Property Property News

Dream on, Dreamer

  • September 15, 2022
  • 3 min read
Dream on, Dreamer

Buying or selling a home is an emotional affair. The price a house is sold for is not just a calculation of the price per square foot in a particular location, but a finely calibrated balance between the house’s desirability to the buyer and the expectations of the seller. What will this house say about me as a person if I buy it? Am I making the right call to sell the property for what the buyer is willing to pay? In today’s volatile property market, aligning the expectations of both of the transacting parties is the key to success. 

However, what happens when the trust breaks down because one or both parties behave badly? Can it be rescued?

Unrealistic expectations create the biggest headaches. A seller dreams up a price they would like to achieve. This can be more or less anchored in reality depending on the individual. The buyer can be egged on by an unscrupulous agent who wishes to flatter the vendor and secure the sales mandate, and also hope that some market feedback, and the passing of time, will eventually bring the seller’s expectations down back to reality. 

Yet some sellers are simply stubborn and refuse to listen to honest feedback from market practitioners. If a buyer does emerge appearing to offer an above the market price, it usually comes with strings attached. They might ask to rent it for a few years first with an option to buy later or ask for a staggered payment plan (rather than the standard 10% on exchange, with the balance payable at completion within a few months). The way to make a deal with “a dreamer” of a seller is to continue to dangle their dream in front of them. 

Once the legal paperwork has started, the “sale” can begin to unravel. Conditions might start being re-negotiated. Exchange and completion get delayed. Payments might come late or missing. If completion is pushed out months, or even years into the future, then economic headwinds might eat away at the agreed price, especially in a period of high inflation. Indeed, the circumstances of both the buyer and seller might change and force the parties to re-draw the deal once more. All of this creates a lot of frustration for the seller not ready to give up on their dream price and the buyer to miss out on their dream home. 

Is there a way of avoiding this conundrum? Make sure the parties have a frank dialogue early on and keep the conversation going throughout the process. The conversations should not take place just between the agents or solicitors – the principals of the deal (the buyer and the seller) should be privy to these talks. Intentions should be set out in writing. Delays should carry significant penalties painful enough to compel parties to stick to what has already been agreed, and to take these obligations seriously before committing to them. Deals between dreamers do happen if there is enough goodwill to see it through. 

On a more practical note, both parties should consider if the dream price or, indeed, house will be worth the frustration and tension throughout. Is a guaranteed £10 million today better than the vague possibility of £15m in a year, or possibly two? Will the tension and aggravation be worth it in the end? In these uncertain markets, I tell my clients there is nothing quite like a bird in hand!

Evgenia Pretrova

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