The Daily Telegraph - Saturday, 5 January 2002 - Property - TRADE SECRETS - Page 9
Cheap tricks and costly mistakes
The winter sales are upon us but are those unmissable housing bargains all that they seem?
Ross Clark investigates.
Some house hunters in London recently received an invitation to what appeared to be the sale of the century. "Serious price reductions," it read. "We are reducing prices on 36 units. These will be offered as a priority to our previous purchasers and clients."
Among the offers was a two-bedroom house in central London, apparently reduced from £390,000 to £365,000, and a two-bedroom flat in one of the wealthier boroughs, reduced from £465,000.
Price reductions for priority clients at a time when property values were still supposed to be increasing? It sounded irresistible. Unfortunately, closer inspection revealed a rather different story.
These properties will be advertised in the national press at a later date but we are offering you the opportunity to purchase prior to formal marketing," continued the bumf.
There was a certain logic gap to this. If the properties had not yet been advertised to anybody, how come they had been 'reduced' in value? In reality, of course, the properties hadn't been reduced at all: the developer had simply plucked a higher value out of the sky to make you, the "privileged" buyer, think you were getting a good deal. You were probably not all that privileged, either: though it purported to be a special deal exclusively for former clients, the flyer had been sent to people who had merely made inquiries about properties in the past.
This is a trick that developers can and do get away with. There are strict rules concerning price 'reductions' in high-street shops: if a department store advertises a sale bargain, it must have previously labelled that item at a higher price. But no such law applies to the marketing of houses. "It is a shame that people buying property cannot have the same level of consumer protection as somebody buying a sausage from a supermarket," says Linda Beaney, of estate agency Beaney Pearce.
Nor is it the only trick that developers use to force the sale of their developments. If you feel you have done brilliantly well to secure yourself a new flat when the competition seemed to be so intense, beware: you may be falling for one of the following ruses.
The professional queuers
Everyone who has looked for a flat in London has probably heard tales of the development that was so popular that, on the day it was launched, hopeful buyers camped out overnight and by morning the queue stretched round the corner.
But how many of them were genuine buyers? According to one central London estate agent, there are cases in which a developer has hired professional queuers to give the impression that a development is more popular than it really is. By the time you reach the sales desk, you may find that several properties have already been stamped 'sold'. It may be that these are phantom sales to induce you, too, to put your name on the dotted line. Once they have done their job, the "sold" flats can then be quietly released on to the market in a later phase.
The phantom bidder
The key to selling a development is to create an air of excitement. Unfortunately, not all of it is genuine. A favourite trick is to have a stooge ring a telephone on the sales desk every few minutes. While you are expressing an interest in a certain house or apartment, the phone rings and the sales negotiator appears to engage in a conversation with an investor inqiring about buying four or five 'units', including the one in which you are interested.
The idea, of course, is to give you the impression that if you don't make up your mind quickly, you will lose the chance to buy. One developer in Lincolnshire helped to sell his houses by enlisting his family and friends to walk round the show home every weekend, saying: 'Wow, isn't it great!'
"You don't normally get queues in the countryside," says Jonathan O'Shea, of FPDSavills. 'But in this case the houses all sold in six or seven weeks.'
The bogus celebrity buyers
Celebrities do have to live somewhere, of course, but they don't buy quite as much property as the rumour mill would suggest. A story recently appeared in a trade magazine "revealing" that an American film star was buying a flat in Docklands. Local estate agents, however, denied any knowledge of this celebrity house-hunting in the area and he has since bought - or so it is rumoured - in another part of London. It is very easy to plant rumours that a star has been expressing interest in a development, giving it a kudos it would not otherwise have and perhaps tipping an excited buyer into signing on the dotted line.
In another case, people who inquired about one visiting one development were told on the phone: "Oh, we can't do any viewings on Thursday evening because we're bringing in somebody by helicopter to have a look and security will be very tight."
The misleading show home
No developer builds all his houses before selling them. In a booming market, all most buyers will have seen is the show home. And there are plenty of ways of making a show home more attractive than the property into which you will eventually move. Developers have been known to furnish homes with three-quarter-size beds, to do away with internal doors and to stick vast conservatories (which would be on at least £10,000 extra) to create an impression of space. Japanese gardens are often employed to disguise the fact that the house lies on a reclaimed brownfield site and has only eight inches of soil. Another trick used on slow-selling developments is to put curtains inside some of the unsold units and park cars outside to give the impression that the properties have already been sold and you had better get your skates on because there are only a few units left.
The over-glamorous brochure
Ever seen tourists poking around the streets of Lambeth looking for its many attractions? Not very often. But there is one development in Lambeth whose brochure comes adorned with photographs of buildings that lie several miles away, such as Buckingham Palace, Tower Bridge and the Cambridge Theatre.
The brochures for new housing developments in villages are often full of photographs of old houses in the village: often very attractive, but not what you are buying. In the early stages of a development, buyers rely heavily on the brochure and the artist's model constructed in the sales centre. A common trick is to depict large, open green spaces that, in practice, get built on.
In the 1980s, a favourite trick was to throw in a car with your new home. As a proportion of the cost of the property, the car accounted for peanuts and, of course, the full cost was passed on to the buyer, but it did appeal to people's greed: the only other way of getting a free car, they reasoned, was to appear on Play Your Cards Right and that was somewhat riskier. A development in Leeds "included" a Harley-Davidson motorbike: in fact, you shared it with the other residents.
Now, membership of an adjoining health club is a common inducement. You might think that use of the health club is an integral part of the property when, more likely, you have use of it only for a year, after which you will be charged a stiff membership fee.
Beware, too, developers who offer to pay your 5 per cent deposit for you: the developer is paying the 5 per cent to itself. All that is happening is that the developer is overvaluing its properties for marketing purposes and you are taking out a 100 per cent mortgage.
Recommended reading for the Homebuyer, by Ross Clark
The Telephone House Neighbours Association, Tunbridge Wells
The aims are to heighten peoples' awareness and concern for the development on Telephone House site, Church Road / York Road, Tunbridge Wells, Kent.