Gazumping and other nasties that flourished in the last property boom are making a return, as competition for homes increases with the bringing forward of the second phase of Help to Buy.
The scheme, which allows buyers to purchase a property under £600,000 with a 5% deposit, was brought forward to last week – three months ahead of schedule. Traffic to Zoopla, the property search website, immediately jumped 17% compared to a week earlier.
Yet supply is not matching this surge in demand, with 14% fewer homes for sale than this time last year, according to the property analysts Home.co.uk, and 19% fewer in London.
There are fears that buyers could be caught in a bidding frenzy fuelled by bullish sellers and eager estate agents keen to talk up the market. Around 10% of the adult population – 5.1 million people – say they are likely to buy in the next 12 months, up from 8% (or 3.7 million) in January 2012, according to Santander Mortgages.
So how can homebuyers navigate the risks of this buoyant market?.
Gone in a flash
Buyers in stronger markets will have to work harder to find the right properties, especially in hotspots such as London. However, Lisa Green, director of the County Homesearch Company in the north-west, emphasises: "Buyers outside the south-east and other hotspots should be wary of estate agents talking up the market." She says the market is still quite weak in many areas, such as Oldham, Huddersfield, Hartlepool, and Powys in Wales.
"Buyers in these markets are still in a strong position to negotiate on the asking price," she says.
First-time buyer Helena Gibbon, 29, is struggling to find a property in London's overheated market. She has been searching for a one-bed flat in Walthamstow, east London, all year, with her sizeable budget of £200,000. Gibbon, who works in advertising, has saved for years for a 10% deposit, and currently lives with her parents while she scours the market.
"It's tough out there for buyers. I have friends who have viewed 30 or 40 properties but they go so quickly," she says.
If you are searching in a popular location, make sure you have all your paperwork ready if you decide to make an offer, says Camilla Dell at Black Brick buying agency.
Most serious buyers will be signed up to Zoopla or Rightmove alerts, but sometimes the best properties do not need to be advertised because they are snapped up so quickly.
Buyers at the top end of the market – with a budget of £500,000 or more – sometimes employ a buying agent with good contacts to search the market. But what about the rest of us? Tracy Kellett, a buying agent at BDI Home Finders, says that buyers should "make friends with estate agents" and emphasise their strong and serious position as a buyer. "Ask for the first heads-up when a property becomes available," she says.
Gazumping
It's every buyer's nightmare – your offer on a property is accepted and you spend hundreds, or even thousands, on a survey, mortgage and legal fees, only to have another buyer make a higher offer and snatch the place from under your nose.
While still relatively rare, agents say gazumping is making an unwelcome return in pockets across the country.Vicki Wusche at The Property Sourcers says: "We recently had an offer accepted for a client on a three-bedroom house in Norwich at the asking price of £122,000.
We immediately sent over our paperwork and instructed a solicitor and went to bed thinking it was a done deal. But in the morning a cash investor had made a higher offer that had been accepted."
Have a mortgage agreement in principle and your surveyor and solicitor ready before you make an offer, and request the estate agent in writing to take the property off the market as soon as your offer is accepted.
Kate Faulkner at advice site Propertychecklists.co.uk says: "Above all, remember that a seller or agent who gazumps you is not worth doing business with anyway. Have faith that a better property will come along soon."
Sealed bids
Bidding wars – where you compete with other buyers for the same property – can be stressful, but it is vital not to get carried away and pay over the odds.
Buyer Georgina Janion recently bought a flat in Putney, south-west London. The ground floor Victorian conversion had 83 viewings and 13 offers in just one week. The sale went to "sealed bids", where Janion and the other potential buyers had to email their final offer before midday on the same day.
She says: "I had been looking for a property for months and viewed about 30 flats, so I knew the local market well. Going to sealed bids is tough and it's impossible to second-guess what other buyers might be willing to pay. I just had to stay calm and offer a fair price that I could afford."
First-time buyers, most of whom will have saved years for a deposit, need to be especially wary of blowing their budget in a bidding war. Check sites such as nethouseprices.com and mouseprice.com for recent sale prices. It's important to retain a pot of savings to buy new furniture or cover unexpected maintenance costs.
Wusche adds: "Also remember interest rates will go up and you should use an online mortgage calculator to see how your monthly payments would be affected. Could you afford to pay 8% on your mortgage? It's vital not to overstretch yourself."
Article Source: http://www.theguardian.com/money/2013/oct/06/gazumping-housing-market-help-to-buy
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