Why house sellers are deluded
Stubborn sellers are part of the reason the housing market is so slow.
We've tried to buy three houses lately, and three times the seller has been unwilling to meet our offers.
“We have advised them that it’s a good offer, but they still aren’t keen to drop the price any further,” explained the estate agent. “I’m sorry, the seller won’t budge any further on the price,” sighed another.
“The vendor says they are delighted to accept your offer, as long as you can pay an additional £6,000 for fixtures and fittings,” said a third, before telling me it “certainly isn’t tax evasion”.
Each offer was the result of careful assessment, using all the tools at our disposal. We’ve been looking for a new home for two months now and it’s starting to look like we’ll never find one.
Or at least, never find one at the right price.
It must be hard to accept that your property is worth less than it was. I know it was hard for us. We bought our little starter home at the peak of the property boom and then watched tens of thousands of pounds fall off the value.
But that’s why we’re gaining consent to lease rather than selling it, which you can read about in my article Could I – should I – get a buy-to-let mortgage?’.
Homeowners wanting to sell right now need to get real. Since the peak of the market, property prices have fallen by a painful amount.
Figures compiled by Nationwide show that a property worth £162,722 today was worth £184,131 in 2007. Factor in inflation and that’s a ‘real’ comparable peak price of £212,887.
That’s quite a drop in value and it’s bound to be hard to accept. But if sellers won’t admit that their property value has fallen then that’s another drag, slowing down the housing market.
It’s not just that new buyers and second-steppers can’t afford to stump up inflated prices - although why should they?
Lenders demand a valuation of a property before approving a mortgage. If the price is too high then this can mean holdups and even cause sales to fall through.
Finding the price
We’re not making unrealistically low offers on the houses we’ve considered. I’m confident that every offer we’ve made has been at around the right price – and the estate agents I’ve spoken to have agreed.
We had been using the site UpMyStreet to learn about local schools and neighbours, but that has since been sold to Zoopla. On top of that, we checked out crime in the area using UKCrimeStats.com.
Then we used the Rightmove price comparison tool to see how the asking prices compared to other properties for sale in the area.
It was the comparison tool that really opened our eyes. We saw two properties needing at least £20,000 of modernisation that were on the market at the same price as modern and beautifully decorated homes.
Because we’d concentrated our search on one area, we could easily compare and see just how inflated these asking prices were.
It was also shocking to see just how little effort some sellers were going to, despite their high asking prices. In one home, a teenage girl didn’t bother getting out of bed to let us view the room. It might be a buyer’s market but no one seems to have told many of the sellers in this town.
Is the message getting through?
Maybe sellers are becoming more realistic. The most recent data from Rightmove shows that new sellers failed to raise their asking prices in May.
That’s the first time that’s happened since the website began measuring house market statistics more than a decade ago.
Miles Shipside, director of Rightmove said that prices normally rose in May, as the market picks up.
“Perhaps the first-time buyer stamp duty holiday, and the knock-on activity it helped to create, has concertinaed the market’s stronger than expected early spring momentum into the first four months of the year rather than the usual six.”
So if you’re planning to put your property on the market in the near future, be aware that it’s still a very tough market. Make sure you understand the real value of your home and that you’re not living in the past.
Using the tools above lets you see what information potential buyers will consider when suggesting a price.
If you think your property is worth more than these tools suggest, then make sure people understand where the extra value is coming from. Highlight the bigger garden or the extension or the brand new kitchen – or whatever it is that makes your home worth more.
And remember, the key to selling a house is to make it easy for the potential buyer to imagine themselves living there. So please, kick your teenagers out of bed before anyone looks round.
You could also try selling your home like a Norwegian.
Since I began this article, one of the houses we made an offer for came back to us and grudgingly accepted our top price. With any luck we’ll be moving by the end of the summer.
The reason the seller was able to accept our price was that they used our lower-than-expected offer to negotiate down the price on the property they wanted to buy.
So, we get the price we can afford and they don’t lose out as they upsize. Admittedly someone somewhere along the chain is going to take the hit, but I don’t see why it should be us. Our current home has lost a lot of its value and we’re hardly in a position to overpay for our next.
There’s certainly one lesson to learn here. If you’re selling a house and the only offers you’re receiving are lower than you want, then you need to drive an equally hard bargain when you come to buy your next home.
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