31st October 2017 by Daniella Quaglia
Buying and selling a home should be a simple process, but when the stakes are so high peoples morality is often brought into question. £500m a year is wasted by the public on failed attempts to buy and sell homes because of sellers and buyers withdrawing from a sale or purchase. Is this a matter of morality or a failed system?
The Government have committed to reform the house buying process and we wait to see what will happen. There is no doubt that people waste time and money by making an offer on a property with no commitment and sellers can accept an offer with no recourse if they have a change of mind and decide to stay put. But is it the Governments responsibility to sort out peoples apparent disregard for a gentleman’s agreement? We would like to know your thoughts.
Take a sorry story we witnessed when a seller received an asking price offer from a cash buyer. The buyer was purchasing in cash, instructed a solicitor and carried out a structural survey immediately. She said she would be patient and would wait until the seller was ready to move. It is a situation that most buyers could have only dreamed of, so they accepted the offer, shook hands, looked the buyer in the eye and insisted that they would follow through with the sale. Six months had passed when the seller was told that the buyer was pulling out of the sale. The seller had lost money and her dream home.
Is this a question of naivety from the seller? Is it a matter of the seller shaking on a deal and not keeping to their word? Is it a sad reflection of modern society? Or is it the fault of a system that allows “immoral practices”?
The seller has done nothing wrong, but try telling the buyer that. Whereas thirty years ago 96% of sales would go through when a deal was struck, now 33% of purchases collapse due to one side withdrawing.
I can remember being told that if you shake on something it is a deal – no going back, no negotiation, deal done. “A gentlemen’s agreement”. “Your word is your bond”. “Let’s shake on it”. Call me old fashioned but wouldn’t it be nice if people respected the old ways.
The Government are discussing introducing measures to prevent this kind of practice occurring. It may not solve the housing crisis and there are bigger ills to remedy in society, but I for one would like to see a shake up of the house selling process to protect the people who shake on a deal and except that to mean “done”. One option could be to introduce a standardised and legally binding reservation agreement introduced at the point of agreeing the sale price, but before the buyer or the seller commits substantial expenditure. If one side then pulls out, it pays the other side pay 10% of the value of the property or a figure of money. This way people would be deterred from putting their house on the market unless they are committed, it will prevent buyers making offers and withdrawing when their head is turned by a prettier house, and it will reduce the chances of the dirty tricks of gazumping and guzundering.
What you can be sure of is that when you shake my hand – it is a deal. My father would be devastated to think that I would do anything other than be a morally sound member of society.