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TODAY'S OTHER NEWS

Agent avoids fall-throughs by making sellers and buyers shake hands on deals

A London estate agent says his system of ‘moral agreements’ between sellers and buyers prevents chains collapsing and means his company has “the lowest fall-out rate from agreement to consolidation.”

Trevor Abrahmsohn, who runs Glentree Estates - specialising in expensive properties in north and north west London and one of OnTheMarket’s founding estate agencies - says that he backs the government’s pledge of introducing reservation agreements.

“The principle is sound, in that buyer and seller both need ‘skin in the game’, when they have agreed on a deal and the conveyancing work is processed through their respective solicitors” explains Abrahmsohn in his company blog.

He says that currently while the prospective buyer incurs substantial expenditure - surveys, conveyancing and the like - the seller’s expenditure is comparatively modest.

“This is why it is so important to try to bind both parties morally, if not contractually, before the formal exchange of contracts take place. The latter could take several months after the initial agreement of terms” notes Abrahmsohn.

Therefore he has a system specific to his company which he explains like this: “We set up strategic meetings between buyer and seller, either for a sale or rental. The common ground is not always obvious beforehand, or easily won, but once identified, we ask both parties to shake hands on the deal. Then intention is to bring moral cohesion to the proceedings.

“In some cases, we discuss the scenario of gazumping/gazundering, which hopefully makes it more difficult for either party to renege.  This goes some way towards stitching the deal together whilst the due diligence is being carried out by solicitors.

“Not surprisingly, Glentree heads the industry with the lowest fall-out rate from agreement to consolidation” he claims.

Last month an official from the Ministry of Housing, Communities and Local Government confirmed that the government was studying a ‘model’ two page reservation agreement drawn up by a law firm as a possible way of reducing fall throughs and speeding up transactions.

An announcement will be made by the government once details have been ironed out concerning how much money should be put down and what circumstances would allow a consumer to pull out of a reservation agreement without penalties.

Poll: Will Reservation Agreements speed sales and cut fall-throughs?

PLACE YOUR VOTE BELOW

  • Rob Hailstone

    I am all for anything that helps reduce fall throughs. Maybe taking this a bit further to the 'spit swear' handshake would help even more? A spit swear apparently means you never break your word. It's a bond. In ancient times it was believed that saliva has a special life-giving or destructive force, depending on who and for what purposes it uses.

    Sorry if this is too much info and you haven't yet had your breakfast.

    Simon Shinerock

    You aren’t going far enough, what about a blood oath?

     
  • Simon Bradbury

    Hi Trevor,
    I really admire this approach. Such emotional connections between a buyer and seller can only be a good thing and simply must reduce fall through/cancellation rates.
    I hear various figures referring to the 'industry norm' in respect of sales fall through/cancellation rates, but it appears to be accepted that about 30% of agreed sales ( with solicitors instructed ) do not make it through to exchange.
    We are currently running with an approximate cancellation rate of 28% over a year.
    May I ask what your fall through/cancellation rate for sales only is?
    I'd be interested to hear other views too...

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    Rock, paper, scissors?

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    A cracking good idea for our industry. Well done Trevor.

  • icon

    There was an estate agent in Leicester who did exactly this fifty years ago. Me and mine bought from them. We were very thoroughly grilled to see if we were real customers before they would even start thinking about accepting us as customers!

    We sold using the same agent a few years later. No problems at all, no chains and all the rest of it.

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