The current more difficult and more competitive conditions in the residential estate agency sector have made it essential for sellers to drop their prices below their original expectations.

"Recently, we had a case where a buyer who had made an offer on a new home subject to the sale of his own home found that the only offers he received were well below what he had expected. He therefore could not raise the agreed sum," says Lanice Steward, managing director of Anne Porter Knight Frank (APKF).

"In the old days that would almost certainly have resulted in the deal falling flat. On this occasion, however, the agent was able to persuade the seller of the home to drop his price by 15% - and this kept the deal intact."

In the current market conditions, said Steward, this was definitely the right course to follow because genuine buyers are now not thick on the ground and because, too, the home seller, in moving on to a new home, would himself now benefit from the more competitive conditions in the market.

"The current conditions in the property market should be kept in mind by sellers. They should remember, too, that a drop of 5% to 10% on their asking price is not significant in relation to the 100% plus increases that they have in almost every instance seen in the last five years."

In the current difficult conditions, said Steward, agents should look more closely at alternative financing mechanisms.

Where a seller has ample resources, a good option is for him to himself grant a bond to the buyer. Parents, too, can sometimes be persuaded to grant a bond to their children.

In those cases, said Steward, the bondholder's risk is not great if the bond is legally registered because the property remains the bondholder's surety.

"Even when dealing with one's own family or a close friend, it is wise in these cases always to work through the recognised legal channels and to draw up the agreement subject to the usual legal conditions," said Steward.

Property24 09/07/2008