Buyers and sellers changing their minds lie behind almost a third of fall-throughs - the single biggest reason why transactions collapse, according to a new survey.
The sample for the study is small - just 574 customers of a comparison website over the course of a year - but buyers and sellers changing their mind lie behind 29 per cent of fall-throughs, with survey problems coming second and accounting for 17 per cent.
Then mortgage problems, chain issues and gazundering and gazumping come next.
Some 67 per cent of the buyers and sellers surveyed by the firm reallymoving believed that Reservation Agreements would have benefited them.
The Ministry of Housing, Communities and Local Government says the Reservation Agreement concept will be trialled in the New Year with some buyers in two pilot regions of the country being obliged to pay £500 to £1,000 in the form of a non-returnable deposit.
This would be to see if fall-throughs for these properties dropped significantly from the current 25 to 35 per cent level discovered by MHCLG research.
Reallymoving says some issues leading to fall-throughs - such as a would-be buyer having difficulty obtaining a mortgage - shows the importance of estate agents vetting potential buyers to ensure they have a mortgage offer in principle before committing to a sale.
“The system for buying and selling property in England and Wales is fundamentally unfair … To save the millions of pounds wasted through collapsed deals every year and to foster renewed trust between buyers and sellers, change is urgently required. Reservation Agreements … would undoubtedly prompt people to think hard about their commitment to the process, which can only be a good thing” says Rob Houghton, the chief executive of reallymoving.
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Any measure to reduce failed sales is to be embraced including reservation fees, which many in the industry have seen before. Fundamental buyer’s remorse though is a harder thing to overcome, and no study has been done to quantify this factor and there seems little chance to remove it from the property sale equation.
On the positive, due to advances in the proptech arena, companies like Offr are putting together solutions to minimise both the period of time taken to get to exchange, whilst equally as importantly having buyers fully qualified at point of sale, and the property pre-packaged conveyancing wise, with a fully transparent offer process leading into a seamless post sale agreed process where vendor seller and the agent and the conveyancing process is front and centre.
It is not a criticism but a sad reality that many agencies have become front loading, win the instruction, list it, sell it to a buyer, send out the memo of sale, and then... there seems often - a black hole of nothingness for weeks, and it is at this point the sale process is at its weakest and the fall throughs occur. RoPA are keen to see the fuller adoption of pre-conveyanced property prior to point of sale, some may mutter it is HIPS mark 2, but the difference is with proptech innovations which were not around before, far from hindering the sale process, motivated vendors can meet motivated buyers, on a business model where an omni channel approach of accountability means that post sale being agreed there is no longer that mysterious black hole where nothing seems to be going on.
With dashboards, and mobile phones, the stakeholders in the sales, the agent who carries the cost of aborted sales, the vendor and the buyer and the conveyancer who also have to absorb lost costs when sales fail, will actually in real time be interconnected, rather than sitting waiting for ‘something’ out of their control to happen.
Whilst not all sales can be saved, pre- qualification of buyers, and pre-registration of properties, and an integrated, interconnected and transparent process which the agent and the other stakeholders are equally a part of, may well with the new technology that the millennials and generation z take for granted, move the industry away from the old model.
A model where agents sell property, solicitors do the legals, to a more enlightened, transparent and collectively biased process where all parties board the train at the same point and have a ticket to the same destination. Now that is a train ride that most estate agents whose margins are being squeezed would definitely like to be on.
Andrew, I agree with many of your points, when you look at the journey, from a customers perspective, of buying a house it is predominately an emotional one. So for sellers to provide more 'logical' information about their property, this will no doubt improve the decision making process and make it more certain. As a fan of the principle of HIPS I agree that now with prop tech helping. I cannot hide the simple fact that if the Agent is to be Vital to the moving experience we need to get on board with change and look positively at what we can embrace that in some part helps customers with the 3 pillars of moving, Best Price, Shortest Time, Less Stress.
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