You may have seen Harrisons Homes have been in the news recently with another incredible achievement. We have achieved the impressive milestone of 100 Property Sales Being Secured By Reservation Agreements. Harrisons are the second agent in the UK to achieve this target. As well as being one of only a handful of agents that offer their clients peace of mind by offering these type of agreements. We are in no doubt that having these agreements in place has contributed to us having one of the lowest fall through rates in the UK. Just 4% compared to the national average of 33%.
What is a reservation agreement?
Reservation agreements are legally binding guarantees that commit the buyer and seller to proceeding with the deal once the offer has been agreed. Both parties agree to the terms under which the deal can be broken. They both pay a deposit, to seal the deal. If the deal is broken by either party for reasons other than those agreed, there is a penalty that must be paid to compensate the other.
It works like this:
The buyer views the property, and express’ an interest that they are considering making an offer.
The seller has already completed a buyer information pack. This is then sent to the buyer to review before an offer is made. A better-informed buyer is less likely to pull out. And more likely to be bold in putting forward their best offer.
Once an offer is agreed. It is reserved, to protect you from Gazumping/Gazundering. You’ll be safe in the knowledge that your property sale is secure before legal exchange of contracts.
Is this the future the housing market?
We believe reservation agreements will become the norm for property sales in the future. Before the pandemic hit, the UK government were at the point of running a trial of reservation agreements. Unfortunately this was cancelled due to Covid-19.
However, property technology company Gazeal created their own reservation agreements, which have now helped people to buy and sell over £200 million worth of property in the past two years. Now government and many industry bodies are very interested in how this was done.
Last Friday, Bryan Mansell, the chief executive of Gazeal, met with the Department of Levelling Up, Housing and Communities as they review the merits of going ahead with a trial.
The call for the change in law and for the introduction of reservation agreements has been picking up a lot of support recently. The past 18 months in the housing market have been unprecedented. The flaws in the current system have been more obvious to see. We believe these agreements are the future as do many others.
National newspaper, The Times, has launched a campaign called “Get Britain Moving: Speed up. Streamline. Save money”. With two main objectives: to reduce uncertainty by calling for the introduction of reservation agreements (making offers legally binding) and greater transparency through the use of digital innovation to create a faster, more secure and less stressful way to buy property.