Buying a home can be an anxious process – here’s what you can do to make it easier
April 16, 2024 6:00 am(Updated 6:01 am)
I’ve been reporting on the housing market for more than (shudder) 20 years now, and these past two years have been among the hardest for would-be buyers.
After more than a decade of steady – and sometimes even soaring – house price growth, 15-year high interest rates have put the brakes on and, according to the latest data, set growth into reverse.
What will happen with house prices in the coming months and years isn’t certain – you would need a crystal ball to be so.
Some forecasts show prices are falling again, with Halifax, Britain’s largest mortgage lender, reporting that the average house price dropped 1 per cent to £288,430 in March, after a 0.3 per cent rise in February and increases in each of the previous four months.
Before the future direction of house prices becomes clear, there will be some bumps in the road, and for those buying – particularly for the first time, it can be an anxious decision-making process.
But based on my experience, here are the 10 things to look out for, when purchasing a home in a tricky market.
- 1. Don’t try to predict the economy. The state of the economy has a huge bearing on the housing market – because of its influence on interest rates, the money people have to buy homes, and more. But if the Bank of England can’t predict what will happen to the economy, what hope is there for the rest of us?
No one could have foresaw that Vladimir Putin would have invaded Ukraine shortly after a global pandemic, so it makes sense to not try. It is perfectly sensible to base the decision on when the right time is to buy a home just on your circumstances, i.e. buy when it suits you.
- 2. Don’t try and forsee a housing market crash. On a similar note to the economy, predicting a housing market crash has become a mug’s game.
God knows what would have to happen for there to be a housing market crash. If Brexit, Covid, Ukraine, and subsequent massive increases to the base rate and double digit inflation hasn’t done it, it’s hard at this point to see what will.
Quite possibly the housing market has become too big – or too central to our economy – to fail, with government stimulus packages in the form of Help to Buy, a lack of political appetite to tackle affordability and very low interest rates all propping it up. These three things have resulted in significant house price growth but are changing, so expect to see less growth for the next 10-20 years.
- 3. Don’t be afraid to haggle on price. You should always be prepared to do this.
On their websites, housing portals like Zoopla will tell you how much house prices have fallen over the past year in different areas in the past 12 months.
Use this as a guide, and speak to the selling agent: ask them how much below asking prices buyers are managing to get. Don’t dismiss everything the agent tells you as lies but be aware they work for the seller. If you area has gone down by 5 per cent in the last 12 months, ask for 10 per cent off in the expectation that you will meet in the middle. Also find out why the buyer wants to sell – if they need to move home urgently, you may feel braver in asking for more money off.
- 4. Agreeing an asking price is just the start. You can negotiate further as you go. You can do this right up to the point you exchange contracts.
If you are a reasonable person you will have a good reason to re-open the negotiations in certain circumstances – say a survey shows problems with a chimney that a builder has said will take £10,000 to fix, or perhaps the sale has taken a long time to happen by which time the value of the home has fallen.
But if you are completely ruthless you will ask for money off because you think you have the buyer over a barrel, particularly if it is a late stage of the process.
Be warned, this approach can sometimes rebound on you in a pleasing karmic process, however. We had someone do this days before we were due to exchange and complete, as our packed boxes lined the hall. We pulled out of the sale and the non-buyer then spent the next six months with us pleading with us to sell at the non-reduced price (we said no).
- 5. Be polite to the people you’re buying from! To try and keep everyone’s blood pressure down, think about how you phrase requests that may be forwarded to your seller and keep an eye on your lawyer’s tone.
We once used a particularly argumentative lawyer who annoyed everyone, and nearly cost us the house sale. She was fairly new to the job and not very expensive. Given the stress caused, for our next purchase we went with someone recommended to us who was more pricey.
She had a negotiating style that was assertive but also calmed waters rather than making them more choppy. Similarly, don’t take things personally or assume the worst intentions of the seller if their tone or their lawyer’s tone seems a bit off.
- 6. Don’t be rushed by the estate agent unless there is good reason. Estate agents often want deals done quickly: they want the commission, or they may be on a payment structure where they earn more the quicker the deal is done.
None of this matters to you. So if the agent is pressing you to make a decision, tell them you need more time and not to contact you for 24 hours. But also: don’t be rude, or alienate the agent. You may need their help if something goes wrong.
- 7. Don’t use an estate agent’s preferred broker or solicitor. They are recommending them as they will get a commission paid in return, not because they are good.
Go with a broker or solicitor that a friend or colleague has recommended instead. And if the agent says you have to use their broker or solicitor or you can’t buy the home, tell them conditional selling is against the law under the Estate Agents Act 1979.
Do use a mortgage broker rather than sticking with your own bank because it’s easier – your broker who will look at the a bigger range of options will most probably get you a better deal.
- 8. Think hard before you take out a huge mortgage. This is particularly true given we’re not expecting to see the same level of house price growth going forward. And if you do choose to borrow a large amount, consider critical illness insurance that will pay out if you get ill.
A large mortgage may put you under pressure and you may not have much money left over. That said you may take the view that short-term pressure could lead to long-term gain. But having money when your kids are small so you can enjoy experiences together is important too.
- 9. Always get an independent survey. A house survey provides an expert account of the property’s condition, and highlights any problems. It is really important to get one of these, because it will avoid problems later down the line.
You should even get one if you are buying a new build home that comes with a ten-year guarantee, as these guarantees sound great but can be ineffective when put to the test. Some of these new build homes are riddled with building flaws, and finding out before you exchange can mean you can leave the sale or haggle the price down. Similarly, no matter how structurally sound a house appears, you need a decent surveyor to spot if the roof is knackered.
- 10. Having the dream home is not everything. I had friends who stretched themselves to buy a house straight from the pages of Elle Decoration.
But the financial problems that ensued badly affected their relationship and they divorced five years later… and had to sell the home. Ultimately, it is far better to be happy in a less-than-dream home than miserable in a perfect one, so don’t overstretch yourself.