All That Glitters Is Not Sold

Dealing with multiple offers on a sale is never easy. For homeowners, it represents the best case scenario as competitive interest often results in one certainty, achieving the optimum sale price. For agents, it can be a mixed blessing as it is always difficult having to disappoint enthusiastic buyers knowing there can only be one victor who gains the spoils.

My approach is to try and make the process as transparent and fair as possible by adopting the practice of allowing buyers one opportunity to present a ‘best and final’ offer. I do not promote sealed bids or engage in continual horse-trading, which I believe undermines client confidence in the process and causes mistrust.

I recently hosted 9 viewings at one property over the course of a Saturday. I allocated half an hour per viewing to allow all prospective buyers a reasonable opportunity to explore the property fully and to ask questions. During each viewing, I obtained supporting information about the buyer’s circumstances, their funding arrangements and initial feedback.

By the end of the day, I was in receipt of 6 offers. Having formally recorded each offer and submitted them to my clients, together with all salient supporting information, it was collectively agreed I would seek best and final offers by midday of the following Monday.

On Sunday, I wrote to every party who had viewed the property the day before, including those who had yet to offer or confirm their intentions. Each party received exactly the same information, which explained the process, the number of offers we were in receipt of and the deadline for either submitting an initial or revised offer. I requested all offers be tendered via email to ensure a clear audit trail existed.

By midday on Monday, I was in receipt of 7 offers. Many of the prospective buyers had taken the time and trouble to write a supporting narrative detailing what they found compelling about the property and why it suited their requirements. The sentiments from everyone were eloquently expressed and my heart sank knowing I would be making 6 difficult phone calls later that day.

With the best and final positions recorded and submitted, I met up with my clients over coffee to discuss the merits of the competing offers. Thankfully my clients had already reached a decision based upon several factors including the offer amount, level of deposit, length of chain and the supporting commentary that accompanied the successful offer.

Being able to delight one family was a wonderful feeling. Informing 6 other parties they had not been successful on this occasion was less joyous but was made easier by the dignity displayed by those receiving the news. Despite obvious disappointment, none of the applicants objected to the way the process had been handled.

I achieved a sale for £35,000 more than the marketing price, which exceeded my client’s expectations and offset all associated costs relating to their sale and onward purchase including agent, legal and removal fees as well as stamp duty. The buoyant market was responsible for such interest levels. Less than a week later I managed to sell an alternative property to one of the buyers who had missed out, which was rewarding and a result of the relationship that evolved during this process.

I had two properties in the same chain exchange contracts today. At varying times, I wondered whether this milestone would be achieved due to mounting frustrations over the common phenomena, ‘if in doubt’ seek an indemnity policy. In this instance it was a tale of three indemnity policies, none of which were supported as being necessary by the respective homeowners.

Many modern developments are subject to a Management Company who collect fees for estate services. If you live on such a development, my advice would be to request and pay for the management pack as soon as your property goes under offer. The packs can take a few weeks to arrive depending on the efficiency of the Management Company. In my experience, their provision is often a delay factor in achieving a swift completion.

This transaction had an inauspicious start when the vendors at the top of the chain decided to purchase a new build and link it to their sale having previously marketed their home as ‘chain free.’ Always a smart move if you want to infuriate the lower chain from the outset. Another consequence of this was the need to complete within a prescribed timeline as the new build developer insisted upon a swift exchange of contracts. The indicative completion date was provisionally set before Christmas, which duly came and went.

If this wasn’t unsettling enough, the road to exchange of contracts took several twists and turns that ultimately required three indemnity policies to resolve formalities.

The complete chain involved the sale of four properties and I represented the middle two sets of clients. Clients B were three down from the top and buying the property owned by Clients A who were two down from the top. Clients A were buying the new build at the top of the chain, which had caused all the consternation about rushing to complete before Christmas to satisfy the house-builder. Just to add to the mix, Clients A and B lived on the same road.

It came to light the road they lived on had never been adopted by the local authority. A Section 38 Highways Adoption Agreement had never been produced following completion of the development. As a consequence the solicitor representing the buyer of Client B’s property insisted on the provision of a bespoke indemnity policy that also required them to sign a statutory declaration to satisfy lender requirements. The policy was sought to protect the buyer and preserve her right in perpetuity to access the property in light of its status as an ‘unadopted’ road. The policy had to address the lack of clear rights of way over the private road to access the property and the risk of demands towards the costs of adopting the roads and footpaths.

It is deemed best protocol for the vendor to pay the costs for an indemnity policy and Clients B immediately set about contacting the local authority to find out when they would be adopting the road in an attempt to avoid paying for the indemnity policy. Although the local authority confirmed they had every intention of adopting the road at some point in the future, they could not confirm when this would be. Clients B resisted the need for a bespoke policy, which cost marginally more than a standard policy, and took the view the buyer should fund the difference in costs between the two policies.

A stalemate ensued over a nominal sum of money until the buyer contacted me and threatened to withdraw from the purchase as a matter of principle. Common sense finally prevailed with Clients B agreeing to both the bespoke policy and the extra costs but it took several weeks to break the deadlock.

In the meantime, the solicitor for Clients B decided the same approach was required in respect of their onward purchase as coincidentally both properties were on the same road. Client A then dug their heels in for identical reasons and objected to pay for the policy. Just to compound matters, Clients A were also asked to provide an indemnity policy in response to an issue relating to the Estate Rent Charge that had not been satisfactorily resolved. The rent charge owner is entitled to grant a long lease of the burdened property to trustees for the purposes of raising income to recover arrears, plus enforcement costs and the cost of granting the lease. In light of this, the solicitor for Clients B required confirmation that either Section 121 of the Law Property Act 1925 had been excluded or a Freehold Rent Charge Indemnity Policy.

To say confusion reigned would be an understatement. Neither Clients A nor B had experienced any difficulty buying their properties in the absence of a Section 38 Agreement and the estate rent charge remained a mystery to both. It resulted in a plethora of communications across the chain and much discord. The transactions hung in the balance for several weeks with all parties becoming fractious.

Everyone was frustrated and the overwhelming sentiment upon achieving exchange of contracts was one of relief rather than exaltation. Given the sums of money at stake, the costs of the indemnity policies were fairly minimal. Rather than contest them, it would have proved far less stressful and much quicker to have simply paid for them without protest.

Section 38 Highways Adoption Agreement Under Section 38 of the Highways Act 1980, a local highway authority can enter into a legal agreement with a developer to adopt a highway providing the highway has been constructed to a specified standard and to the satisfaction of the local highway authority.

Honesty is always the best policy but enthusiastic vendors can sometimes do more harm than good.

On a recent viewing, I arrived early to be given a guided tour by the homeowner. Shortly after the well rehearsed tour swung into gear, the buyers arrived. I remained restricted to a listening brief as the homeowner slipped into overdrive, barely pausing for breath.

The vendor believed she was being helpful. The property had been in the family’s ownership for two generations so who better to regale buyers with stories with an historical overview?

A lot of useful information about the property was disclosed. All very beneficial to the prospective buyers but the desire to be helpful extended to sharing details that could be construed as ‘optional extras.’ They included disclosure about the water table resulting in frequent low level flooding of adjacent fields, the emergence of new build development engulfing the local area, the lack of nearby amenities and an admission the access road resembled an ice rink during winter months.

Most people would applaud such honesty but did it help the vendor’s cause? Judging by the ashen looks on the buyer’s faces, the admissions only served to raise alarm bells.

Disclosing can provide buyers with compelling reasons for not taking matters forward. A balance needs to be struck when being factual and informative. Just as there is no merit in the non-disclosure of pertinent information that is either readily available or will be identified during surveys or the conveyancing process, it is also important not to deter buyers by giving them more to think about than is necessary unless, of course, the information is mainly positive.

In this instance, the guided tour was similar to being shown around an historic building owned by the National Trust. The enthusiastic vendor took the role of knowledgeable guide, awash with interesting facts and anecdotes at her fingertips. That’s all well and good but properties donated to the National Trust remain in their care forever. They can never be sold due to Acts of Parliament. The National Trust is in essence a landlord, a guardian in perpetuity with the aim of ensuring important buildings are maintained for everyone’s enjoyment.

By contrast, the aim of a property viewing that is on the open market is to achieve a sale. The buyer’s certainly enjoyed the tour but whilst the presentation was worthy of full marks, the narrative definitely remained a work in progress.