As we’ve already reported in this post, the conveyancing process has been experiencing record delays that is slowing down the entire property sale process. Sellers are being urged to come forward with their properties now if they want to see them sold before Christmas. What we didn’t discuss when reporting on the conveyancing issues, was the effect that these delays would have from a buyer’s perspective.

The biggest issue caused by the delays for many buyers is that the sales are beginning to extend beyond the expiry dates of their mortgage offers. Beyond the frustration of having to reapply for their mortgages, many are finding that the new mortgage offers have much higher rates. It was found that in the six months leading up to May mortgages had risen at the fastest pace in a decade. It’s estimated that mortgages would cost £2000 more than six months ago. The rise in mortgage rates is directly linked to the cost-of-living crisis, which is cutting into the nations wallets. It is also causing mortgage lenders to readjust their affordability criteria.

Fundamentally, the longer the buying process goes on the more likely a buyer will find that they can no longer afford the property they are trying to buy. The growth in house prices are slowing but they haven’t stopped yet. So, buyers could find that when reapplying for a mortgage, the cost of their mortgage will have increased, the price of the property could have gone up and the lender will have reduced the amount that they consider the buyer is able to afford.

For the prospective buyers in rented accommodation, who are also tackling the rise in their rent bills, the longer the buying process extends on for the more of their money is being sunk into rental costs. For those sat in property chains the extended timescales increase the chance of the chain collapsing, something that we are already beginning to see.

Many have been predicting house prices to drop and have been surprised by the continued growth the property market has managed to sustain. However, it is believed that the property market has been shielding from the impact of the rising mortgage rates due to the delay between the rise in mortgages and the time it takes for buyers to purchase with mortgages. It is pointed out that those who are purchasing with mortgages today are doing so with mortgage offers that were agreed several months prior when the rates were cheaper. The real impact of the rise in mortgage rates is yet to affect the property market.

The risk here for buyers is that if there is a fall in house prices, as experts have predicted, there is a very real danger that they could fall into negative equity. Negative equity is where a person’s home ends up being worth less than what they borrowed to purchase it. This means that when they come to sell the property, they must pay the difference in value to the bank.

With the property market already in an uncertain state and with the situation developing at a rapid pace the increased timescales that property sales are now extending to is becoming a huge problem for both buyers and sellers. As sales continue to fall-through and property chains continue to break both buyers and sellers are finding that the market has changed drastically from when they first entered into their doomed deals.

How Auctions can help.

The auction process provides security to sales transactions with fixed contractual timescales. This has allowed Whoobid to maintain a sales completion rate of 95%. Depending on the auction method the contractual timescales could involve an instant exchange followed by a 28 day completion for a traditional auction or a 28 day exchange followed by a further 28 day completion for a modern method of auction. The reason that the modern method has longer timescales compared to the traditional method is to allow buyers more time to arrange the financing through mortgages and other lenders. To learn more about the different methods, you can check out this post in which we have detailed the differences.

For buyers in a time when conveyancing delays are causing their purchases to fall through, the strict timelines provided through the auction process are a benefit that shouldn’t be overlooked. For auctions the productions of an auction pack eliminates the conveyancing stage. The auction pack, sometimes known as the legal pack, contains all the documents and searches that are necessary for a buyer to legally purchase the property. This pack should be studied by the buyer prior to making a bid or offer and it is advised that buyers also seek legal advice on the contents of this pack.

Auctions have become a popular method of sale for sellers for many of the same benefits that apply to buyers. The quick process and security of sale being the leading benefits. Its for this reason that properties that come to auction are often not what people expect them to be. A common misconception is that auction properties are “problem” properties. Properties that need extensive work. The misconception of what an auction property should look like often leads to many buyers missing out on great properties that meet their needs because they have discounted them due to their method of sale.

The reality is that any property is suitable for sale through the auction process. Ultimately, it comes down to the seller’s choice as to how they decide to sell their property and for many sellers the benefits of the auction process are too good for them to miss out on. To see the great selection of properties we have on offer you can see them here.

If you wish to make an offer or bid on any of our properties we recommend that you register first on our website. This can be done here.