Bad, bad buyers - 18 April 2008

Posted by Paul Collins No comments

Distressed sellers beware, as market conditions begin to toughen and the amount of property on the market increases and people try to cash in on their property ahead of what they see will a sustained period of price pressure of the property market, attitudes of buyers are becoming more aggressive.

We have already seen the re-emergence of that wonderful practice, gazundering, when buyers make last minute demands for a discount and threaten to pull out of a sale and collapse the chain at the last moment. As prices continue to be under even more downward pressure in the majority of the country, buyers will be getting more aggressive in their negotiation tactics in order to secure themselves the best deal, and also to ward off the possibility that they could be left with negative equity when they buy and the market dips again.

Agencies in some parts of the country are already beginning to discount property that they see might be a degree overpriced, and have the potential to hang around on their books for a significant period of time. Two-bedroom properties are seen to be the most at risk from falling prices, with reports that in some areas these properties are already being discounted by up to 40 per cent in order to sell them before further drops in prices occur across the board.

Now, it is by no means just buyers who get defensive, aggressive and downright awkward during market conditions that even the most conservative observer would call ‘challenging’. It is usually in times of strife in the property world that the stories of sellers stripping literally anything that isn’t bolted down – and many things that are – out of a property when they move. Of course, there will always be people who take the screws from the letterbox in their efforts to not give anything away for ‘free’, but some people seem to take things to extremes in tougher times.

This has always been something that is slightly mystifying – imagine taking everything you can out of a property you are leaving with the intention of saving money on buying new. You then welcome friends and family into your new home only to confront them with the same tired and yellowing 80s lampshades that they hated in your old house…

People won’t stop at many things to get what they can out of their property when they leave. It is a slightly different situation, but I remember when the last recession hit and I was living in prime commuter-belt territory in Kent. Walking down the road one day I was confronted with the sight of a five-bedroom detached house which had lost all of it roof tiles overnight. Spiralling debts and aggressive creditors had forced the overstretched owner to abandon the property, flog the tiles for cash and do a runner, as the story went.

Anyway, I digress. More than one website out in cyberspace actively encourages buyers to employ gazundering as a legitimate tactic. Most people would admit that while a proportion of properties are overvalued and competition between sellers is fierce at the moment, making an offer with the express intention of then demanding a discount at the last possible moment is dishonest at best, and highly immoral at worst. Imagine if the situation were reversed, and buyers were suddenly confronted with a 20 per cent rise in the price of the property they had already agreed to buy on the day of exchanging contracts. Where does the moral high ground rest in the current market conditions? Does anything go when it comes to business, as many people regard this purchase? Or should transactions regards people’s homes be guided by a more strict code of honour?

Has this happened to you? Or have you done it yourself?

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