Tuesday, 26 April 2011

Property In The UK 11: Squeezing Out A Little Bit More

The house I live in has been on the market since September 2010.  Not a good time to be selling a house, but as regular readers know, I have never been lucky with property.  If it were not for HM Revenue & Customs admitting to overcharging me £16,000 worth of tax in 2008 and refunding it (with no apology) then, by now the house would have been repossessed.  I have been unemployed for 11 months, bar six weeks' of a few days of work (some weeks one day, some two days per week) and despite still having regular interviews I seem no closer to getting back into employment.  Consequently, because of the woman who lives in my house running a business I am not entitled to any benefit to pay the mortgage.  The mortgage lender, Nationwide Building Society, has repeatedly refused to discuss my inability to pay, saying that if I have enough to pay at least one month's mortgage payments, then it is too early to discuss me defaulting or going on to interest only payments.  With unemployment rising and despite 27 interviews now, no sign of work, the only option is to sell the house.  Of course, that is easier said than done.

I acknowledge that I am very bad at selecting companies to provide me a service.  I always pick the worst company available (though on a number of occasions, recommended to me) for the particular job.  Consequently I have been ripped off by letting agents, removal companies, electrical repair companies and now estate agents.  Within a five-minute walk of my house there are at least five estate agents, though the best decided to morph instead into a financial advice company, much to my frustration and the company they recommended nearby only lets, not sells properties.  Consequently I picked a large company close to my house that was tied into national networks so as to get the coverage.  However, the staff turned out to be clueless, making no effort to learn about the neighbourhood (even though you can see their office from my house) or the potential buyers coming round and what they were looking for (buy-to-let, buy-for-family, buy-for-self; elderly, middle aged, young; with/out children; local, from London, etc.) and said nothing bar 'this is the living room'.  They had the cheek to say they would no longer do accompanied viewings because I simply took over the sales role.  I said that was insulting as I had only taken that role because their staff made no effort to address the viewers or sell the property.  Anyway, we got one buyer from them, but it took him three months and he had not even sent round a surveyor.  We abandoned both him and the estate agent.

The next company we went for, is tiny, but works incredibly hard and within a week of transferring to them we have another buyer, offering £2000 more than the first.  I live in a town with still high demand for property, very close to a good range of shops and good primary schools.  Despite paying £240,000 for the house in 2007 it is now worth £230,000; to be expected with the downturn in the market.  Offers have come in starting at £205,000, not leaving enough to clear the debts on the house and have enough to put down a deposit on a rented property.  We have managed to get offers now up to £217,000 helped by the move from Winter to Spring, but still in line for a heavy loss.  Given the location and the benefits of the property, once the economy recovers, the value is likely to rise fast, especially with the revival of buy-to-let mortgages reported this week.  Thus, the person is getting a good deal on the property, £13,000 less than the valuation given even now by the estate agents.

These days, it is apparent, that a good deal is not enough for house buyers, they constantly want to squeeze out more from the seller.  I have experienced this even back in 2007 selling my flat in London, a time when the housing market was much healthier.  Due to being bullied by the landlord's representative, I effectively sold a two-bedroomed flat for the price of a one-bedroomed flat in the area of Newham.  It was clean and modern and I had replaced the bathroom and the windows and made other improvements in the six years I had owned it, primarily for my own benefit when living there, but clearly improving it over some of the neighbouring flats.  In my hurry, the buyer got a very good bargain.  However, this was not enough.  Living in rented accommodation I had no desire to move the furniture and white goods from it.  This was initially not an issue, but then suddenly the buyer wanted them gone at my expense.  Then he wanted the flat to be cleaned, by him even before he owned it, at a cost of £500 (€565; US$805).  The flat was not unclean and it took £40 to employ a woman to clean it thoroughly.  However, it was clear the buyer was using it as an excuse to squeeze more money for me, even though he was paying about £30,000 (€33,900; US$48,300) less than an equivalent flat in the same area would have cost him.  Once the front door lock had been destroyed by the estate agents' carelessness on the day before the contract exchange occurred, I took the opportunity while it was being replaced to ensure that the buyer would receive a welcoming gift of rotten milk, a mouldy fridge and faeces when he arrived.  Any waste paper and other rubbish I could find, was distributed over the flat so he could really see what an untidied flat looked like.  As you can understand, I was angered, by the attempt to squeeze more and more from me, even when I was selling the place at a bargain price.

A very similar thing occurred with the current house.  The second buyer we accepted first sent around three inspectors.  The surveyor spent three hours at the property and people came to check the central heating and electricity too.  This dragged out over a couple of weeks.  The buyer did not take efforts to conceal her contempt for us and I overheard her ridiculing myself and the woman who lives in our house as stupid.  Clearly she, like the buyer of my flat, believed that we were so desperate that she could humiliate us and we would have to swallow it.  I have no idea why humiliation is now seen to be a necessary part of buying a house.  Certainly getting an extra £500 from the buyer now seems to be part of a fashion.  In this case she did not demand cleaning, she asked instead that we paid £500 towards the £1000 it would cost to build an additional wall around the kitchen; a wall that we would gain no benefit from.  We naturally refused.  The estate agent felt the demand was ridiculous, which suggests that it may not be as common behaviour as I have experienced, but he did offer to take £500 off his commission instead.  The woman, disgruntled with our refusal to comply with us immediately withdrew her offer, over two months since she had made it, and like the first buyer, during that time, had effectively blocked other potential buyers.

These may be isolated incidents, but to me there does seem to be a trend that, as a buyer you see what you can squeeze out of the sellers.  Getting a good price is not enough.  There has to be some specific demand imposed on the sellers to make it clear to them that you hold the power.  To me this does not seem to be a healthy way to do business.  Either you want the property or you do not.  Either you can afford to buy the property or you cannot.  There is obviously room for discussion over the price and we have engaged with that, all the buyers (we are now on to the third, who rather worryingly has requested a third viewing of the house as I have been writing this) have got a price well below the asking price.  When seeing Niall Ferguson talking about the success of Western capitalism and how now it is not thriving so well as it is in China, he noted the fact that honesty in business is one trait highly valued in Chinese commerce.  This element seems to have gone from buying and selling in the UK and slows down exchange and discourages commerce.  This applies to selling on eBay in the UK as it does to selling houses.  Sometime in the previous decade, perhaps prompted by television programmes, buyers have been encouraged to move from simply getting a good deal, to squeezing unnecessary extras.  After all, on a £217,000 sale, the commission to the estate agent is usually £4880 and unless the buyer if a first-time buyer the Stamp Duty Land Tax (SDLT) is £2,170, so what is the fuss over £500?  It seems to be a principle that Ferguson missed that is damaging to capitalism in the UK today.  It is not enough simply to make a profitable deal, now you have to 'win a victory' too and rub the face of your 'opponent' in the mud by asserting how much more economically powerful you are than them.  This is one thing which harms sales and business in the UK and seems to be increasing as the recession widens the gap between people who previously would have been on the same economic level.  Selling your house should not require you to kow-tow to someone who explicitly holds you in contempt.

P.P. 28/05/2011
This aspect of the house sale has taken on an additional unpleasant twist.  It is clear that I have a sign on my forehead that I cannot see but which instructs everyone else: 'patronise and exploit this man as much as you can'.  Last week I was fortunate enough to get work.  This means there is no longer a need to sell the house, though we will struggle with paying the mortgage until my first salary arrives at the end of July.  However, given that the house is worth tens of thousands of pounds less than when we bought it and we own 1/300th of it more, every month of the mortgage we pay, if we can hold on to it until prices have at least returned to their 2007 level, then we will at least be a little better off.

Once the job had been confirmed, I telephoned the estate agent to tell him we were taking the house off the market.  I said I expected an invoice for services rendered in the four months they had been selling our house for us.  I assumed he would inform all the relevant parties.  Today, however, I received a very snotty letter from the solicitors' office, asking why they had not been informed as well.  It was clear they had found out in two days of me telling the estate agent anyway, but that I did not crawl round to them and kiss their feet and apologise for not continuing with the sale, was clearly sufficient to leave them indignant.  They were not our choice of solicitors anyway, we only took them as they are the ones the estate agent uses.  All our communications, bar one visit, have been through the estate agent.  Given their attitude now, I am actually glad I did not call them.

It gets worse.  When our second buyer decided that because we were unwilling to pay her £500 and have a wall built to no benefit of us, she would break off the sale, we were left with the solicitor's charge for the work they had done already, a sum of £300 [€318; US$483].  We contacted the buyer to see if she would reimburse us this money.  She did not say no, she simply refused to respond to any attempts to contact her.  We accepted that with no written contract we could not get the money out of her.  Now, however, this time we have broken the sale and now this latest buyer is trying to get his solicitor's fees back out of us.  Despite being employed by us, our solicitor seems always to be working on behalf of other people.  In the first case she did nothing to help us recoup the money from the buyer who broke off.  In this second case, however, she has forwarded a bill from the buyer's solicitor, at a cost of £8 to us, and written to tell us it is 'only fair' that we reimburse the buyer.  Why is it 'fair' that we have to pay the fees for everyone?  The solicitor seems to have no interest in aiding us, despite being paid by us, at fees £66 higher than those levied by the latest buyer's solicitor.

Part of the problem seems to be that we are too honest and treat people politely.  In contrast the two buyers have behaved in a 'chav-plus' manner.  They behave as if thuggish, self-centred people from a housing estate, terse and rude in their manners, expecting always to get that bit extra, and yet, they have the money to speculate in property.  I could be terse and aggressive in my business dealings, put on the accent and behaviour I learnt in Mile End and it is apparent in not doing so I somehow signal that I am open to being exploited by all and sundry.  My advice is: the only way to go into buying or selling a house in the UK in 2011 is to behave as if you are some small-time gangster who has retired from the Ocean Estate in Stepney to Chigwell.  In addition, avoid Aldridge Brownlee solicitors.

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