A new ‘lock-in lite’ style service is being trialled which allows a vendor and buyer to ‘commit’ to a transaction through a monetary deposit.
HonestyBox was soft-launched last month but has been used by Hewitt Adams on the Wirral for the last six.
Hewitt Adams is co-founded by Ben Adams, who started with Countrywide where he became a regional marketing manager before moving on to Dubai for three years.
It was there that he says he came to value how to secure a transaction from the outset.
He says the Dubai system is far less stressful for both sellers and buyers.
Coming back to the UK, he set up Hewitt Adams with business partner Dan Hewitt.
The pair started developing HonestyBox some 18 months ago, believing it could be an instruction winner.
Through HonestyBox, agents offer sellers and buyers the ability to offer either £500 or £1,000 each into the ‘honesty box’.
Both lodge equal amounts and can then choose an ‘absolute’ or a ‘qualified’ lock.
‘Absolute’ is where neither party can withdraw from the agreement without forfeiting their deposit.
Adams said that this is the more popular option with cash buyers or those in chain-free situations.
The ‘qualified’ lock allows the parties to create their own terms and conditions, and outline the instances either party may exit the agreement without penalty.
A qualifying term might be that the property must value up on survey to the agreed purchase price. If it doesn’t, the deal can be renegotiated or the purchaser can withdraw without penalty.
Another qualifying term could specify that where a chain collapses, buyers and sellers can exit without penalty or agree a further time window.
Adams said: “It’s designed more as a gesture of intent and a deterrent for anyone who might have a habit of gazundering or gazumping.
“We recognise it’s not as iron clad as a full reservation agreement or as legally binding as the Gazeal system. But it wasn’t designed to be.
“It was created to strengthen chains, deter gazumping and gazundering, and nurture greater trust as well as confidence in chains.
“As someone who has been a lister, branch valuer and business manager for the last decade, I wanted it to be a tool that offered some extra peace of mind to sellers and buyers.
“We also thought it would be a helpful tool to estate agents and perhaps give them a handy USP over their competition.”
Agents pay £50 a month to use the service.
Adams said that at £600 a year, it only needs to win one instruction or prevent one fall-through to pay for itself.
Over the next three months agents are being invited to trial it free through the website by typing in the code: INVITED.
The Government has expressed its interest in lock-in agreements as part of its proposals to improve the home buying and selling process.
Might work at preventing some fall throughs but can’t see how this could be an instruction clincher.
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Great idea but until gov’t wake up and make it law to protect sellers from flaky buyers , its an uphil struggle.
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Its a nice idea but any company could add their take on this to their website, i think the £50 pcm is asking too much.
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Surely until the government put no sale no fee (incl insurance payouts) on conveyancing this is going to make little difference . If because of a protracted conveyance and the shortage of property the vendor gets a higher offer they’re not going to blink over losing a thousand pounds ?
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Half way houses are full of holes. Formal lock-in/lock-out agreements have been used for years now and are as watertight as you can get. I’ve them twice this year successfully. The trouble is they require full commitment from both parties. HonestyBox’s package is a good idea but does not need full commitment so is unlikely to work in the majority of cases; when cold feet set in the buyer or seller will simply wriggle out of the transaction and such a low deposit in the “absolute” agreement is a tiny loss if the buyer finds a better property at a cheaper price.
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Doesn’t seem very different to the existing ‘Stakeholders Deposit’ that we took on every reservation through the 1980’s. Back then it was £250, but refundable. In my view its either a Lock-In or it isn’t? Not convinced its in either parties interests as circumstances change ie Death. Best way is: to get the sale through quickly and properly – all of which is happening very soon through RoPA.
Watch for the new Propertymark Toolkit anytime soon.
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Problem is, far too many estate agents take too long to sell a house in the first place increasing the chance of abortive deals, as the seller is already stressed when a buyer does come along, and a buyer who annoys them during the conveyancing could lead the seller to throw their toys out of the pram. Also, buyers see a property on the market so long, they think they are in charge as the seller must be desperate and if they do not like a seller’s stance on anything, they pull out..
On top of that, even when a buyer is found, far too many estates do not vet them properly. No MIP (or saving in the bank to cover the price), no offer put forward, that should be the deal. Instead with pressure on agent commission, any buyer will do seems to be too common a theme now.
The conveyancers in those cases then have little chance, as they either have annoyed sellers with how long the property took to sell (and then the same estate agent chasing a conveyancer to be fast) or a buyer who was never stable anyway.
Make sure you use a great estate agent – we work with them all the time – and a great conveyance.
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