It’s only £10k... hardly worth quibbling over!

Homeowners – and probably buyers too – don’t think carefully enough about price when a home changes hands because we have all become a bit too blasé about the housing market.

By The Newsroom
Saturday, 3rd September 2011, 10:12 am

“Step back from the negotiating process as if you were an outside observer, imagine yourself looking down on the scene from a balcony for a clearer view of reality,” advises David Pollock, managing director of estate agent Greene & Co, who starred in BBC Two’s fly-on-the-wall documentary Property People.

He believes people get so carried away by the excitement of buying and selling that they lose focus on the real value of money.

“If I came up with a legal scheme to make £10,000, you would listen to it carefully and be willing to spend hours and hours on the project,” he explains.

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“When it comes to property people give the money away in a flash.”

In his new book, 101 Things Your Estate Agent Should Tell You When Buying Or Selling A Property, Mr Pollock argues that most of us are obsessed with rapid profits on bricks and mortar.

“I can’t emphasise it enough: buy a home as a home first and as an investment second. It is this obsession with property as an investment which has contributed greatly to credit crunch problems which are causing so much trouble globally today.

“My own view is that buyers shouldn’t take out a mortgage worth more than 75 per cent of the purchase price and nobody should take out a mortgage at any time which they couldn’t afford if monthly running costs rose by 20 per cent.

“Having worked in the property industry for 34 years, I have seen people make the same mistakes over and over again, so I’m hoping an insider’s knowledge helps buyers and sellers make the most of their estate agent.”

Pollock thinks we have lost touch on the final £10,000 on a typical home advertised at £320,000, around the average in several London boroughs.

He said: “In a market where prices are moving far more slowly, many vendors are far too quick to allow a £10,000 discount almost as a knee-jerk reaction.

“I could understand it when prices were flying around all over the shop, but the value of many houses has to be earned with much more effort these days.

“Of course, you could equally well argue that in plenty of cases purchasers often spend that final £10,000 too easily as well. Everybody gets caught up in the rush, and it’s only a bit more on the mortgage, isn’t it? Though it may take years for us to repay.

“With the internet available to buyers and sellers today, there is really no substitute for due diligence, due diligence, due diligence. Can you justify this price for a home, as buyer or seller?

“If you can, then stick to that price.”

Mr Pollock thinks too many vendors are tempted by the prospect of sole agency – only one agent handling their sale – because they think it saves money.

He says: “Sole agency means a commission of 1.75 per cent, whereas multiple agency is in the 2-2.5 per cent range, possibly even higher.

“Multiple agency means you end up paying more for a sale, but I believe it gives vendors a much better chance of getting the best possible price. If a home on the books of my agency is sold by a rival down the road, I’m going to give my staff a pretty hard time, believe me!.

“Competition encourages each agent to work harder to sell your property, resulting in wider exposure, and increasing the chances of selling.”

He advises sellers to nag their estate agents “nicely” to ensure they are pushing ahead with the sale.

“Just remember to do it in a nice way, by prefacing your request with, ‘I know I must be driving you mad but...’.”

Also, says Pollock, a buyer and seller should meet to discuss the final points of a sale.

“A gentleman’s word is worth £10,000,” he said. “I encourage a buyer and seller to talk through the main terms of a sale, largely to avoid any ambiguities, and possible misunderstandings later on.

“I believe a meeting of this type builds rapport and hardens up the agreement. Certainly I have found it can dramatically reduce the number of aborted deals from gazumping and gazundering.”