Thoughts on buying and selling houses – part two
Earlier I wrote about the difficulty of supply and demand when buying or selling a house, caused by an unwillingness or inability to accept a market value for a property. But I wanted to write about one thing that struck me repeatedly when searching for a house to move to – the craziness of the UK’s offer system.
This is our second time around for buying a house; the first was a little over three years ago, after many years of renting (with varying degrees of comfort, heat and space). One thing that struck us then was how easy it was to make a decision on a purchase based on little more than 10 minutes inside a property.
We’ve all heard it said that you can get a feel for a place within the first few seconds – indeed, that’s what happened to us. But it’s easy to be ruled by hearts rather than heads, and committing to tens of thousands of pounds based on a cursory look around isn’t ideal for anyone.
That’s where the survey comes in. Yet however thorough this might be, there’s no substitute for spending time in a place and becoming accustomed to it. What if, for example, the neighbours turn out to be drug dealing ex-convicts with a penchant for shouting at 3am? What about the alcoholic woman who lives down the road who routinely argues with her heroin addict daughter? And what if next door’s brat strikes up a friendship with the four scally kids opposite, who decide to build BMX ramps in the middle of the road, sit on parked cars, chuck crisp packets everywhere and generally cause a load of low-level aggro?
That’s all stuff no survey can tell you. And unless you do a thorough check of a neighbourhood over a number of days and nights, it’s easy to come away with a false impression. (Conversely, a workmate lives a few streets away and loves it; it seems that a few bad apples really can ruin a vat of cheap cider).
Second time around, we resolved to really get to know an area before committing to anything. And hopefully everything will go OK with the place we’re after. But I really wanted to write a little about the ridiculous situation with offers on houses that besets the UK.
If a house is marketed for £179,000, that’s a sure sign that the vendor will accept just under £175,000. The stamp duty threshold is there, which means anything more and the buyer will have to pay 1% to the Treasury.
If a house is marketed at £1.1 million, meanwhile, it’s not unheard for it to sell for £1 million or less, particularly in a stagnant market. That’s a whole £100,000 less than the asking price. Clearly there are bizarre economies of scale at work. At the other end of the scale, if a house is on the market for £100,000, it’ll probably go for a few thousand less.
When assessing available houses, everyone seems to go through a merry process of thinking, ‘Well, it’s on for £180; we could get it for £170 or less’ and so on. You automatically look at prices you can’t afford, knowing that they’re unrealistic. And it’s a universal conspiracy: the vendors know this, estate agents know it, and buyers certainly know it. So you go in with a low offer, get it rejected, then come back with a slightly higher one, they haggle for a bit more, you ask for some fixtures and fittings to be included, and hopefully eventually strike a deal.
But why bother? Why not have a fixed price, and if your product doesn’t sell, you lower it? That’s the principle that guides most buying and selling, and I really don’t understand why it doesn’t apply to the housing market. It’s a ridiculous state of affairs. Fixed prices are established in Scotland, and the first person to offer this gets the property. Why can’t it become more prevalent in England and Wales?
Tags: housing