Vendor demands heighten risk for movers
Vendor demands for cash unconditional offers and auctions are forcing owner-occupiers to take on significant risks to move up the property ladder, according to advisers.
Wednesday, August 4th 2021, 7:07AM
In a strong sellers' market, the vast majority of vendors are selling homes at auction, only accepting cash unconditional offers ahead of auction processes.
The vendor demands have made it more difficult for people looking to move up the ladder. Owner occupiers looking to trade up are faced with having to put in an unconditional offer before they have sold their own home.
Many buyers are turning to open bridging finance, leaving them at risk of paying two mortgages if they are successful at auction.
Meanwhile, some in the market are considering selling their home at the same time, leaving them vulnerable to being without a home, if they lose an auction.
Movers are being forced to try and "time" the market due to vendors' demands.
Craig Pope of Loan Market said houses in desirable locations were requiring unconditional offers "80% of the time".
He said clients were "either getting open bridging or selling first. It’s a real mixed bag."
Kris Pedersen said there was "a fair bit of BS" from real estate agents in the current market.
He warned some could be caught out if they purchase a home without selling, if the market turns.
"It is definitely hard work when needing to sell first so we are seeing more clients considering bridging, as the banks in some cases will do open bridges. But people want to be careful there as at some stage this market has to turn as well."
David Green of adviceHQ said the conditions imposed by vendors were "always a challenge in a heated market".
"Most buyers are buying before selling so they don’t get caught short with nowhere to live," he said.
He said banks were reluctant to provide open bridging in many cases.
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