The impact of the credit crunch on your house sale is
all too real and far-reaching. What we'd hoped would be a short term
'blip' in the housing market has turned out to be something rather more
fundamental - and complicated.
Most significantly the credit crunch means properties are less
affordable. Let's look at the reasons why house selling during the
credit crunch is problematic and what if anything you can do about it.
of unsold properties is increasing
One impact of the credit crunch on your
house sale is the possibility your house may languish unsold. According to figures released by the
National Association of Estate Agents, agents have roughly three times
as many properties on their books compared with three or four years ago.
Even in Scotland where the slowdown has been less abrupt, homeowners are
still struggling to find buyers with an appetite to move and who can
secure a mortgage deal.
In previous years, before we had to consider the impact of
the credit crunch on your house sale, it was probably true that if your
house wasn't getting viewings it was probably over-priced (all things
being equal). This is an over-simplification of the current situation.
Not only is the appetite for house selling reduced..more than that..
Buyers can't finance their
purchase of your home
Another impact of the credit crunch on
your house sale is that you are more likely now to lose your buyer. We are
experiencing a noticeable surge of
enquiries from homeowners who are facing this very situation.
Nine times out of
ten the reason sellers give is that the buyer can't get finance or their
buyer's sale has
fallen through. The impact of the credit crunch on your house sale is
therefore also likely to involve more intractable house selling chains. Lenders are now re-jigging their
mortgage deals on a daily basis! The BBC reports that the number of
available mortgage offers fell 20% in just one week. Essentially lenders
are tightening their belts - they simply don't want to risk over-stretching
themselves by taking on new customers. According to the Council of
Mortgage Lenders, mortgage lending has hit a 16-year low. So there you
have it. Which
also means of course that..
You can't find a
suitable new mortgage deal
And of course if buyers can't find
mortgage deals the same must be true of existing homeowners like you.
When it comes to securing a
competitive new mortgage or remortgage offer those hardest hit are
homeowners who have traditionally relied on sub-prime lenders. A
widespread impact of the credit crunch on your house sale and those in
your chain is that lenders are now asking for a much larger deposit -
twenty-five percent is not unusual. 100% mortgage deals are simply no longer available.
It's official - house prices are
Bear in mind that the knock-on impact
of the credit crunch on your house sale is that buyers are now
restricted in what they can offer for your house. Whether you like it or
not you may not get an offer you think you deserve. But please remember house prices are dynamic. We've just got used to them only going
one way - up.
According to figures released by the
Halifax in April, house prices have reached their slowest rate of growth
for twelve years with March seeing prices in
'sharp decline'. While
some commentators have quite rightly said we shouldn't be persuaded by
just once piece of news..it does seem to be true that house prices are falling
to some extent in
the face of new constraints on affordability. Falling prices is probably
the most unwelcome impact of the credit crunch on your house sale.
What can you do to safeguard
In essence what we said before we had
to consider the impact of the credit crunch on your house sale still holds true.
Get your own finances in order
and sort your finance options out as best you can before putting your house on the
market. It's probably only worth securing a decision in principle (DIP) from
a lender once you have an offer since any DIP will be time-limited.
Next get over the barrier of believing
your house is worth what it was a year ago. It may not be. Get yourself
into the frame of mind that now is the time to sell low to buy low.
Find an estate agent willing to accept your
"price to sell" approach.
Even with buyer confidence rock-bottom take comfort in the fact that
some people still need to move regardless of the current situation in
the wider market.
When it comes to vetting prospective buyers,
favour buyers who come with a DIP in hand. Realistically this is most
likely to happen for first time buyer properties where people have
nothing to sell. Buyers for almost every other type of property will be
in a chain. If your property does attract the eye of a chain-free buyer
then grab them - even if it means lowering your price. But don't accept
an offer without a DIP or mortgage offer in place. As a rule of thumb
DIPS are generally valid for around 30 days though in the current
climate it could be less. However, the
general message we'd give is to make sure you or your agent screens
buyers appropriately to make sure they are "qualified" to buy in the
Ultimately the impact of the credit
crunch on your sale may mean you can't sell. Of course the "lifeline" offered by
professional property buyers still exists but we're not immune to
current market conditions either. We also have to take account of
falling house values and more expensive mortgage interest rates.
However, the option of asking a
professional buyer to help either with an outright sale or long term
rent back still exists.