Don't be too hasty about selling.

Homeowners who find themselves in a bit of a financial squeeze now because of the higher interest rates should think twice before they react by putting their homes on the market. 

 

For a start, the substantial rise in home prices over the past few years means there is a good chance that even a smaller home could cost them more than the total outstanding on their existing bonds, says Berry Everitt, MD of the Chas Everitt International property group. 

 

"Then of course additional expenditure such as transfer costs on a new property and relocation costs must also be taken into account." 

 

Secondly, he notes, they need to be really sure that there is no other course open to them and that they seriously want to sell, because giving an agent a mandate just so they can gauge the likely response from the market could easily get them into even deeper financial hot water. 

 

Writing in the Property Signposts newsletter, he points out that many mandates, especially sole mandates, contain a provision to protect agents against "frivolous" sellers who are just testing the water. 

 

"And besides, the courts have held that a seller who refuses an offer at the full price, or on the terms laid down in a mandate, may be obliged to pay the agent damages equal to the commission that would have been earned through a successful sale." 

 

The implication is that agents who spend time and money to market properties in good faith should be paid for their services if they find a willing and able buyer as a result - even if the owner then changes his mind about selling, Everitt says. 

 

"Homeowners trying to balance their budgets are thus advised to carefully assess the current market and to ask a reliable estate agent what price they could reasonably expect to get for their home before hastily awarding a mandate. 

 

"And if they have already awarded a mandate but change their minds about selling, they should inform their agents immediately in order to limit the potential financial damage all round."

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