It appears that the country’s residential property market is gaining steam at a fast pace. However, and you’ll have to excuse my pessimism; every silver lining always seems to have a cloud.
The rise of the housing market brings along problems faced during the market boom of 2006 and 2007. Such property nasties include gazumping, and tricks of unscrupulous agents, especially in hot spots such as London and other attractive areas. And with supply still short and prices on the rise, buyers fear they might get cheated. Here is a list of some of the tricks estate agents could try to dupe you with and some tips to help you avoid becoming a victim of the rising housing market, outlined in an article from Jessica Winch and Richard Dyson for The Daily Telegraph.
In what is increasingly a seller’s market, buyers are on edge as they feel their dream home might be taken by a richer or quicker rival buyer. This makes buyers extremely vulnerable, which estate agents are well aware of and make use of customers’ fear. They often try their best to sell the services of their in-house mortgage broker in order to earn a commission. This additionally baffles the buyer, but the best thing is to stay calm and resist the pressure. As Jan Hytch, President of the National Association of Estate Agents puts it; putting pressure on buyers by estate agents is illegal and could lead to fines or even a prison sentence for the agent.
Another thing is developers’ practices to promote “fake” discounts on the full price of newly-built properties. Buyers are advised to better examine these prices since they could be potentially misleading. One of developers’ most popular tactics recently is advertising properties for 80% of their real price as they look for buyers using the Help to Buy Scheme, where a loan of 20% of the cost is backed by the government.
Gazumping is another familiar problem that is rearing its ugly head, as competition for homes will likely get hotter with the restart of the Help to Buy scheme. Gazumping occurs when a dubious seller accepts a higher cost on their property from one potential buyer despite already having accepted an offer from another. The initial buyer is forced to raise the price otherwise they risk losing the property.
Gazundering, on the other hand, is a situation where a buyer demands a reduction in price at the last minute, leaving the seller at odds as to whether to accept the lower offer or to go through the hassle of looking for new buyers. In order to avoid getting involved in such situations, buyers could ask the developer to take the property off the market for a certain period of time.
When the housing market is going through a busy period, it’s tempting to buy quickly. However, I think it’s crucial for buyers to do their homework; look at houses in the surrounding areas to make sure the price is right. Don’t panic buy; it’s a big decision.