High pressure tactics like Open House viewings, sealed best bids and gazumping are back, especially in London and south east England according to property law firm Boodle Hatfield.
Saskia Arthur, a firm partner, does not mince her words. She describes the tactics as “nasty practices not seen for a number of years” and says in one instance 30 or more would-be buyers were shown around a two-bedroom London house in just 20 minutes, in a bid to instil panic and competition.
Now she is advising buyers to prepare for the worst by:
- including with an offer a letting saying why the property is right for you;
- stressing your willingness to be flexible if the vendor wants a quick exchange or to delay completion to coincide with school terms or work commitments;
- have mortgage or other funding in place (and tell the vendor about them);
- line-up surveyors, solicitors and any other advisers to act as soon as possible if the offer succeeds.
“Buyers need to understand the market and the more unpleasant tactics that have once again returned, to give themselves the best possible chance of securing the home they want” she says.
Comments
Hello all.
Your opinions, please, on the following 'tactic', lifted from an Agent's Tw@tter page (also their homepage and no doubt Facebook to complete the set...):
"Offers coming in soon on this great home in #cloudcuckooland so get in quick if you like what you see..."
Tell me - what part of the Estate Agents Act DOES that comply with?
...or should we ALL be doing it?
'Nasty practices not seen for a number of years.' Well now.....
- send 3 firms bust in 9 years (just waiting for 4th to go)
- borrow money from clients knowing there is no chance of ever repaying the loans
- fail to disclose material information to lending institutions
- act for purchaser AND seller in the purchase of property without the knowledge of the purchaser
- mess with SDLT payments due to HMRC, prosecution by the SRA pending
This, Saskia, describes a certain father and son in law SOLICITOR team operating locally to my business. Clean up your own profession (if you can still call it that) before you have a go at mine. And don't bite the hand that feeds you.
Tony - Show me which law states that the agent must get the best price?
Indeed what is the best price?
"including with an offer a letting saying why the property is right for you"
Is this a fonejacker script, innit?
If this Saskia is also into ‘acquisitions’ as the chap below pointed out from her blog then im not surprised shes commented on it, cant be easy ‘representing’ someone else on desirable stuff at the moment, you’d look at bit worthless rocking up to join a queue at an open house and just miss out on everything. In a tough market acquisition agents have a stronger position as they can add value by negotiating hard and smart, in a good market they must struggle to add value?
Also, the Estate agent solicitor thing about not getting on – I had a solicitor recently point out that they sent us a cheque for £12k and only got £1k themselves and weren’t happy. Im not sure who’s to blame for Conveyancers (and surveyors) fees being in a race to the floor for the last 20 years but im glad I failed at school sufficiently enough all those years ago so I had no danger of becoming either.
Jonnie
I don't think Saskia expected all of those reactions! Bottom line is that most conveyancing solicitors and estate agents still get on like cat and dog. Neither really understands, or perhaps fully appreciates, the practical and financial difficulties etc the other face on a daily basis. Mr Day, fancy chewing this one over when we next meet up?
@ 'Full picture' and 'Saskia'
Most Agents are not children.
Please put a sock in it, and write a book!
Following on from my last comment the same firm issued an article dated 9th December 2013 in the name of their solicitor and 'legal eagle' Edward Allen that sounds familiar...:
GAME OF HOMES: OVERCOMING HIGH PRESSURE TACTICS
As the London property market continues to surge, some of the high pressure tactics deployed in the previous boom are back with a vengeance. Legal eagle Edward Allan explains how to stay
ahead of the games…
Open Days
Mass viewings of ten induce panic among potential buyers. The most popular properties across London have all viewings strictly limited to a single two hour Saturday morning slot. Competition is intensified and buyers are then often expected to submit their "initial" offer by Monday morning, with best and final offers being requested a few days later.
I've heard of one prospective buyer being shown around a two-bedroom house in south-west London, ripe for re-development, with 30 other interested parties in the space of just 20 minutes.
Sealing The Best Bid
Agents will collate the prospective buyers' best and final offers for the seller to then consider. It is a misnomer to believe that it is purely a matter of offering the highest bid.
If you are asked to make a sealed bid, find out from the agent precisely what is required by the seller. If the seller has agreed their onward purchase it is likely that they will be looking for a buyer who can act most quickly and offer the highest price. At this stage, it is worth spending time producing a suitable covering letter to accompany your best and final bid to help sway the seller to favour you. It is important to let the seller know why this property is the right one for you and we have seen clients win best bids without having submitted the highest offer because the seller thought they were the right family for the property who could also perform quickly in securing a very quick exchange of contracts.
In a sellers' market it is the best tactic available to buyers
The other pieces of advice for anyone writing a sealed bids letter is to stress that you are (if you can be) flexible on timing for completion. Many sellers want a quick exchange, but may want time between exchange and completion for school terms to end or work commitments to be completed. The agent will of ten show copies of this letter to the seller to help them decide, so it is worth putting yourself in the shoes of the seller and trying to demonstrate that you are the bidder who wants this specific property and will do everything reasonably possible to make their life easier in selling their property. In a sellers' market it is the best tactic available to buyers.
Whilst all reputable agents will adhere to the timings given as to when the bids are to be opened, so that you have no doubt that your sealed bid remains so until the allotted time you should consider delivering the bid to the agents just before the allotted time.
Selling agents act in the seller's interest and, beyond the price, it is important to demonstrate to the agent that you are a committed buyer and approach the process in a professional way.
If you do require a mortgage to purchase the property you should make sure that you have an offer in principle for the sum that you require. You can then advise the seller in your sealed bid that your mortgage arrangements are in place and that you have an offer in principle.
You should have a surveyor ready to carry out a survey of the property, have instructed a solicitor and, where necessary, provide direct contact details of your mortgage adviser, solicitor and surveyor. If you look committed to the purchase and are clearly ready to proceed as soon as you are confirmed as the winner of the sealed bids, then in a highly competitive market this may assist you in being seen as a better candidate than others, even if yours was not the highest bid.
Gazumping
Fierce competition once confined only to prime central London locations has now spread throughout the city. One client was told after exchange by the selling agent that three other prospective buyers had tried to outbid them, but fortunately for our client the seller had been gazumped themselves and was a strong believer in the doctrine of karma!
There is little that can be done to stop gazumping and though agents will often push exclusivity
agreements with large non-refundable deposits as a way of a buyer securing a property, these may not necessarily achieve what a buyer had wanted. Such agreements do not bind the parties to actually exchange contracts and at the end of the exclusivity period the seller can still walk away, but should have to return the deposit.
It is often hard to prove that anyone else may have come forward to buy the house during the
exclusivity period
It is often hard to prove that anyone else may have come forward to buy the house during the exclusivity period and the cost of litigation prohibits most people making a claim. It can also take some time to settle such agreements because any solicitor acting for a buyer will want the deposit refunded in certain circumstances, not least if there is an issue with the legal title or the survey throws up a structural problem with the property.
The Right Team
At the top end of the market, assembling an experienced professional team further gives you an advantage when looking to purchase property, particularly in the prime central London market.
We have exchanged contracts in less than seven hours from being instructed
Carefully chosen solicitors can, despite the pressure of the deal, negotiate effective exclusivity
agreements on behalf of clients and ensure all due diligence is carried out quickly to secure a prompt exchange. Sellers of ten expect a five or 10 day exchange period, but we have exchanged contracts in less than seven hours from being instructed. Solicitors regularly dealing with prime residential property will be able to provide tailored advice regarding the ancillary issues that may arise when relocating or investing in high value property, often in relation to a client's tax position that may require a complex ownership arrangement or offshore structures.
A buying agent can also be an invaluable tool in keeping the deal together by using their relationships with the selling agent to reassure them and ward off threats from other buyers.
Most importantly, buyers should keep in regular contact with the selling agent and by ensuring a good dialogue opens up, buyers will be best placed to keep pace with the fast changing market.
This article by Edward Allan was first published in Prime Resi, Journal of Prime Property in December 2013.
I'm not sure this story has been reported correctly. The full PR issued on the firm's website is below. I don't actually read from this that agents are being attacked just that the firm is experiencing conditions that have previously caused upset when buying a home. In this case I'd say the lawyer is offering good advice on how to deal with a sellers desire to achieve the best price and the buyer to avoid disappointment. As one of the former commentators correctly points out the agent is instructed to carry out the instructions of the seller and I am sure this includes instructions to offer 'open-house' viewings and 'auctions' to the highest bidder.
Full press release:
SOUTH EAST PROPERTY MARKET SEES UNWELCOME RETURN OF PRESSURE PRACTICES
The booming residential property market in London and the South East is seeing the unwelcome return of pressure practices, says property law firm Boodle Hatfield.
Sellers looking for the highest price combined with buyers trying to secure the perfect property has led to the return of high pressure tactics, such as the mass viewing, sealed best bids and gazumping, where a seller accepts a higher bid after already having accepted another.
Saskia Arthur, a partner in Boodle Hatfield's Residential Property team said: "Fierce competition that was until recently confined to prime central London locations has now spread throughout the City and the South East and with it the nasty practices not seen for a number of years."
Saturday morning open days instil a sense of panic and intense competition, as potential buyers are rushed round the most popular properties along with numerous other interested parties.
Saskia says: "I've heard of one prospective buyer being shown around a two-bedroom house in south-westLondon, ripe for re-development, with 30 other interested parties in the space of just 20 minutes."
"There is then an expectation that initial offers must be submitted by Monday morning at the latest, with final offers being requested just a few days later."
Gazumping is also on the increase and there is very little that can be done to prevent it.
"Whilst agents may push exclusivity agreements with large non-refundable deposits, these do not legally bind the parties to actually exchange contracts," says Saskia. "Once the exclusivity period closes the seller can still walk away, but should have to return the deposit. The cost of litigation also prohibits most people making a claim."
A buyer can, however, take practical steps when it comes to sealed bids. Saskia offers this advice:
•Find out from the agent exactly what is required by the seller;
•Include with your bid a covering letter that tells the seller why this property is right for you - it is not always the highest bid that wins;
•If possible, stress flexibility in timing for completion - whilst many want a quick exchange, sellers may want to delay completion to coincide with school terms or work commitments;
•Deliver your bid to the agents just before the allotted time - not too early and certainly not late;
•Have any mortgage requirements in place and advice the seller of those arrangements; and
•Have surveyors, solicitors and any other advisers all lined up and ready to move.
Saskia concludes: "London and much of the South East is a sellers market. Buyers need to understand the market, and some of the more unpleasant tactics that have once again returned, to give themselves the best possible chance of securing the home they want."
14 January 2014
How easy peolple forget what the agents job is?
Get the best price for the property for the person they are contracted with and pay their bill, the seller, not the buyer.
Please note that this is just ONE lawyer!
Doesn't mean much and is certainly not worthy of headlining?
Saskia, Saskia, .....tut, tut.
It always dismays me when a solicitor sees fit to question the practices employed by estate agency firms.
Has she actually been an estate agent.
Yes, open house viewings are a bit more pressurised but done correctly they are an incredibly efficient use of an agents time, and last time I checked we represent a vendor not a purchaser.
Were the estate agency industry to really start turning their attention on the conveyancing industry and pointing out all the faults that they have which leads to incredible agency frustration then perhaps the Saskia's of this world would pipe down a bit.
one last thing Saskia, dont bite the hand that feeds you!
well done new editors for headlining with a story sure to get agents backs up, more of the same please. Far better than some bloke setting up a free to use website or an online agent from his garden shed. Oh and by the way, the market is pretty busy, spoilt only be vendors telling me that prices have gone up 10% so they want to put their asking prices up
A copy of an email sent to the solicitor who submitted content for your article "High Pressure Sales Tactics are back..."
Good morning,
We haven’t communicated before but I refer to your article in the above publication on which I have received an email “newsletter” type notification today.
It does dismay me that you see fit to criticize and describe as the return of “nasty practices” the fact that estate agents have reacted to an increase in buoyancy and an element of brinkmanship as to the prices that may be achieved within the market place by acting in the interests of their clients, by entertaining viewings through the use of Open Days, which best caters for the prospect of high levels of interest and multiple viewings on a property offered for sale and gives everybody who may be interested a chance to put their best foot forward.
If we work on the premise that a property is worth what the market is prepared to pay at any given time, I would be interested in hearing from you as to a better way to make certain that clients interests are best safeguarded in a market place where demand outstrips supply
Estate agents are often criticised for not acting in the very best interests of our clients but when we employ practices designed to do exactly that, individuals like yourself are critical again.
I understand that the practice of Open Days isn’t always palatable for those looking to purchase as the levels of pressure are undeniably increased but unless I am mistaken, we act in the interests of the vendors as our paying clients and as long as we are efficient, professional, sensitive and even handed then everybody has an equal chance to put their best foot forward.
An Open Day also best avoids the spectre of gazumping which you mention as a separate issue and often occurs when a property hasn’t had a proper airing in the market place and an offer has been accepted before everybody who may have been interested has been given a chance to comment.
I appreciate that like any profession, there are good and bad estate agents and just how these events and there results are managed is key in respect of it working appropriately, but your article criticises the marketing principle of Open Days and the prospect of handling best bids, and there I believe whole heartedly you are wrong unless as I say, you can suggest an alternative?
It seems to me no matter what we as agents do, somebody is happy to criticise and find fault as it seems estate agency bashing remains “the thing to do” and I would suggest your article falls in to this category.
I would be interested in you justifying your article, as it has been published in light of the comments above.
Regards,
Davis Simpson, MNAEA
Below is her "Bio" from her website, "She acts on acquisitions and purchases of the most expensive land, farms and residential properties and estates in England" - So looks like she prides herself on dealing with expensive transactions but then attacks the estate agent to enable this!
About Saskia
Saskia has a diverse client base and wide ranging practice focusing on the residential, rural and landed estates sectors and advising on all areas of property law that impact on high net worth individuals, large land owners and estates.
She heads the firm's residential practice and acts for both domestic and foreign nationals and works closely with our tax, private client and corporate teams on the often complex arrangements surrounding such transactions.
With a number of urban and country estate clients, along with property investors and private clients, she acts on all major property matters including sales and purchases of high value residential property, landed estates and commercial farming operations, overage arrangements, landlord and tenant issues (whether residential, commercial or agricultural), easements, first registrations, sporting and telecommunications, together with the ongoing day to day management advice on a myriad of issues. She regularly acts on acquisitions and purchases of the most expensive land, farms and residential properties and estates in England.
Would we find better service levels from Sols if they worked on a no sale no fee arraignment.
When working with both, tend to find that the fee "no mater what the outcome sols" take longer and dont seem to have the time to assure there clients that minor issues are normal or easily managed.
No sale no fee should be standard across the conveyancing industry.
Saskia - quick question.
Is an auction 'A Nasty Practice' too?
Open house viewings are very useful in cities. Apart from the practicality and efficiency for the vendor, they also serve to reduce our carbon footprint
I find it incredible that today we hear Ross Harper has gone under with a clients accound deficit of £300k and Reeve Fisher Sands lost £3m in customer stamp duty which was was not passed on to the government, that Saskia has the gall to moan about agents marketing tactics.
Open house and best offers us THE fairest and most system there is. Vendors get to see concentrated activity and hopefully a number of offers to chose from...and buyers are given fair opportunity to make their voices heard. or would they prefer the property not being offered to them at all. And remember solicitor lady we act for OUR fee paying clients not the purchaser you are paid to protect. "Nasty practice''...no. I call it transparent practice.
@EW - you make a valid point - this is a service which can be very beneficial to clients and is a common place model in many countries.
Saskia - 30 buyers in 20 minutes? Really?Is that even possible unless in Conga style formation?
We arranged an open house viewing on a tired, dated home because the elderly owner didn't need the upheaval of weeks of appointments where often people are late, fail to show or turn up on mass with extended family and small children.The owner was taken out by her family for the day whilst we showed the property.
We had 35 viewings marshaled by 6 staff. The property sold for more than the guide price as it had potential.
One of the staff even hoovered round before we left.
A very happy client - a great service performed and an even better result achieved FOR OUR CLIENT.
If you want to speed up conveyancing - ban Golf and Friday lunches.
I agree with Jay. How is this news?
Has Saskia been in a cave for the last 5 years?
Come back Ros...
How about the service agents are getting from solicitors?
How many times are our calls dodged
How many times are we fobbed off for "i am about to do a review on that file"
How many times documents sent but not received
How many times we are promised a call back and does not happen
How many times you get a solicitor tha does not understand a lease extension right to assign
How many times you get a solicitor that does not understand leasehold with share of freehold
How many sales have solicitors lost you?
Thats what i call nasty practice and needs to be gone from the industry.
This is all very interesting, but really not that important.
@Nothappy - really? Sop when Sothebys value John Lennons guitar for £20k and sell it for £1m, everyone celebrates and says 'well done'.
What happened to Ros' IMPORTANT story "The number of law firms still operating but which will have to close within a matter of days because they have no Professional Indemnity insurance now stands at 117."
One firm misappropriating over £3m is slightly more scandalous than an open house viewing.
Perspective - please
Whilst everyone would agree that buyers should be well prepared to put themselves in a strong position this poorly judged press release just shows how little the lawyer knows about the market and who an agent acts for.
Would she prefer an agent blocked potential buyers from viewing rather than give them a fair crack at the whip at an open house or sealed bids or that the seller should miss out on achieving the best price from the best buyer?
I'm sure this has got something off her chest but has done little to enhance Boodle Hadfield's (that's Boodle Hadfield) working relationship with agents.
Remember for every buyer there is a seller and I don't hear their lawyers wingeing.
In an open and free market - whether prices are rising or falling - buyers cannot be forced to buy - they will only buy if they want to. An open house is not a nasty tactic, neither is a sealed bid and gazumping is buyer driven. Open Houses give many buyers the opportunity to view - or they face being told 'sorry we're having to cancel your viewing because the 1st person to view biught it', 'Sealed Bids allow you to offer the best price you are prepared to pay - the alternative is blind, or a dutch auction and the duty of the agent in law is to get the best price. Gazumping - agents are required by law to submit all offers - a buyer making the higher offer does so in the full knowledge that someone else is already buying the property - buyers vs buyers, the vendors may or may not accept a higher offer - it is their decision. Buyers fail to mention gazundering in recent years, many times instigated by lawyers for the slightest defect/concern. Much of the concerns in the market place would be removed if lawyers were to get their act together, move their technology into the 21st century, remain open for lunch, work later into the evening and work Saturday & Sundays like the majority of the retailers in the UK. Conveyancers are not high flying barristers - they provide a retail off the shelf service. If they do this, along with lenders and surveyors - the house buying and selling legal process would be reduced substantially and would probably negate the need for Open Houses, Sealed Bids and Gazumping. Thank you for listening to my pre coffee rant. Lawyers!
Why is the property market the only one where an asking price is not the asking price? Agents in my area are putting properties on below stamp duty at £495,000 and telling people they need to put in offers and to put "their best foot forward". Properties end up selling for around £520,000. It's scandalous and will lead to overinflated prices that won't support sustainable growth. Shame, shame , shame naughty estate agents!
I wouldn't necessarily class an open house viewing as 'high pressure'. However, being prepared is key
Is that it? A half arsed 'press release' from a mildly irritated solicitor makes the top story?
I agree with Saskia. It is always wise for buyers to have 'all their ducks in a row' before making an offer. Especially in a fast moving market like the one we have now.