Apr 262011

The housing market has been beset with the same problems for 30 years or more, so straight-forward bolt-on ideas about how best to market houses are unlikely to take things forward. Instead of going round and round, from boom to bust, we’re proposing a BIG change in paradigm.

“We all now have to consider the possibility that something is systemically wrong with the workings of the housing market” says Peter Hendry, the manager of Property Match (UK), the direct online house marketing web site. He was a surveyor and estate agent, and gained over 30 years experience working in the sector.

Buyers have been in short supply during the latest downturn. The number of homes sold was  1.6million in 2006, the year before the credit crunch struck, but was just under 900,000 in 2010, and things have continuing to deteriorate, fairly quickly since then. That matters, because without a sufficient number of buyers willing and able to purchase houses at the prices being chalked up by estate agents, the market must falter. New figures throwing more light on this will be published by ONS later today.

“We therefore need something radical and new, and this is it!” says Mr Hendry.

Here is a brief synopsis of the proposals he is advocating, and why:

1. The fact that the housing market has slowed nationally, and the number of completed sales transactions has slumped, is because agents are not following current ‘market-led’ prices but instead are attempting to stick with out of date and over-exaggerated ones, for whatever reason.

2. In a nutshell, Market price (or market value) is the amount of money being paid when supply and demand balance perfectly (whilst allowing for the period needed to find a buyer, let’s say three months for houses generally).

The only way the market can balance supply with demand, when prices are held artificially high, is by sellers eventually pulling out of the market owing to the scarce number of people wishing to buy at such high prices. This causes the market to further stagnate; unless and until demand for more houses, at the excessive prices stated, increases once again (unlikely).

What I am saying is that this condition is actually being ‘induced’ by over-zealous estate agents - operating in a vain effort to win house-selling instructions by agreeing to represent their clients’ supposed best interests, whilst knowing that in truth the prices being mooted are well above current market expectations (London being the one exception of course).

This whole thing needs a complete re-think, in my view because without it, the problems of ever-booming then busting prices, in the housing market, will simply continue.

3. My response to the claim by some estate agents that private sales web sites like e.g. Property Match (UK) are simply trying to rubbish what they do and then ‘snaffle’ their business, is this: -

In fact it’s the estate agents themselves who are trying to rubbish private sales web sites like ours. To see what I mean for yourselves, please look on the EstateAgentToday blogs:

This blog: http://www.estateagenttoday.co.uk/news_features/Peter-Hendry-blog
And: http://www.estateagenttoday.co.uk/news_features/Eric-Walker-Blog

These two blogs, along with several others on EAT, are full of offensive comments made by estate agents, usually posting anonymously and which are both sad to read and morally cowardly on account of the anonymity.

By comparison, on the Property Match (UK) web site and this blog, only factual statements may be found about the market and its current state, together with positive suggestions of ways to improve its performance, and the performance of those that work in it. Anyone can contact the site’s ‘human’ web site manager too.

Many estate agents appear to harbour the misapprehension that we at Property Match (UK) maintain a blanket condemnation of estate agency practices. Some openly state it.
It is a lie, it is simply untrue. The site was set up and is being maintained to draw attention to and explain some of the more important failings of estate agents, and to offer the public an alternative service for as long as is required, or until a more normal (and acceptable) service is resumed in the field of estate agency.
A new, good, honest and effective service needs to be delivered by agents so that their reputations can be repaired, at long last. Surely even estate agents would not dispute that that is needed?

4. The only way to achieve such high objectives is for all those acting as agents of house-selling clients to know, or learn how to determine asking prices within the range of where market prices currently are. That ‘expertise’ is what agents should ‘own’, as part of what they can and should offer their clients.

Not knowing how to assess such prices with reasonable accuracy and reliability is totally unacceptable, as far as any service being offered to the client-public is concerned.

The need to know how to assess market values is a vital part of estate agency nowadays but evidently, this is not something most current-day agents whom I have spoken to know much about. Gut-reaction is what springs to their minds instead! I hope all estate agents may soon begin to see that they need to address this massive problem and remedy it urgently. If not it is most likely that we shall see more continuing disruption across the UK housing market, with price booms, followed by busts, until such time as everyone sees this as a problem needing to be urgently remedied.

Many of the houses being offered for sale are effectively not even on the ‘current market’ really, owing to the unobtainable price tags which they sport - mostly courtesy of the agents sporting such excessive asking prices.

5. To me, probably the most tragic thing, seen as a result of the comments posted on the EAT blogs is the offensive nature of the remarks (to say the least) by the several anonymous-blogging agents, who seem quite unable to post any intelligent responses to what is being proposed and whom have simply decided to dislike all new ideas!
If these people are representative of ‘estate agency’, no wonder they have retained a bad reputation.

6.This trait, amongst current-day practicing estate agents needs, in my opinion anyway, to be proactively weeded out by any caring practitioners still in the profession, both for the benefit of all house-selling clients, and to improve the image that clients have of estate agency in general.

Are you up for this, educated and caring estate agents???

Here’s the idea:

If agents charged a reasonable amount for market appraisals - enough to cover all the expenses for the practice concerned, more effort could be put into doing them. This way, agents could offer more accurate, and carefully produced appraisals and not be out of pocket by doing that.

If the agent giving the appraisal gives it their best shot, but they don’t win the instruction, they won’t have wasted anything because taking on a property that won’t sell, one with too high a price tag, is a drain on any practice’s resources - and if they charge a reasonable amount for market appraisals, they will have been paid for their abortive work anyway.

The point is if most practices did careful, more accurate market appraisals, after a fairly short while, different firm’s appraisal figures would begin to converge with each other in appraisal prices. This would be the ideal situation for the seller too, as then they could choose the firm they prefer, based on all the other criteria which are probably just as important (or even more so) than asking or appraisal price alone.

“In my opinion, this is the way estate agents should ‘evolve the service’ they offer into what they should now be offering to all the house-selling clients they take on,” says Mr Hendry of Property Match (UK).

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