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.