Jan 222011

The most disturbing thing of all, about estate agents’ activities is: - They are in actual fact in business to actively encourage as many vendors as possible to place their houses up for sale at any one time. They do this by simply exaggerating the prices these house may be sold for. As you may well imagine, the average vendor is easily charmed into compliance when told of house prices that are better than they could have possibly have imagined. These agents do business by having as many houses for sale as they possibly can, and they compete with each other to see which are the most skilful at getting market share in this way. Actually selling the houses is not even a blip on their radars compared to winning the initial instructions.

Having got control of selling the houses, they then hope to ensnare a few unsuspecting buyers with access to more cash and mortgage-raising ability than is good for them. They also hope for a tide of rising prices; which generally only comes every so often, of course.

By getting so many houses onto the market in this way, they are setting an unrealistic tone of both prices and timescales which cause many people to suffer much dissatisfaction and disappointment but estate agents are just business people and do not care about this. Huge numbers of failed attempts to sell houses are just forgotten and never surface in the press or media.

A small number of sales are successful and agents live from the fees earned from these transactions. Agents are used to working in such an atmosphere of scarcity and have been for decades.

We’re saying that duping people into selling in this way and offering free initial valuations into the bargain, is unfair and results in bad market outcomes for the majority. We argue for a change in the way agents take on new instructions to allow a more market-conscious breed of professional advisers to filter in and stimulate much more positive activity across the whole UK housing market. Fair prices for all and relatively quick and reliable sales would be the outcome. Who, amongst the house-owning community would NOT want that?

Posted by: Peter Hendry: Pioneering better ways of house-marketing

Jan 032011

Its similar to when builders underquote for a building project, and then hope to get a supplementary payment to cover the underquote so that they can make a profit on the job in the end; estate agents are working on an exactly similar, but opposite principle.

Estate agents expect to overquote, or exaggerate the value of a house to secure the initial instruction but then try and tempt the seller with lower offers; whilst at the same time hoping that market prices will continue to climb to overtake the initial over-optimistic pricing; and so mask their rather dubious tactics.
One obvious difficulty with this is that there can be no hope, whatsoever, of masking such tactics when market prices are falling!

The main trouble with such a business model is that the client is the one who suffers.
The result is slowness in finding any serious buyers at the prices initially quoted. Secondly, the fact that the prices eventually offered are frequently several thousand pounds less than what the seller was expecting, causes extreme difficulties for them when trying to close a deal on what they intended to buy.

It means, often, that they find they cannot afford what they intended to buy, or if they can, only by increasing the amount they have to borrow - sometimes to alarming levels.

Some buyers have insufficient information about the proper value for the house in question and so try and use the asking price as a guide instead. Those that are well funded often later realise they’ve offered more than they should have and some actually decide to withdraw, causing sales chains to collapse. This is an appalling state of affairs for those trying to move house, usually within a set time-frame.

With all the delay and uncertainty being created by these tactics, it’s simply time to re-evaluate the estate agents’ business model.

Its a pernicious (and wicked) misrepresentation (or betrayal) of the situation really going on out there!

Surely therefore, there should be an immediate trend downwards, in house prices, in order to restore market activity?

I can see that economic commentators mainly follow and report on market trends, soon after they occur. However, estate agents are forward-looking and should aim to be the first to react to such clear trends and thus keep the market moving, for the benefit of all the participants, especially the sellers.

Estate agents need to react to the circumstances quickly, if they are to be of use to their clients. As there are lots of sellers, this would be feasible but estate agents must advise on ‘price’ correctly. It is their job, to advise the seller on price, after all.

The best way forward now is to re-value everything to ‘current’ market value and thus get people moving.
Think of the extra work such restored market fluidity would bring for all of the trades involved, as well as getting our National workforce into the locations required for productivity. We are convinced that further delay will simply cause further damage to the whole UK economy.

In the last house price slump, those that borrowed excessively, lost out. Those that saved for later investment, were rewarded in the end.

Property Match (UK) is prepared to stand up and say we agree with Housing Minister Grant Shapps MP, who reportedly said In an interview with the Observer and later with the BBC, that he wants government policies to usher in a new age of “house price stability”.

This report may be read at:
BBC News article

He says:
“The main thing everyone requires for their subsistence is a roof over their head and when that basic human need becomes too expensive for average citizens to afford, something is out of kilter.” “I think the answer is house-price stability.”

In the last house price slump, those that borrowed excessively, lost out. Those that saved for later investment, were rewarded in the end.

An earlier article in the Property Match blog has more details on this reasoning.
Its now time we learned the lessons of the past and stopped walking into the same pitfalls that are clearly presenting themselves, once again.

For as long as agents bolster-up asking prices, owners are UNlikely to want to consider asking real market prices (and so cannot sensibly offer them either).
For as long as asking prices are bolstered-up, sadly, owners are not going to consider offering their property for sale at true current market prices.

More on how we think a turn-around may be quickly achieved:
CAP (Correct Asking Price) - by Property Match (UK).

Posted by: Property Match (UK): The modern way to market houses