Property: How to make deals stick

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The Independent Online
The practice of gazumping can rear its ugly head at the most apparently unlikely times. It is perceived to happen only when prices are booming, yet it only needs two buyers to be keen on the same house for temptation to strike. Few of us can say, hand on heart, that we would not go for a higher offer - especially when the value of our homes has sunk far below our expectations.

There have been calls for changes, to bring us in line with the Scottish system, whereby purchasers and sellers are locked into deals once an offer is accepted. Of course, individuals south of the border are free to make similar binding agreements, but often choose not to because there are grave disadvantages - not least that both parties forfeit the chance of grabbing a better deal. Remember that gazundering is just as pernicious as gazumping nowadays, as buyers threaten to pull out at the last minute unless the price is cut.

Also, Scottish buyers may have to check out several homes before they can make a confident bid, perhaps incurring costs for legal work and structural surveys on each one. Once they make a bid that is accepted, they are legally bound to it.

One solution could be to speed up transactions, which the Government is now planning to do through more efficient processing of titles at the Land Registry. Local authorities will also face penalties for taking too much time searching their files. But the average purchase still takes only six weeks, according to a report by the Lord Chancellor, and new offers can come in within days to spoil a deal.

The Law Commission has made several attempts to unravel this knot, and has probably arrived at the best solution: we should look to the Continent, where buyers in most countries pay a non-returnable 10 per cent deposit and sellers face a penalty of twice that amount if they pull out.

ROY BROOKS, the late lamented London estate agent, master of the engagingly honest advertisement back in the Sixties, had the perfect answer to gazumping. 'He was very proud of his reputation and did not want to be blamed by the buyer,' says Tony Halstead, his former partner, 'so he just presented sellers with a simple form to sign.' The waiver was as forthright as Roy's adverts. It merely said: 'I am going to be a shit. This is not the agent's fault.' Tony claims he can't remember a single case of gazumping.

REMEMBER, back in 1983, having to make that agonising choice between the frivolous purchase of an E-Type Jag and the heavy responsibility of a mortgage? You should have bought the car. It would fetch more than three times what you paid for it, while every pounds 1,000 ploughed into property in that year is now worth pounds 2,234, according to the Household Mortgage Corporation.

House prices peaked in 1991, prompting one commentator, John Wriglesworth, to coin the phrase last year that homes were now 'for nesting, not investing'. Still, bricks and mortar have done reasonably well over a decade, in spite of the slump.

Classic car prices, meanwhile, though they too had begun to fall by 1991, never dropped enough to wipe out the advantage over certain other investments. Had you put your pounds 1,000 into ultra-safe government giltsin 1983, it would be worth less than pounds 1,240 today, while a gold bar would be a trifling pounds 765. Even the adage about putting your money in a building society rather than asking for a loan has been disproved, as that would now total pounds 2,136. The big bucks are in shares - today worth pounds 4,420, the stock market crash notwithstanding. On the other hand, you would have been somewhat pressed to live in a share certificate or to bring up three kids in a car.

HOME SALES continued to rise between Easter and the early summer. The number of deals between April and June soared by 36 per cent to more than 297,000, according to the Adams Residential Property Index. This should give owners more confidence about being able to move, although there is a long way to climb out of the slump. Sales are still almost 10 per cent below those in the year to June 1992, and James R Adams, the company that produces the index using figures from solicitors around the country, is refusing to make a hard forecast for the rest of the year until after this month.

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