Check out this article from last week’s Financial Times, it’s a long one but any home buyers will no doubt empathize!
Nesting, not investing
By Merryn Somerset Webb
Published: July 30 2010 17:13 | Last updated: July 30 2010 17:13
Merryn Somerset Webb with her home tools
A serving of cupcakes (as well as a search agent) helped Merryn Somerset Webb in her hunt for a Georgian townhouse in Edinburgh
When we first moved to Edinburgh 18 months ago, the last thing my husband and I wanted was to buy a house. It seemed perfectly obvious that the house price crash had really only just begun and my oft-stated view (in the FT and in Moneyweek) was that prices would end the cycle a good 30 per cent down from their level at the time. Six months later, however, we started looking for a house. Why?
Partly because we were fed up with our rented flat. My husband Sandy had taken it because there was nothing else on the market. I was in London and too pregnant to nip up and down looking at flats, so I had just assumed, as it was both big and in Edinburgh – home to some of the world’s finest Georgian architecture – that it would be fine. When we arrived I took a quick look around, started to cry and had to be taken to a coffee shop and given several cupcakes before I could begin to cope. The flat was dark and, thanks to some apparent misunderstanding about refurbishments, about as filthy as it must have been when its previous occupants (five students) had left it some months earlier.
It got cleaner but it never got any lighter. And after a long Scottish winter, I vowed I wouldn’t spend another January in it. But the misery of that particular flat wasn’t the only reason we started spending our free time trawling property websites. It was also about family stability, schools and the long term: our daughter wanted her bedroom to be pink rather than magnolia and I wanted her to have what she wanted, whatever the financial cost.
Crash-landed gentry – Jul-24
Slash bills and save the world – Jul-16
House & Home: High security – Jul-09
Timber, but not as we know it – Jul-02
A bumpy ride – Jun-26
Retirement revolution – Jun-19
We figured that it wouldn’t be too tough to find a nice Georgian townhouse in Edinburgh within our budget. After all, the Scottish capital survives mostly on the cash that comes in from the public and financial sectors and, with both of those in trouble and the mortgage market crunched, we expected desperate sellers to pour out of the woodwork the second we set up our www.primelocation.co.uk alert for five bedrooms and a garden. They didn’t. Instead, there was almost nothing on the market and what there was listed was so grossly overpriced that it just sat there.
But even as I seethed with frustration with Edinburgh’s complacent homeowners and their utter failure to accept the macro-economics of the situation (bank crises lead to credit crunches, which lead to house price falls), a few other people seemed to be finding houses – and often houses I hadn’t even known were for sale.
I started asking how. The answer was almost always Matthew. Matthew turned out to be Matthew Sinclair of search agents Saint Property. That’s when I realised I was missing a trick. What on earth were we thinking, conducting the most important and expensive purchase we were ever going to make, in a local market we barely knew, without taking any professional advice whatsoever?
Indeed, what is anyone doing buying a house at any price without taking advice? Think about it and it is all a bit nuts. Most people wouldn’t dream of investing even a few hundred thousand pounds in the stock market without a wealth manager holding their hand. And they couldn’t imagine spending their only million on a painting on the advice of one gallery owner. Yet when we buy houses, we trawl around a few estate agents until we find one we think we like. Then, ignoring the fact that the agent is acting for the seller, we look at it for an average of 96 minutes, negotiate with him ourselves and, after the odd interjection from our solicitor about whether or not the dishwasher is included, we pay up.
That’s not just insane at the top end of the market – it is insane throughout the market. Search agents were invented to suit a bubble market – the idea being that they would seek out houses for their clients before they came to market and buy them before the competition even knew they existed. That still makes sense in a few areas. But in a market like today’s, where prices and supply are uncertain and estate agents are desperate to make sales, all buyers need someone on their side, whether they are spending £400,000 or £4m. Get a good agent and they should be worth every penny of the 1-2 per cent they cost. So we called Matthew, we explained what we wanted, he said he could find it and we hired him.
Matthew didn’t just show us hordes of houses, figure out square-foot price comparatives, seemingly know every buyer and seller in the market and have an acceptable price for every inch of Edinburgh in his head: he spent a lot of time trying to explain to us what we really wanted. He talked us down from houses that were too small and too big. He steered us away from tiny gardens and dark hallways and he did his best to stall us when we tried to buy a 5,500 sq ft office in the West End for conversion. Luckily we gave up on the idea before he had to tell us exactly what he thought of our idiocy.
Then one day he said he thought a house in Windsor Street would suit us very well. We said we doubted it. We had driven down it not long after we had arrived and agreed that if there was one street of Georgian townhouses we didn’t fancy much it was Windsor Street. It isn’t very pretty and it is on the wrong side of town. I wanted to live on the west side of Edinburgh in the sweet gentility of Stockbridge, not in the East End, surrounded by the hurly-burly of Leith Walk.
Humour me, said Matthew; come and see it. We agreed but only because we were feeling guilty about how hard we were making the poor man work. When we first met Matthew, Sandy told him that a house on Saxe Coburg Place, a particularly pretty garden square in the classically Georgian New Town, would be all his dreams come true. I told him the same about Danube Street in Stockbridge. Matthew had found one on each street that we might just have been able to afford and we had promptly rejected one as being too dark and the other as being too small.
The house on Windsor Street was perfect. It had exactly the right amount of space, with high-up bedrooms for the children, a great drawing room, an office for me and a study for Sandy, a gorgeous open-plan kitchen, a walled garden and the one thing that my in-laws just can’t get over – off-street parking. Most important of all, even in the gloom of the Edinburgh spring, light was pouring in through its ornate cupola: it was bright enough to satisfy me and architecturally good enough to satisfy my fussy husband (who can also walk to his West End office from it in 20 minutes or so). By lunchtime the next day Matthew had dealt with some tricky negotiations on price and our offer had been accepted.
I’m guessing that Matthew then poured himself a stiff drink. He swore at the time that he had had worse clients. But it does seem unlikely, particularly as it turns out his work wasn’t quite done. A few minutes after we walked through our new front door 10 weeks later, I was in tears again. Shelves and tiles were missing; the washing machine had gone (so irritating!); and, when you turned on the water in the upstairs bathroom, it dripped down into the kitchen. This time it took chocolate cake from Leith Walk’s best deli, Valvona & Crolla, before I was calm. We told Matthew, he came round, the leaks were contained and, as I write, the hole in the kitchen ceiling is being patched up. Buying agents don’t come cheap but you can’t say this one didn’t earn his fees.
We now have the right house for us and we feel the price we paid was about right. We also think buying will be the right thing for our family. But we still think it will turn out to be the worst investment decision we have ever made. The demand for a house has nothing to do with how many people would like to live in it and everything to do with how many people can get their hands on the credit to do so. Right now credit is severely restricted and the supply of houses for sale is rising fast. That’s an equation that can only have one result. On the plus side, if we ever need to sell our house, we do at least know a man who should be able to find us a buyer.