Greater regulation of estate agents is needed, according to a mortgage broker who has had three property purchases fall through in the past six months.
Adele Forbes, managing director of brokerage West Yorkshire Money, told FTAdviser that she has seen first hand the difficulties that exist in the current market and believes better protections for buyers are needed.
Forbes feels that estate agents are overvaluing properties and are not appropriately preparing their clients for the possibility that they will have to renegotiate on price if their property is valued at less than they hoped to sell for.
She is particularly concerned for buyers who do not use a mortgage adviser when purchasing a property, as they likely do not have the knowledge or support to spot and handle the issues she herself has faced in the past few months.
Forbes, who has lived in her current property for nine years, began her search for a new home just before the pandemic but parked her plans until last year when the market improved.
She listed the property again in April 2022 with the hope of downsizing and although she managed to find a buyer, she has had less success finding a new property.
In the past four months Forbes has placed four offers down on different properties, but so far three have fallen through.
Down valuations
After paying £400 to get the first property valued, Forbes was told that it was worth £15,000 less than what the owner was willing to sell it for.
“There are lenders who offer a free survey but this particular lender didn't so I had no choice but to pay that money. I thought as much as it might get down valued, the seller should really have negotiated the price down,” Forbes said.
“They were open to it about two weeks later, but that was too late. I was in a chain where my buyer was buying with cash or was buying with bridging, which put me under more pressure to sell,” Forbes explained.
But as the seller was unwilling to negotiate, she was left to look for a different property.
The second property Forbes found also did not work out as it went into probate following the death of the owner.
As this can take up to 12 months, Forbes was not in a position to wait for the property.
By this stage, Forbes had been looking for a new home for more than eight months.
She thought she may be lucky third time round and had found another property she was happy with but again, this was down valued after she had a homebuyer’s survey done.
Forbes decided to pay £690 to have the more in depth homebuyer’s survey done because the property was built in 1880 and needed some improvements made to it.
When she got the survey results back the property was valued at £40,000 less than what the buyer wanted to sell it for, and again they were not willing to renegotiate.
Last week, Forbes received her third down valuation on her fourth property, one that is relatively new and not in need of significant work.
In this instance however, this seller was more willing to negotiate on the £50,000 difference and Forbes has been able to move ahead with the purchase.
In total the mortgage broker has spent £1,100 on valuation surveys during her home search and said that sellers need to be better prepared by estate agents for the issues that can arise with their properties.
“It's a buyers market at the moment, not the sellers,” Forbes said.
However, greater regulation looks unlikely at the moment.
Mortgage brokers have previously raised the issue of down valuations with FTAdviser, warning last year that they are likely to continue.
At the time, Continuum adviser, Anthony Harris, said: “Sellers are asking high prices and there always seems to be more than two buyers who are prepared to enter a bit of a bidding war, pushing up prices further."
As Forbes has pointed out though, the market has changed since then, with house prices starting to drop and buyers now having more control.
A spokesperson for the Royal Institution of Chartered Surveyors told FTAdviser that in some cases seller expectations have not caught up with the market, but noted that estate agents are limited in what they can do to help.
“Over the past couple of years, we have seen increases in property asking prices reflecting a very dynamic sales market and pent up demand following Covid-19. However, the past few months have seen prices drop as the market adjusts to the wider economic pressures," the spokesperson said.
"Agents can only advise sellers on the asking price. However, the asking price is often just one part of the offer, the position that the buyer is in can also play a part. For example, a below-asking-price offer by a chain-free, cash buyer may have more success than an asking price offer from someone in a lengthy chain."
The spokesperson noted that if the seller refuses to negotiate on the asking price, there is not much an estate agent can do.
"Agents are legally required to put all offers they receive through to the seller and then it is down to the seller whether to accept the offer.”
jane.matthews@ft.com
