Feeding Frenzy

You have, of course, read the horror stories: National house prices rising by 3 per cent (around £5,583) in a single month (October 2013), and a cool 17 per cent over the year according to the Land Registry. Average London house prices are hovering around the £400,000 mark, and an average of 14 people are now competing for every London home. A recent survey on behalf of the National Housing Federation – complied by analysts Oxford Economics ¬– suggests the average London home could climb by 40 per cent in the next six years, meaning prices will be more like £650,000 by 2020.

The Government’s Help to Buy scheme further saturated the market, with many buyers adopting a ‘now or never’ mentality, which might be fuelled by terrifying headlines, the desire to keep up with friends or pressure from family, and the October roll-out of the Governments second phase of the scheme. Despite concerns that the program might stimulate another housing bubble, the governments guarantee to underpin 15 per cent of a loan, on just a 5 per cent deposit, has proved incredibly alluring for many first time buyers.
All food for thought. But don’t start packing up and making plans to move out of this fair city just yet. With planning, preparation and some good tactics, you can steal a march (to return to the earlier military metaphor) on your fellow house hunters and get in there now when the going’s good. Here’s some tips to make sure you’re ready to move when you need…

Get Pre-Approved
If you’ve sold a house, you’ll know, but if you haven’t, this will still make sense. Imagine your home is on the market. Your agent calls one day to tell you that two offers have been made. The first is from an unknown quantity that is still in the early stages of financing and mortgage approval. The second offer is from a couple holding a current credit check, mortgage in principal, and a fat deposit sitting in their bank account. Who is the seller going to choose? The second couple could tell them they plan to turn the place into a drum & bass nightclub and they’d still be mad not to bite their hand off. The merits of having your finances in order before going to market cannot be underestimated. You will find the whole process is turned on its head when you can prove you are ready to buy at the drop of a hat.

“Going house hunting with a pre-approved loan letter in your back pocket means you can hunt with a far clearer head.”

You’re one step ahead of the many other buyers, so rather than panicking about the hordes other hunters, which might colour your judgement when it comes to a property, you can stop, take a breath, and ask yourself ‘is this really the property you want to buy?’

Find A Good Estate Agent
And make friends with them. Trust on both sides is important. You cannot, and should not, work with someone you’re not completely comfortable with. They need to understand your hopes, dreams and requirements from your plans for the future, down to the nitty-gritty of location, quality of finish, and whether or not there’s residents parking, for example. You also want to be the person your agent calls first when a new listing becomes available. Communicate what your want, and what your position is, clearly, concisely, and rationally:

“you want to buy a house - your agent wants to sell it to you.”
That’s the dream relationship you’re looking to find. Equally, buying a house comes with a fair amount of admin you’ll be unsurprised to know. And whether you’re a first time, or fourth time buyer, having a knowledgeable guide to help you navigate the labyrinthine T&Cs of buying a home cannot be underestimated. How do you find this agent? Find someone who’s bought or sold a house with them and ask them. Has a friend or family member recently made property move? Talk to them. Honest, first hand info on a possible agent will help you make a decision or back up any gut feelings you have.

Lead With Your Highest Offer
Found the right house, in the right place, for pretty much the right price? Then *cue A-Team music* it’s go time. By this point you should have spent some time monitoring similar properties, in the same or similar area that you want to buy in, so you should have a handle on how much they’re selling for, and how quickly they’re being bought. These are both little things that will further equip you and put you in the best possible position when the time comes to put your money where your mouth is. Think about it: if the properties in the area you want to live in are selling slowly, below the asking price, then you are in a better, more informed position to put in a lower offer. Conversely, if the house prices in your desired area, or even street, are stable or increasing, you need to lead with your best offer. It won’t feel great initially, but you have to make a decisive move if you’re to win out in such a competitive market. Put the offer in writing, then if the seller is interested, the negotiations start. At this point it’s worth pointing out that as a buyer, at this point, you’re at a slight disadvantage. The seller has a professional negotiator working for them in the form of the agent, while as a buyer you’re left to your own devices. If this is a concern for you, then you can appoint a buyers agent to provide support.

Consider A Bridging Loan
Calling this a last resort is a little strong, but if you know you want a very, very specific property, then this might be your solution. A bridging loan is exactly as it sounds – it’s a loan that allows people to complete the purchase of a property before selling their existing home, by providing short-term access to money at a high-rate of interest. Often used by property developers and those buying at auction, these loans are not for the faint of heart. Although they are growing in popularity due to the speed they can be granted in comparison to the relatively sluggish banks and building societies, beware: you could end up facing interest of 1.5 per cent a month, which translates to a whopping 18% a year. There also legal and administration fees to be heeded. But if you want to make a fast, cash purchase, these are worth investigating.

Think Fast, Move Fast
So the futures not as bleak as some of the headlines might make you think; Buying the home you want is very possible, and it’s going to remain that way. What you need to do, like an expert chef, is prepare yourself. Prep everything, from finances, to timelines, to details on where you want to live and why. Have the answer to any and every question ready in your arsenal. Give yourself options and you’ll find it. That house. That home.

Words:
Josh Woodfin in conversation with James Sims / MIke Horne