SPECIAL FEATURE: The return of an old enemy
There are welcome signs that the pace of the recovery is finally beginning to pick up – so much so that the International Monetary Fund has just upgraded its forecast for Britain’s economy.
The manufacturing, construction and services sectors have all experienced strong growth over the past quarter – the latter at its fastest pace since 1997 thanks to in no small part to the recovery we’re seeing in the housing market.
Sniff and you’ll get a whiff of confidence that appears to be growing amongst estate agents and intermediaries alike in many regions around the country.
However, a pick up in the market also means that we could see the return of the age-old enemy of buyers – gazumping.
Normally a by-product of a stronger housing market, it’s not as bad as it was at the peak of the market five or six years ago but it can still destroy the dreams of would-be buyers and cost them serious money which few can afford.
Whether gazumped by a last minute higher offer or a mortgage lenders’ valuation is below the price offered, cold feet by the seller, illness or damage to the property, one in three house sales fell through last year. Back in 2008 nearly half (45%) failed to get to completion.
There are a number of things that your home buying clients can do to protect themselves before they make an offer such as having a mortgage application lined up and ready, having a solicitor who has completed the relevant checks and making sure their dream home is taken off the market for an agree period.
All these steps, however, won’t guarantee they get over the line but they can at least protect their financial commitment if not their emotional one.
Policies such as Home Buyer’s Protection insurance will protect your client if they are gazumped by an offer of £1,000 or more if the mortgage lender’s valuation is less than 90% of the sum offered for the property.
It will also cover your client if they have to withdraw from their purchase due to unforeseen illness or property damage is incurred before completion and exceeds 10% of the agreed price.
Necessity is the mother of invention and this product has come about as a result of the need to innovate in a contracting market as so many have in the last six years, it just so happens that it can offer a great defence against the auld enemy as well!