Welcome to a new word “Gazanging” – the practice of the seller withdrawing their property from the market at a late stage leaving the buyer “hanging”. Recent figures have revealed that almost one in three house sales in 2011 collapsed because the seller withdrew from the market.
Ed Williamsof Lupton Fawcett LLP takes a look at some of the reasons for this.
Are the expectations of sellers too high? Houses are still expensive by anyone’s standards, but with the supply of buyers restricted by the difficulty in obtaining mortgage funds, the economy stagnating, unemployment high and inflation high, why do house prices seem resilient to this? Well the simple answer is that sale prices are not. We need to look at the difference between the asking price of a property and the actual sale price. According to one popular estate agency website the current average national asking price for a property in England and Wales is £236,597 against an average national selling price of £163,049 (HM Land Registry) - a drop of 32% between the average prices.
Whilst regional variations can explain some of this, it is still a significant difference in a seller's expectation and the price at which they are able to secure a buyer. Cold feet at this stage, when they realise that their property is not worth what they initially had thought or hoped, has led to seller withdrawal and the birth of a new word. Sellers do tend to start high with the asking price knowing they can reduce but no one in this current market seems willing to start with a low price in the hope that large levels of interest will drive the price up.
The elimination of Home Information Packs (HIPs) has seen the cost of putting your home on the market fall dramatically, making it easier to “test” the market without a large financial burden. Sellers are able to see what price they can achieve before deciding whether to sell or not, and it is only when a buyer has made an offer that they can truly find out the worth of their property. Negative equity pressure means that some sellers have a minimum level at which they can afford to crystallise their debt. If they cannot achieve that price, then they will have little choice but to withdraw their property - something they will only find out at an advanced stage in the transaction.
As uncertainty still shrouds the property market, the period between agreeing a price and exchanging contracts is vital to all parties. At Lupton Fawcett LLP we will make this as short as possible. For any property related issues, please contact Ed Williams in Sheffield on 0114 2133919 or e-mail Ed at firstname.lastname@example.org or Jeremy Henderson in Leeds on 0113 2802015 or via e-mail on email@example.com