Q&A: SALES
Q. Dear Russell, I’ve put an offer in on a property that I really like but so has another party. The vendor has said that he wants to do a contract race in order to decide. What does that mean?
A. A contract race is very much first-past-the-post – basically the first party to have read the contract, done the paperwork, got the necessary funds in place and exchange contracts gets the property.
While contract races don’t happen very often, they do occur and you need to be well prepared. When a vendor asks for one you have to be able to move quickly – I have seen an exchange happen in as little as half a day. The speed at which an exchange can occur means you need to be very well organised and have agreed funding such as your mortgage beforehand.
Vendors will tend to go down the contract race route if they have two equally good buyers with similar offers and want to speed up the process. While you can express a desire not to enter a contract race, it is very much up to the seller and you could find yourself losing the property.
To succeed in a contract race you need to have that 10 per cent deposit to send over at a moment’s notice and you will also need to get a survey done – this can occasionally be avoided if the property is in a block. Most importantly you must have very good solicitors who will clear their schedule for you at the last minute.
But bear in mind that the solicitors’ cost will be a lot more because of the time pressure involved. Furthermore, you may incur legal costs but there’s still no guarantee that you’ll be the first there. It’s a risk that you and your wallet have to be prepared to take when doing a contract race.
Q. Dear Russell, I’ve heard that the property market tends to slow down over the summer and few new properties are coming onto the market at the moment. I’m currently looking to buy, but is it worth looking over the next three months or should I put my search on hold?
A. I think that the summer is actually quite a good time to look because although not many properties tend to come onto the market, there are also a lot fewer people focusing on hunting for a property, which reduces the level of competition that you will face.
I estimate that about one in five prospective buyers are either away or not focused on looking over the summer, whether because they are thinking about their holiday, occupying their children who aren’t at school, for example.
Looking in the summer can put you at a strategic advantage compared to the competition. I’ve known clients who have managed to get a property simply because the other interested party was away on holiday, so it can make a difference.
What’s more, the quieter summer season usually means there are fewer viewings. If vendors want to sell they might be more inclined to take an offer just because they want to get on with the process or because they would lose a property that they are interested in.
Arranging viewings is also easier over the summer. Most estate agents will have keys to the property and if the current owners are away on holiday then you can view the property at a time that suits you.
Russell Hunt is managing director of Property Hunt, a search agent for London and the Home Counties
www.property-hunt.co.uk