Ahead of the Easter holidays and hot on the heels of Alistair Darlings’ first (and hopefully last) budget comes news that home buyers have been waiting for for over a decade – an estate agent with an Easter Sale!
Reeds Rains, a chain of estate agents with over 150 offices in the north of England have slashed prices on 2,000 of their properties. Altogether, over £15 million has been chopped from it’s stock of houses for sale with the average reduction just under £8,000. Since their average asking price was £148,000 this means that the stickers in the window scream “5 1/2% off!” and you can expect that if you turn up to haggle and have a valid mortgage offer that you might get even more.
The MD of Reeds Rains, Nigel Favas is quoted as saying that there has already been a “fantastic” response from his clients “enabling buyers to see what vendors will sell for has a benefit for both parties.” I bet.
With values on the turn and prices actually falling in areas like Nottinghamshire according to the Land Registry it is not surprising to see asking prices being dropped. What is worrying is that the website Rightmove.co.uk has suggested that asking prices have already fallen by £5% since last October. What seems to be happening is that as the market slides both agents and sellers are chasing prices down. In a falling market you have to price ahead (i.e. to where people expect to see the guide price) not where it is today.
In what I would admit was not a very scientific experiment, last week I looked at 300 houses that went on the market last August. About half had not sold and were still, seven months later, still being offered for sale. Of those that were no longer on the market, less than 20% appeared to have sold although this figure may rise as the Land Registry catches up.
So, if you are already on the market or thinking of selling, make sure you listen to your estate agent and be aggressive with your asking price. Unless you look serious, buyers will assume you are either flying a kite or stupid. Either way you will appear unrealistic and they will go and look at something else. If you are looking to buy, shop around. With some agents already in Sale mode, it looks like the market is falling away faster than the traditional indices are reporting.
Remember, it ends up costing nearly twice as much to borrow £1 as a mortgage over 25 years so if you can save yourself £8,000 now it’s like saving £16k over the period of your mortgage – £16k paid out of taxed income! If you can save another £8k at the start then you may just be able to afford the fees, taxes, higher living costs and expenses that you will have worked out or been told that Mr Darling has just added for the privilege of moving house and improving your lot in the UK in 2008.