Oct 312011

The thing is, everything has gone pear-shaped in the housing market with far too many houses for sale and not enough sales being completed. Even Phil Spencer, working flat out to close sales, is not going to be enough to plug this sized gap.

The most significant difficulty causing the market to fail is undoubtedly the problem that asking prices are being ill-conceived.

Clearly, people need to be ‘educated’ about what current prices are. Equally clearly this ‘education’ needs to come from estate agents to their clients; and it’s not.

On reason why it isn’t happening is that even estate agents don’t seem to have much of a clue about valuing houses (or appraising them to se their opt-outish phrase).

This ought, quite simply, to be totally unacceptable.

It’s GOT to be sorted out, for the sake of all those selling, or wanting to sell, but also so that buyers in the market can have the ‘confidence’ to know what market values currently are, for what they are thinking of buying.

For example, if a vendor is offering (through estate agents, as their appointed agent) a house at say £200,000 and the best interest the agent can get for their clients is a succession of offers at £170,000, then any seller should be made to understand that the current price of what they are selling cannot be £200,000. Also the estate agent needs to understand that all genuine offers are material when valuing the house in the current market. These, together with actual evidence of recently completed sales, should specifically be used to re-calculate the house’s present value.

The really important bit though is: - if the same logic could be applied to any house that the seller wanted to buy, then that same seller would realise they could be much more relaxed about the level of price they needed to attain on the house they were selling; as the buy price would (and should) also be similarly affected in a downturn.

Unless and until both these things can happen, chaos must continue across the whole housing market! It really is that simple and it also is really that simple to find the way to get the whole housing market working again; chiming in unison, flowing like a well established river of trade! When this happens, people would be able to move from one house to another relatively easily, which is one of the main reasons for wanting to be owner-occupiers in the first place - isn’t it?

Estate agents need to take the lead here because they ARE the lead players in the task of finding new buyers for houses in this country, currently.

We sincerely hope they will soon accept this and act accordingly, though we are also firmly of the belief that if they do not, other businesses will spring up and do this in place of them.

The most obvious way for this to happen would of course be via the Internet. But the revolution would have to be from sites that take appropriate responsibility to get the houses advertised, marked up at prices which are within the correct ‘valuation range’ - and not simply quoted piecemeal, as seems to be happening at present.

This is the challenge.

The gauntlet has been laid down by the recent collapse of the housing market - without a shadow of a doubt.

The estate agents that survive will be the ones who take action, quickly to embrace the above vital changes to the old methodologies, without waiting until it’s been done (by others).

Best of luck for the future, everyone!

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

Oct 192011

So, what could estate agents do to restore activity in the housing market?

To my mind, first of all, unless houses are priced within the valuation range, and well-presented, why would they ever sell - except by some kind of fluke!

For my money, it’s the estate agent’s ‘job’ to make sure that each house they are selling is firstly priced within that current range and secondly well-presented, by advising their clients appropriately and convincingly. Budding estate agents need to possess sufficient ‘charisma’ to enable them to succeed here.

But before all that, they do need to be able to measure (or know how to measure) the valuation range correctly, before opening their mouths and offering advice about house values. That requires both good training and sufficient experience.

The lack of these things are the twin problems currently besetting many estate agents.

Unfortunately owing to financial pressures these days, most agents just end up in a headlong rush to retain the greatest number of houses on their books, instead of dealing with these shortcomings. They need to take stock of this.

Things need to change for the better if the housing market is ever to improve.

One way would be to force all of the overpriced houses onto the private or free-listing web sites!
That would free-up estate agents to offer a more professional service and get on with the work of moving people who are genuinely ready to accept good professional advice and thus move house more quickly.

It would be a master stroke, in our view.

Posted by: Property Match (UK)/Asking_Prices: Peter Hendry, Consultant in Housing Valuation

Oct 102011

We’re looking for an edge, to offer a better service, than that currently provided by estate agents. That is why we have developed this web site.

Our stance is to embrace ‘valuation techniques’ to a greater extent than estate agents do and thus help people to price houses more accurately in the marketplace.

The purpose of using valuations and the main purpose of anyone doing them should be to act between parties (i.e. any vendors and purchasers), in determining the right price for any particular house to be sold at.

In comparison, the mandate for estate agents (as is generally stated) is to try and get the ‘best’ price that they can for their client, an individual vendor, in the current market conditions (but usually without settling upon a specific time by which this needs to be achieved). The difficulty is, this does
involve the need to do a proper valuation of the house to be sold at all.

Instead it works by the agent simply gauging the level of vendor desperation and than fixing the asking price as high as possible whilst loosely taking into account both the market conditions and the extent to which the client might take a lower offer in order to get the house sold!

Those clients who have no wish to take below market offers at all, are often taken on by the agent anyway, at whatever price the owner thinks they ought to get - irrespective of true current value. This is because in the present circumstances, no-one actually does a proper valuation to find out what that is! The result is that large numbers of houses on estate agents’ books are frequently over priced. The effect of this is to cause unwanted confusion in the marketplace about what market values are actually running at. Unfortunately this tends to drive buyers away, which in turn is the primary cause of the next price slump, or to be more precise the next correction in prices (because the prices being asked were never achievable in the first place).

Instead of this, IF everyone placing houses up for sale in the market used proper valuations to determine asking prices, the market would flow, continually, in all economic conditions. This achievement would be of immense benefit to the wider economy as well as to individuals wishing to move house at any particular time.

One of the main benefits of being a house owner in the first place is to be able to be mobile enough to sell and buy elsewhere simultaneously. If that opportunity should no longer be available as a result of a de-stabilised private housing market, in exactly the way we are currently seeing, fewer people are likely to be interested in becoming home owners. This itself could become a threat to the whole idea of (and indeed the intrinsic value of) home ownership.

WE, at property-match, are aiming to help the market by offering a better way in which to buy and sell houses by trying to ensure that houses placed online with us, have been properly valued beforehand.

We are taking the lead on this because we know that estate agents are failing to carry out proper house valuations, as is clearly shown by the Land Registry statistics on completed house sales and their differentials with average house asking prices. The whole housing market has suffered as a direct result of this failure.

Vendors: - if you would like to join us in improving the way houses are bought and sold here in the UK, we welcome your business on this basis. We look forward to not only advertising your property online for you, but also to liaising with you in person about anything which you may be unsure about when you are in the process of selling your house.

Obviously we would first encourage you to obtain a valuation of your house, based on Land Registry data. We can help you to order one of these before you actually start the whole marketing process. Estate agents generally do not offer their clients this at all and our research indicates that many of them are actually opposed to considering doing so.

Intervention by Government, whilst deciding and implementing ‘public policy’, is always a prerequisite to bringing any necessary improvements to the way in which the housing market (or any other market for that matter) functions; especially when a market is hijacked by the poorly considered actions of its main players and negotiators.

Posted by: Peter Hendry, Consultant in Housing Valuation Property Match (UK)/Asking_Prices

Oct 042011

Average asking prices are currently £231,543 whereas average sold prices are £164,000 (recent Land Registry figures). What does this say about current house-marketing methods by estate agents??? Something urgently needs to be done to correct this appalling mismatch, which is crippling the housing market by driving buyers away, just when they are most needed.

The PM said on The Marr show last Sunday “Democracy is government by explanation“. Well I have some unanswered questions for him.

How can you square this government’s policy to cut the deficit as a matter of primary importance (and urgency) whilst at the same time expecting individuals to borrow more from banks and banks to lend them more for buying houses at unrealistic, unjustified, and frankly completely unsustainable prices?  To put it another way; are you strongly encouraging the public to borrow more e.g. buy houses at unsustainable prices etc., at the very same time as telling our own exchequer to cut the Nation’s deficit as a matter of extreme urgency?  If so, which policy is, in fact, the one you would advise ordinary people living in the community to pursue, those who are loosing their jobs or otherwise struggling as a result of the government’s chosen policies?

Assuming the debt crisis is exacerbating the slowdown in the housing market, you would expect (would you not) that house prices would self-moderate enough to adjust for this. I think we should agree, in a perfect market, prices would moderate to reflect market conditions. The question is, why is our housing market NOT functioning in this way? Once this is properly realised, the question of exactly what should be done to improve the way it functions needs to be addressed? To date it has simply been ignored by successive governments.

Just helping buyers to borrow more and builders to do likewise (which is the government’s current suggested policy) is not the answer. What is required instead, is first helping industry, the engine of our economy, to achieve a growth in exports in order to create new wealth. This will eventually result in those needing housing, acquiring the ability to purchase some and hence house prices would stop falling, once again.

Until this is achieved, how can any government turn a blind eye to what is, in the words of your Housing Minister Grant Shapps, speaking on Radio 4 on 4th October, ” A very extreme housing crisis”. How can they not deal with the problem of excessive house asking prices, when hardly anyone is earning enough to pay such artificially conceived prices and when the rate of completed sales is stagnating unacceptably and unnecessarily?

What is needed are proper valuations, which are fully reasoned and provided in writing by all estate agents, whom should be made to provide these by law. This is the KEY to getting the housing market back on its feet and moving, once again. To quote from an age-old saying “If the price is right, each individual house will sell, in any market conditions”.

Surely therefore all estate agents should be required to provide proper valuations, as part of the service that they offer, whenever pitching to take on new properties to sell? They certainly do not do this at present.

Secondly, the idea that first-time buyers are in some way essential to provide support to the prices of houses further up the chain, has NO factual basis whatsoever.
This is like saying that small investors, buying shares on the stock market, will have ‘a measurable’ affect on the quoted price of those shares. The effect would be as insignificant as someone trying to fill a swimming pool using a teaspoon filled from a dripping tap!

Thirdly it’s a myth to suggest that building more houses (whether affordable or not) will have a material effect by reducing the prices of the majority of existing UK houses.

All that is needed instead is better information about the current sales prices being achieved, so that this feeds into agents’ asking prices more effectively.

This, is what could bring much needed business back to the housing market. It would also help grow the whole economy. David Orr, the economist, speaking on the same phone-in program as Grant Shapps said, that a successful housing market is very very important to the whole UK economy. I totally agree with him.

Finally, after publicising his reservations in newspapers, Andrew Tyrie, the Conservative chairman of the Treasury Select Committee, managed to get George Osborne to agree that he would make it easier for small businesses to take on new workers. A success surely.

Maybe Andrew Tyrie, if asked, might be prepared to ‘second’ some of these questions for more detailed consideration by government?

If there are no answers available from David Cameron (or from his Housing Minister) might Mr Tyrie be prepared to offer some further comment on some of these points instead?

Posted by: Property Match (UK)/Asking_Prices: Peter Hendry, Consultant in Housing Valuation