Right to Buy or Right to Loan!

If you stand still you die. Or is it if a Shark stops swimming? Whichever, the property market cannot realistically wait for wages to rise to allow it’s members to move. We know that’s not going to happen. So has the scheme allowing us the ability to save the deposits we need and afford the repayments on the houses we would love to own, been redressed, elaborated and improved?

Shouldn’t the very fact it’s conception occurred become the  unwritten warning following the aftermath of David Cameron’s fast tracked “Help To Buy Scheme Part Deux”?

The scheme will not lend to those without a 5% deposit in place on a new or now an “old” build home and it will undertake “strict” application measures to ensure the affordability is legitimate. The 95% balance will be in a repayment form rather than interest only and there will be no addition loan, just a guarantee. So, in essence the vehicle is identical to the one we discussed a few weeks but with Grandpa being replaced by The Government.

The dotted i’s and crossed t’s have not been finalised but lenders have geared themselves up for this. The opportunity will have an initial live span of three years. This may be longer than Grandma as well. I’m not being cynical I’m just worried. Although on paper the bubble burst a while ago now, trying to re-inflate it without taking into consideration why it happened seems dangerous.  It’s not just me that’s a little concerned. The chief executive of Britain’s biggest mortgage lender, Lloyds Banking Group,  says he fears Help to Buy could create a dangerous bubble in property prices. He said this a matter of weeks after telling the Government they had his unequivocal support. Antonio Horta Osorio seems to have stopped in his tracks and as the CEO of Lloyds, who own Halifax a major lender in this market, it is particularly concerning. I’d like to think that as long as everyone remains sensible and the “new” lending is vigilant then it could help stimulate the market. Strangely enough it does though seem to be gaining momentum without it?     By Mark Walmsley

A Do’er or a Not to Do’er!

Sometimes we have to do for ourselves what we recommend to others and quite recently I found myself struggling to take my own advice! It’s all to easy to recommend an improvement here and an improvement there to enable the well located sows ear become the perfectly situated silk purse of your dreams. The reality is exactly what that particular idiom suggests. You can’t make a solid chair out of poor quality wood.

Prior to renovating your resale project, if you think that the builders quotation is incredibly reasonable it probably is. You need to know that any renovative costs are genuine before you’ve offered on your property. Talk to contractors, get quotes, choose the styles of windows and the kitchen and the bathroom fitments, don’t falter but don’t choose such that are unfit for purpose. Look to your needs and your pocket. If the costs are dangerously tight then the risk of a “Do’er Up’er” is such that you may loose money if you are able to sell at all. And, if you can’t sell what then? “Let It!”, the Estate Agent shouts but this brings it’s own risks and rewards.

It’s planning for the need.  We’ve just sold a property in Cannon Close to the South of the City and the wonderful property needed work. The vendor and myself knew that the volume of work would not enable a “Do’er Up’er” purchase  despite a tremendous volume of such buyers looking and offering. If the property is for you and your family then it’s about your own needs and the long term. So throw caution to the wind and have the two Ensuite bathrooms, under floor kitchen flooring and granite work surfaces. It’s yours to live in and enjoy and if you do it properly it will last and the eventual sale, so distant as to not warrant contemplation, will not disappoint.     By Mark Walmsley

The Secrets Of The Magic Circle

Being an Estate Agent gives one exclusive insights into the secrets of the industry and how it works. Today I am going to risk my own safety and reveal all for the first time.

As a sales Estate Agent, one makes money from selling property. One can only sell property if one has property on one’s books to sell. So the first rule of Estate Agency is “Win The Instruction”.

With most property owners choosing their agent based upon the valuation given, the most important thing for an Estate Agent is the figure they give at the valuation. So most Estate Agents as a matter of course over-value in order to win the instruction. And because they know that the other Estate Agents attending are also going to over-value, they need to really, really over-value in order to win the instruction.

If this sounds strange to you, just think of all those properties you’ve noticed that have been on sale for months (or even years). These are products of the over-valuing trend amongst many Estate Agents.

I checked official figures yesterday and discovered that according to Rightmove, the average property at Elizabeth Davenport had been on sale for just 7 weeks. By comparison some very well known large Estate Agents in Coventry had averages of more than 30 weeks. Why? Because their properties are over-valued and over-priced.

Imagine trying to sell a £10 note for £11. What do you think would happen? Of course, people would laugh and walk away. And that is exactly what happens to over-priced properties. By comparison what do you think would happen if you put a £10 note on sale for £9? Of course, people would flock round and an auction would begin, resulting in a bidding war and probably a sale price approaching the £10 mark. In other words the only danger when pricing a property is “over-valuation” and in reality there is no danger of “under-valuation” whatsoever.

But the magic circle will never admit any of this to you and my head will probably be on a stake by tomorrow morning…………………

Inclusive or Exclusive ????

I recently arranged some viewings on a property that was one of those homes that could have attracted the attention of  anyone on the planet, or at least seemingly.

And after all, as I was tought when I studied Economics A-level, price is driven by demand.  In other words if you mange to maximise the demand for any item, commodity or service, you increase it’s value.  The higher the demand , the higher the price.

With this in mind why would it ever make sense to make a commodity or service “exclusive”  and frighten away or “exclude” some of the potential buyers. The simple answer is it would never make sense.

And when one is deciding upon which buyer to choose or indeed which supplier to choose, surely an open mind and a decision based upon merit will lead to a win-win situation, both in economic terms and personal satisfaction terms for both consumer and supplier? Surely yes??!!

Apparently not. Even in 2013, exclusivity is still alive and well. Some consumers, suppliers, buyers and sellers base their decisions not upon what would work best for them or their clients but on whose handshake fits or which buyer is on the right committee.

At Elizabeth Davenport, we don’t have any favourites or hold allegancies. We work to achieve the best results for all of our clients by bringing in the widest range of buyers and customers possible. We don’t judge applicants by their handshake or in fact by their weekend habits, or for that matter their creed, colour, sex, poitical views or indeed anything other than their ability to purchase.

We are inclusive, not exclusive and as a result we achieve the best prices and results for all of our clients.

You Want It, You Can Afford It, But You Can’t Have It!

This week has seen the The Royal Institute of Chartered Surveyors show public caution to the seemingly dramatic rise in house prices over the last eight months. A rise of 5.4% to the end of August is revelation indeed, certainly one at odds with the reality in many parts of Coventry & Warwickshire, let alone the Country as a whole.  Quite how their suggestion of how a cap could occur is not certain but surely it would be almost impossible to control?  Joshua Miller, the RICS Senior Economist believes that the Bank of England  have the ability to instigate such an action, one that has proved successful in Canada and other parts of the World.  Anyone who knows me will know I am the least able to argue with a senior economist of anywhere, let alone the RICS, but  Canada and Britain are two totally different beasts. One has a total lack of space and the other more space than they could use, need, or wish to ruin! This is really the point to address. Demographically certain areas within the country will benefit from price rises and are also able to tolerate them. How in a free economy could you tell homeowners that they could not sell to waiting cash buyers because the buyer wants to pay too much? In contrast there are more areas in the country hoping for a rise in house prices than there are who have already benefitted from them. Once again, the reality seems to sit with the Banks and Mortgage lending. If you need a mortgage to buy a house as virtually all of us do, we have to remember that it is not “our” money which allows the purchase to occur. With this in mind surely the RICS should be focusing their might upon the experienced and proven failures of the past rather than restricting potential growth across this very much imbalanced county and nation as a whole? By Mark Walmsley

Secure the Home you Want for Less?

I have just left a series of viewings on a property of ours that we really want to secure offers on. We have worked closely with the owners to ensure the right price and marketing has been implemented such that the level of viewings have dramatically increased since they placed their house on the market with us. The viewings were undertaken with myself and the owner both present.  I really wanted the prospective buyers of the house to hear the position of the sellers from the sellers themselves. It is really vital when trying to secure the very best offer on a house that the buyer understands how motivated the sellers are. Do they need to sell sooner rather than later? Have they seen a property themselves that they may be able to negotiate at a lower price? Do they indeed have the luxury of waiting for the highest offer? Surprisingly even when numerous offers may have been placed on a house the recommendation is not necessarily that the seller accepts the highest offer but that they accept the most suitable offer that best suits their needs.

As a buyer your ability to negotiate is dependent upon a number of factors.

Whether you want the house or not, you are not buying the property yourself unless you are buying with cash. Therefore the seller needs to know the offer you make is genuine. It’s very easy to say I’ll offer the asking price but whose paying for it? The mortgage needs to be agreed in principal to put you in as strong a position as possible. This will help.

Is the mortgage subject to additional funds raised by the sale of your own house? As George explained last week, if this is the case, secure your own sale first.

Are the buyers going to want to sell to you? Excuse me! This is without doubt the most personal part of the negotiation process. If the house you are buying is owner occupied then  present yourself to them as well as possible. The amount of sellers who refuse offers because they “didn’t like” the prospective resident in waiting is always a surprise but really shouldn’t be when you consider neighbourly relations and the emotional attachment to they have to their home.

Lastly rationalize and be genuine about your offer. Why is it 10% lower than the asking price? Why is it that your asking price offer is better than another’s? Do the research. Look at the value of other houses in the Street and when they sold. It is our job to present your offer to our Client’s in as good a light as possible. It is also our job to secure the best offer possible for our Client. Remember though. The best doesn’t always mean the highest.

 

By Mark Walmsley

Don’t Put The Cart Before The Horse!

A common dilemma when moving home is juggling things into the correct order.

Should you find somewhere to move to first or find a buyer for your own place beforehand? Many homeowners call our office and say that they are scared to put their own property on sale until they have somewhere to move to. This is an understandable concern but trying to find somewhere to buy before you have sold is putting the cart before the horse. It simply won’t work and will lead to disappointment and frustration.

Firstly many estate agents simply won’t book you in to view any of their properties unless you have already agreed a sale. And even if they do, if you find something that you like then you will not be in a proceedable position and will miss out. After all, how can you possibly make an offer on your next property when you don’t know what your current one is going to sell for?

So the first thing to do is to get your own place on sale with a good estate agent that gets results fast. Look for an agent that has a high proportion of “Sold” stock (around 60% is excellent). Elizabeth Davenport currently have 66% of our stock Sold STC compared to other local agents that have as little as 10%.

Once we find you a buyer and accept an offer, you can begin your search in earnest. And don’t forget, ultimately if you can’t find anywhere to go to then you are not legally obliged to move until contracts are exchanged.

HELP YOUR CHILDREN ! THEY’LL NEED IT !

Whilst the recent birth of my second child only a week or so ago has left the Dad within me contemplating nothing but cuddles, gurgles and kisses, the Estate Agent couldn’t be faulted for wondering if my children will ever be able to afford a house at all.

According to recent research those actively motivated, fully employed, first time buyers are having to save for an average of eight years to acquire the basic deposit needed to by their first property. I don’t work for the Department of National Statistics but my children having full time employment could well be triumph enough. Buying their own property could simply be the icing on the cake. 60% of first time buyers receive help from parents and grandparents and if it’s possible to do so then I would certainly like to honour this statistic. I would love to believe I’ll have the ability to pass lump sums to each allowing them to purchase their first home.

Could this be realistic though? It’s cost enough raising children whilst maintaining the ability to pay a mortgage, financing the family car and facing the inevitable breakdowns and household dilapidations that running a family require. My head began to ache (could have been lack of sleep?). Here are a few suggestions Elizabeth Davenport’s financial advisors have recommended to me.

There are many ways that a parent or grandparent can help their children with that DO NOT involve parting with their own assets. Remortgaging your own home, with the right advice, may mean that your own repayments raise but you will have released a sum to enable your children to pay for their own house rather than Mr & Mrs Landlord’s!

Even more generously minded parents or grandparents who seek to downsize themselves will find tax benefits in gifting monies to their offspring rather than allocating it as possible inheritance. This is a particularly tough conversation to instigate with Grandpa as it involves giving money and death but nonetheless it may be one that an astute Grandma could initiate instead!

Thirdly the ability for a working parent to guarantee a mortgage loan can help top up the deposit. Certainly if their own professional history and credit rating is credible this can be a very valuable tool in securing the right property rather than the compromised shed in not as bad a location as the other forty you looked at!

Finally, despite there being a raft of other options available I’ll present the ultimate. If your relationship with Mum and Dad is faultless and you truly remain the apple of your parents eye then a mortgage can be guaranteed via a charge on the parental home. This is a massive trust related gesture which is essentially a declaration that you can trust your children implicitly and they honour you enough to never default. This, of course will be my chosen path because as every new parent is certain, their children will be faultless!

Why Global Warming is a Scam

Since the beginning of history a favourite outcry to gain attention has always been “The End Of the World is Nigh!”

Each generation assumes that they are the gifted ones that will have the honour of destroying the earth once and for all.Global Disaster The reason for the final destruction varies and has ranged from an “act of god” to a “cataclismic natural disaster” to more recently “manmade self inflicted global warming”.

Such predictions of impending doom sell newstime and quickly collect public support and outcry. At the same time predictions of impending happiness, success and world order are pushed aside and ignored. Sadly, good news simply doesn’t sell.

By the same token, predictions of a stable housing market where prices are steady and properties sell quickly to happy buyers with good credit ratings are overlooked in favour of stories about housing price bubbles, crashes, repossessions and mortgage scarcity. The “housing shortage crisis” sounds much more exciting than “housing harmony” and “steady sales and rebuilding”.

My prediction for the next 3 years is for steady growth and very gradual increases of prices, probably in line with inflation but no more.

I tried to sell this story to the press but surprisingly they weren’t interested. Now if I’d told them that prices were set to sky-rocket……………………..

House Prices Rocketing?!

Once again the media are talking about house prices rocketing and we’re heading back towards a housing market bubble.

The facts of the matter (taken from the Land Registry Price Index) are that prices in Coventry currently (as of June this year) House Price Indexstand at the same level they were in Jan 2011, the same as they were in Feb 2010, the same as they were in Feb 2009 and most surprising of all, the same as they were in July 2004. Yes, that’s right, house prices in the Coventry area are the same now as they were 9 years ago.

The media seem obsessed with house prices. The national figures churned out on a monthly basis are heavily skewed by what happens in London and aren’t really relevant to areas outside the home counties. What really matters and is relevant is the number of transactions that are going through. The great news is that volumes have indeed increased this year in the local area and there is a healthy amount of activity meaning if you intend to move home, now is a good time. The number of buyers out there in a proceedable position has increased meaning sensible people with sensible expectations are able to sell their properties and move on to pastures new.

Fortunately talk of another bubble at this stage is make-believe.