live in England, Wales and Northern Ireland, here are some things that you should know:

• Find an agent that belongs to an Ombudsman’s scheme. The Ombudsman can award compensation and publishes a list of members on its website. Under the government’s Consumer Act, all estate agents have to belong to an industry body with an ombudsman scheme attached

• Be aware of the estate agent’s legal obligations

• If a buyer or seller believes that an agent has failed to meet its obligations they should complain to their local trading standards department

• Complaints about agents should be made to your local authority’s trading standards office

• If the agent cannot resolve a problem and they is signed up to the OEA code of practice, you can take your complaint to the Ombudsman

• Do not use the same legal adviser as the seller

• When an offer is made for a property, the estate agent must pass it to the seller promptly and in writing

• If you are the buyer, the estate agent does not have to give you details of other offers they have received for the property that you are after. Badly-handled offers are one of the top complaints dealt with by the Ombudsman for Estate Agents

• According to the Office of Fair Trading (OFT), an agent must not invent a bid or claim to have a cash offer, or first-time buyer, unless this is true. Nor can they state that they have a potential buyer unless that is true. A seller should demand to see the evidence if they have suspicions

• After your offer has been accepted, you cannot force an estate agent, or seller, to take the property off the market, or stop them advertising. You may fear being gazumped, but the agent is working to get the best price for the seller, and not the buyer. Some agents will offer to take a property off the market out of goodwill - particularly if your offer is close to the asking price and you are not involved in a chain

• In England, Wales and Northern Ireland, an estate agent can ask for a holding deposit once an offer has been put in, providing that they are covered by adequate insurance. All money must be held in a separate client bank or building society account, or accounts, as set out in the Estate Agents (Accounts) Regulations

• A common complaint handled by the Ombudsman for Estate Agents are “inaccurate sales particulars”. It is actually an offence for an estate agent to make statements about a property that are false, or misleading

• Estate agents are forbidden from presenting a seller with hidden extra charges. They must state either the exact amount you will be charged, or when this is not possible, provide details about how the costs will be worked out, or provide an accurate estimate. It is important to read their contract of services carefully before signing. For example, if you opt for single estate agent selling rights, and then find a buyer yourself without the help of the agent, you will still have to pay the agent

• Estate agents cannot discriminate against a buyer because they do not want to take advantage of the agent’s financial advice services. Agents must treat all buyers “fairly”, under the terms of the Estate Agents Act 1979

The OFT has a free booklet called “Using an estate agent”, which is available from its website.

Contact addresses

The Ombudsman for Estate Agents Scheme: 01722 333306

The National Association of Estate Agents (NAEA): 01926 496800