Speeding up the house sale process has to be in the interests of everyone involved whether they are buyers, sellers, estate agents, mortgage brokers or solicitors. And it can be done when everyone involved wants it to happen as I know from my experience as a solicitor.
On one glorious occasion instructions were received from a buyer in the morning, papers were obtained, the searches and survey undertaken, the mortgage offer received immediately followed by pre-completion searches report on title, receipt of mortgage funds and completion all in one day.
Willing buyers and sellers plus solicitors, surveyors and mortgage companies can make it happen but far too often it does not work. Everyone knows stories of friends, relatives or work colleagues who have had to take a more scenic route to their house deal. Horror stories of gazumping and gazundering, buyers pulling out at the last minute or sellers deciding that they really don’t want to sell are well-known.
Grim statistic
Spring Move research shows more than 2.5 million house sales have fallen through in the past five years – a rate of around 500,000 a year. That is a grim enough statistic on its own but the reasons for the rate of failures illustrate why the house sales process has to be made to work better.
Research shows that time-wasting by buyers and sellers are among the major causes of the high rate of deals that fall through. Around 38 per cent who have seen house sales fall through blamed time-wasting by buyers, and 41 per cent who have lost out on house deals cited time-wasting by sellers as the main reasons for their house deal failing.
People in the North East and North West of England are among the worst affected with 11 per cent of people seeing deals fall through in the past five years.
The reason cited by most people for house sale failures was a change in their personal circumstances while other excuses included no longer wanting to sell or no longer liking the house they wanted to buy. The stress and emotional upheaval behind those figures is bad enough but there is also the financial cost involved and time wasted by the other parties in a housing transaction.
HIPs
Those statistics demonstrate graphically why it’s generally considered that moving house is among the most stressful things you can do in your life. Mortgage intermediaries of course see both sides as they will buy their own houses while also having to sit on the sidelines in their jobs as deals fall through and time is wasted preparing mortgage offers.
The government of course has a plan to end the house sales misery in the form of Home Information Packs (HIPs), which are due to become compulsory from 1 June 2007 with national tests of the packs from the middle of this year.
At Spring Move we already work with estate agents to handle all the reports and legal activities associated with a house transaction and produce a Property Information Pack which helps speed up the process.
HIPs aim to produce the same outcome and are to be welcomed if they genuinely bring an improvement to the process of buying and selling houses. However, the regulations have to ensure that consumers do not lose out in the long-run and the additional costs incurred do not outweigh the benefits.
The packs will provide all the information upfront that buyers currently only receive once they have made an offer. Typically that includes terms of sale, evidence of title, replies to enquiries, copies of consents and approvals, replies to searches and a survey of the property which will be known as a Home Condition Report.
HIP amendments
We believe the regulations as proposed by the government need some amendments. For instance it is proposed every pack should have a logo on it. This seems a pointless money-waster as consumers will ultimately bear the cost. The government wants to include home contents and home use forms which do not have to be completed. They should either have to be completed or not be included.
There should be more information in the pack such as an interpretation of the contents – many people looking at the packs will need guidance on what they are being told.
Packs should include valuations as ultimately lenders will have to carry them out further delaying the process. The inclusion of a valuation will ensure that selling agents place a realistic valuation on the property and are more likely to sell a property within the expected 6-8 week timescale, which will be needed if the content of the HIP is to remain valid.
Not including a valuation will be a green light to the less professional estate agents to continue to overvalue properties. The ability to access valuation evidence through the internet seems to reinforce the point that this information should be included; its inclusion makes the whole process more transparent which has to be a good thing if the conveyancing system is to move into the 21st century. Also, contracts ought to be in the pack. These are, in the main, in a standard form and its inclusion will identify to a buyer the basis upon which any transaction will proceed.
HIPs are going to become reality so it makes sense to make them work for the benefit of all parties in the housing market. If they work well the only losers will be the time-wasters and they will not be missed.
Stephen Foden is chairman of Spring Move
