Sunday 19 November 2017

Up to buyers to cull the charades

There are some people who have their house on the market but are not actually selling them. Photo: Bloomberg
There are some people who have their house on the market but are not actually selling them. Photo: Bloomberg
Mark Keenan

Mark Keenan

The housing market is infested right now by a virulent strain of pest which sucks energy, time and resources from home hunters and estate agents. I'm talking about the charade vendors - the people who have their house up 'for sale' but aren't actually selling it.

You'll waste time viewing their home, throw away money getting a surveyor through it and their estate agent will waste time and resources servicing a sale campaign that will go on forever. It's all for nowt.

It is estimated that supply in a 'normal' level should run at around 5pc of stock overall. According to Sherry FitzGerald's research dept, the percentage of homes for sale has been diving steadily. In July 2012, it was 3.2pc, in July 2013 it was 2.5pc, by July 2014 it was 2pc, in 2015 it hit 1.7pc and the last available estimate in July last year was 1.5pc. It is reasonable to assume we are now at just 1.25pc.

While charade vendors have always been with us, their presence and the difficulties they create are being more acutely felt of late because of the supply problem. On top of this, the move by banks to conclude repossession processes has brought more of them to the fore.

Fake vendors fall into a number of categories. First up are the undecided - those who haven't really thought out the reality of moving. They might have truly wanted to move when the sign went up, but as people walked through their home for Saturday viewing and the offers started coming in, reality dawned and they got cold feet. Too embarrassed to withdraw, they tell themselves that if a high enough offer comes, they might just be convinced.

Next we have the unrealistic - the ranks of vendors who know more than the market does. This pompous lot are convinced their home is worth quite a bit more than anyone is prepared to pay for it. They are prepared to move, just not at a price anyone will pay. And they will hold firm on the inflated price because they, like their homes, are superior and they are right.

Then we have the chancers - to be found mostly at the top end. Because they are successful at business, they are always looking to make a financial killing and their home becomes an extension of this. Aware that there are buyers for whom money is no object, if they find the right property, their 'for sale' sign is a permanent baited hook for such a sucker. If the house is worth €3m, they advertise it at €4m and will keep fishing for years for that big deal.

Last come the hostile - charade sellers forced to sell against their wishes. Their situations generally come under three categories - marital break up/separation, imposition of a will or a pending repossession.

Often after a divorce or separation, one partner is left living in the house owned by both under a court order until children are old enough to leave the nest or, if no children are involved, until that partner can sort out a new place to live. The time comes to sell and they don't want to move. So the sign goes up. But the incumbent resident obstructs the process, including shutting the property out from viewings or demanding a price which is too high.

We have the obstructive sibling left in a family home inherited by all of the children. Given a period of time to sort themselves out, some will dig in and similarly furnish a charade that the house is being sold.

Lastly comes the bank-enforced vendor who has the sign up to keep the bank convinced they are playing ball. The price is usually too high or the sale process is obstructed. It is at this end of the market that the charade sellers have been increasing their share of signs.

While the economy has been moving steadily out of recession, banks are only recently getting to grips with their bad loans. State-controlled lenders are under pressure to clean up their books with a view of reprivatising and values have increased enough to make repossessions more financially plausible from the lender's perspective. While some financially-stricken charade vendors might deserve our sympathy, there is an increasing problem with homes for sale, but they're not really.

It is the weary buyer who suffers most. Those plodding about between a dwindling number of homes will increasingly become diverted and waste their energy and time and increasing amounts of surveyors cash on those who are really not serious. Estate agents won't sort it by erasing such homes from their books. So starved of stock are they that most are happy to carry dud vendors along to beef up their diminishing catalogues.

So it's up to buyers to stamp it out. It takes an average of five weeks to sell a house in Dublin (REA) and slightly longer elsewhere. So if a city home has been for sale in a vendor's market for more than four months , or a rural home by more than six; you really have to ask why. And decide not to waste your survey cash and your time.

Indo Property

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