Get a grip on price and you can still sell your property
Be realistic about profits and be tough with your estate agent if you want to move
Saturday 17 January 2009
Trying to sell your property has become a much trickier endeavour over the past year, as house prices have slumped more than 15 per cent, and buyers have built up the courage to make ever more audacious offers. As a result, far fewer properties have been placed on the market – as homeowners have often elected to put up with their current residence, rather than face the indignity of selling their home for a fraction of what they believe it to be worth.
But in spite of the barrage of negative headlines over the past few months, it's wrong to assume that you won't be able to sell your home. According to Lindsay Cuthill, a director of the upmarket estate agency chain Savills, properties are still selling, and if you're willing to be realistic about price, it's possible to find a buyer within a few weeks. "Price is still the key factor," says Cuthill. "If it's on at what the market perceives to be the wrong price, you won't sell it."
Cuthill adds that it's worth being philosophical about paper profits that you may have made. If you bought your house more than four years ago, it should still be worth more than you paid for it. The fact that there was a point when you could have sold it for 25 per cent more than you can now, is irrelevant. And if you're upgrading to a bigger property, you should end up being a beneficiary of the slump. After all, if your property has fallen 20 per cent in value, the property you're buying should have fallen by a similar proportion. So a three-bed property that was worth £400,000 may now be worth £320,000 – a saving of £80,000. The £250,000 property you're selling will have only lost £50,000 of its value.
You can make further savings by not incurring unnecessary costs in the sale. Selling property can be pricey – with legal and estate agent fees, home information pack charges and new mortgage costs. But by shopping around, you can save thousands of pounds, and keep these to a minimum.
Using an estate agent is still the easiest way to sell your house. If they're any good, they should be able to bring a string of prospective buyers round to view, and because they're paid by commission – which is a percentage of the sale price – you can rest assured that they'll do their best to sell it for as much as they can.
The downside of using agents is that their charges will run into thousands of pounds. Typically, they'll charge around 1.5 per cent of the sale price – that's £3,000 on a £200,000 property – and some will charge 2.5 per cent. Agents will also often penalise you for using more than one agency – perhaps charging you 2 per cent if you don't agree to let them be in sole charge.
However, it's well worth driving a tough bargain with your agent – and trying to agree better terms. With so few properties on their books, it's likely that they'll be desperate for your custom, so you may be able to whittle them down to a charge of 1 per cent. At the very least, you should be able to get them to waive the additional fee for putting the property on with more than one agent. Be aggressive, and don't be afraid to go elsewhere.
Although the direct sale market is still relatively small, it has been rapidly growing, facilitated by the internet. Websites such as homesonsale.co.uk and houseladder.co.uk don't charge any fees or commission. Alternatively, you can opt for a pay-site, such as mypropertyforsale.co.uk, which posts your listing on a number of popular websites if you pay its higher fee of £139. Halfapercent.com is another site that lists your properties on high traffic sites – including Rightmove and Primelocation. It charges 0.5 or 1 per cent commission depending on which level of service you go for. Whichever online option you go for, it's almost certain to be cheaper than using an agent.
If you need a very quick sale, and are willing to make a compromise on price, it may be worth considering a sale at auction. From start to finish, it's possible to offload your house in as little as a month, and if you can persuade buyers that you're giving them something of a bargain, then you could generate quite a lot of interest.
But Paul Mooney of Savills ( savills. co.uk) auctions says this is not usually the ideal option for people who are selling their own home. "Most of the properties we deal with is unmodernised stuff from housing associations or lenders – and even in a good market we don't tend to see many owner-occupiers using auctions," he says.
Mooney adds that if your property is relatively modern inside, it's unlikely to attract property developers – who make up a large proportion of the buyers at auctions. The cost of selling at auction is also slightly higher than using an agent. Savills, for example, charges 2.5 per cent of the sale price, as well as £400 plus VAT for the listing in the auction catalogue. Barnard Marcus (barnardmarcusauctions.com) and Allsop (allsop.co.uk) are two other operators that conduct property auctions. Check their websites for dates.
Another option for a quick sale is to approach a property developer or property speculator. Developers such as Barratt Homes will consider doing a part exchange if you're willing to upgrade to one of their new homes. At the moment, Barratt is also offering to give you an additional £1,000 a month towards your mortgage for a year, on certain plots.
Perhaps the quickest way to get a property off your hands is to sell to a property speculator such as instantpropertyinvestor.com or quickmove now. com. These companies claim they'll offer you up to 80 per cent of your property's value, and some speculators say they can complete the deal in 48 hours. However, most offers will not be as good as 80 per cent.
If you want a relatively speedy sale, then it's important to hire a reliable solicitor. The best option is to take a recommendation from a friend or relative. However, if you have to look for one yourself, it's worth phoning or even going round to their office to get a feel for what they're like. If the phone rings for a long time, or you're left on hold for ages, then the firm may be one to avoid.
Once you've sold your property and are looking to buy a new one, spare a minute to think about your stamp duty bill. At the moment, you pay 1 per cent of the property's value if it's worth between £175,000 and £250,000. It then rises to 3 per cent if the property is worth between £250,000 and £500,000, and it's 4 per cent for property's worth anything more. If you're looking at properties valued close to the threshold, remember that you will make a significant saving by buying something in the lower tax category. Stamp duty on a property worth £249,000 is £2,490, while the tax on a home worth £251,000 is £7,530 – a difference of more than £5,000.
You'll also need to get yourself a home information pack (HIP) when you sell your house – which can set you back as much as £400. It's already mandatory to have a HIP before you sell your home, and as of April, it will be mandatory to have one before you even put your property on the market.
Your HIP must contain an energy performance certificate (which you can obtain by having a professional assessor come round to your house), as well as details of local searches. Although your estate agent is likely to offer to provide your HIP for you, you should be able to get a much better deal by shopping around online. Myhiphome.co.uk, for example, puts together HIPs in between five and eight days for just £159, while HIPs 4u.com charges £152 plus VAT (fees are high for leasehold properties).
If you're planning to buy a new property, you're also going to need to pay for a survey, but it's worth exploring whether you can combine this with the valuation which your mortgage company will require. These are often offered free by the lender. A basic survey should cost you no more than £250, while a full survey will cost in the region of £600. Finally, you may be able to save money on moving day by hiring a van and doing it yourself – rather than splashing out on the likes of Pickfords or Bishop's Move.
Getting a mortgage Shop around – save pounds
Once you've sold your old property, you'll probably need to get a mortgage together to buy your new one. In the current tight markets, getting a loan is less easy than it was, and the best rates are reserved for those who don't need to borrow any more than 60 per cent of a property's value.
"It is still possible to borrow up to 90 per cent LTV, but there are only a handful of lenders to choose from, so you will pay a premium on the rate," says Melanie Bien, a director for the independent mortgage broker Savills Private Finance. "For example, if you are borrowing up to 60 per cent loan to value, you can get a one-year fixed rate at 3.99 per cent from the Woolwich (with £995 fee), but if you are borrowing 90 per cent, Cheltenham & Gloucester will charge you 5.69 per cent for a two-year fix (with £994 fee)."
When you're shopping for a mortgage, keep an eye on the fees. Most of the lowest mortgage rates are accompanied by four figure administration charges – which may not be economical if your mortgage is relatively small.
It's worth calling a broker such Savills (0870 900 7762) or London & Country (0800 953 0304), which can compare the best deals. L&C doesn't charge fees for advice. Even if you use a broker, it is worth checking the websites of major lenders for good deals.
Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk
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