21 January 2009

Looking to Buy or Sell?

The current climate, it seems, is making what would once have been thought of as a 'cheeky offer' the norm. So, just how big is the difference between asking and selling prices?

Just a year ago, a cheeky offer would have amounted to anything that was a seven or eight per cent discount off the asking price of a house. Now, the actual gap between asking and selling prices is up to 12.5 per cent in some parts of the country, as sellers are forced to accept lower offers - or choose not to sell.

According to The Royal Institution of Chartered Surveyors (RICS), the average UK home is selling at an average of nine per cent below its advertised price, with homes in the north going for 12.5 per cent less than their asking price.

In the North West, East and West Midlands and Wales, homeowners are accepting offers 10 per cent below asking price on average. Scotland, with a gap of only 2.4 per cent, is yet to be affected, although RICS says that the gap is likely to widen over the coming months. London homes are currently going for around 8.5 per cent below asking price, although that is expected to waiver when the job losses in the financial market begin to impact.

'With housing transactions currently at a 30 year low, many vendors are being forced to lower their asking prices to achieve a sale in an ever shrinking market or they are being forced to rent their property until the market picks up,' says Simon Rubinsohn, RICS chief economist. 'The gap between asking prices and selling prices could widen in the coming months as the downturn in the economy becomes more visible.'

What Should You Do?

Well, if you're selling and buying a new home, there are two things you could do. One: take your house off the market and sit tight for a year or so - but expect the market to possibly drop again in the meantime. Or, two: accept that you'll have to go for a lower offer, but try to renegotiate a lower offer with the people you are buying from - and get them to do the same with their vendors.

If you're buying but have nothing to sell - use this ammunition wisely. A cheeky offer differs regionally - if in doubt, try for a discount of around 10 per cent and see what happens...

Lucy Searle

Article appears on www.channel4.com