Wednesday, April 16, 2008

Guide to Gazundering Anyone?

Capitalise On House Price Falls

You can almost smell the fear. "The Royal Institution Of Chartered Surveyors has just published its gloomiest view on house prices since the records began in 1978." "You may think such a practice (gazundering) is unethical or even immoral. But in a market where prices are falling rapidly, I think it is understandable." This will become standard practice unless the deal goes through in days.

Posted by renting2 @ 03:21 PM (1952 views)
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12 thoughts on “Guide to Gazundering Anyone?

  • So as an FTB you think you’re smart by squeezing 5% off the price, and then watch prices collapse…

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  • justwatching says:

    Better idea.
    Put in a really sh*t offer to start with. Asking price – 30%.
    5% is for p*ssys.

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  • Rentinginpeace says:

    The comments to the article are better than the article!

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  • I would offer 50% of the price myself (really). Look at the basis. Cambridge Econometrics in May 2001 said house prices were 21% overvalued. by 2008 looking at a 30% fall it would bring levels to a 2004 basis (Anatole Kaletsky in the Times). What happened between 2001 and 2004 in terms of inflation? nobody is saying. But I have a hunch that 50% is about right.

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  • justwatching says:

    80% a tad greedy. Although a 3 bed semi for 40k sounds nice, less than 2X av salary though.

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  • tc,

    I still think that in the darkest hour, some property will be sold for less than 30% of peak price – but we’re not there yet – patience will be rewarded…

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  • mark wadsworth says:

    JW, I tried that last weekend at the local estate agents. I asked if they’d come down in price, and he reckoned maybe a bit. I explained “No, I mean like 30% off” he said no. I giggled and told him I’d be back in a year and I try again. And if that didn;t work, I’d be back in two years and end up paying 40% less. That elicited a smile at least and he told me I was probably right.

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  • A friend of mine was gazundered as late as last june (ok, by just £3000 but still …) The good news is the cynical little shit that did it is almost certainly a good £30-40,000 down by now if not more (on a one-bed city flat he bought for £160k) and is almost certainly in negative equity.

    I think this article misses the point – it’s certainly unethical to try to gouge a cash discount at the last minute through wanton manipulation like my friend’s buyer (especially if they are doing quite nicely on their own sale)

    But it’s quite another to find house prices in unexpected sudden collapse (and for most people it is unexpected) and have cold feet, if not about the overall purchase, then certainly about the price being paid.

    Gazundering cases are one of the few occasions estate agents actually have to work for their money, keeping chains together and negotiating new prices up and down … make ’em sweat I say.

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  • justwatching says:

    Mark, isn’t the EA obliged to pass on your offer to his client?

    Titanic, now there is a question, would you buy a repo? I think that I would, in a couple of years time. But you’re right, the guilty feeling is there.

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  • JW, he usually does have to pass on the offer, unless the client has stated that they only want to know about offers over a certain price. There is a great three bed semi near me, 2 recptions, drive, garage, gardens etc. Been on for about 280 days. I’m thinking that by the time it hits a year I may put in an offer of about 65-70%, to see if I can test the water. Then hold back for a few more months let them pay a bit more of that mortgage for an empty house and then come back. I suspect it is too early though. Peoplen are still in denial that it has actually started and expect it to work out with the BoE to the rescue. It was only a couple of weeks ago that a friend was saying to me “where is this crash you have predicting for the last 3-4 years then”

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  • mark wadsworth says:

    JW, yes they are obliged to pass on firm offers, but I just indicated three or four properties that fit the bill and asked him whether any would come down 30%. But you are right, me and the Mrs ought to put in proper offers, only to have them rejected.

    I’ll be able to frame the rejection letters next to the next HM Land Registry showing that they sold for considerably less! Tee hee.

    As to buying a repo, what’s the problem? It’s not the house’s fault it was repossessed, is it? In my experience, there is a hex over houses that are built over a spring or a watercourse. It’s not just the dampness in the cellar, it’s more than that. But a repo I have no problem with.

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  • So, it looks like Gordo is arranging for the BoE to bail out the banks and get the supply of mortgages moving, again. This will do no good for the pound, once it is announced. But what about house prices?

    The drop could be cushioned quite a bit – how much? 5%,10% 15% ?

    We could have a HPC of “only” 3%. How far will the BoE support banking (house prices)?

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