Latest proposal for the best way to resolve the current unacceptable stagnation right across the UK housing market.
It’s no good working under the principle that house prices can’t ever go down. Anyone who understands the nature of investments must understand that, but house prices don’t necessarily have to suffer from vast reductions either.
My idea involves improving the way houses are bought and sold, by making ‘knowledge’ about current house prices more generally available to buyers. The change would involve estate agents taking a more proactive position on this. They would need to improve their methods of assessing house prices.
It may be argued in common law that as soon as an agent accepts an offer on behalf of a seller, the person making the offer then becomes a client of that estate agent. Therefore, all agents have a duty of care to advise buyers about what they are negotiating to buy and thus the level of price which such buyers are intending to pay.
For example, if the agent advises or helps the buyer in regard to obtaining finance, or discusses the best way to proceed with regard to any disrepair noted in the buyer’s survey, or advises on general matters concerning exchange of contracts, that agent is advising the buyer and hence is acting for them.
Similarly with lettings, if the agent advises the buyer about which terms should be acceptable to the landlord and should discuss details in the letting agreement, then that agent is acting between the parties. That agent is, in effect, acting for the tenant as well as the landlord. The estate agent’s primary objective remember, is to get an agreement and hence collect its commission. To do that an estate agent will usually advise all parties on any matter relating to getting that agreement.
The effect of this is that all agents are, in fact, responsible to see that terms are reasonable in the current market conditions from the viewpoint of all buyers (or tenants) as well as for any particular seller.
‘Best price’ has to go. It’s that simple.
Here’s my latest proposal for the best way to resolve the current stagnation right across the UK housing market.
The only things that must vary in depressed economic conditions are: market prices.
If everyone knew that these were reasonably accurate, the market could still flow.
If the market could still flow, substantial economic benefits would be fed back into the whole economy.
NEW IDEA: designed to achieve this.
Instead of just listing a house at an asking price of say £500,000, state ‘Valuation: £500,000′.
That way, all agents could be held to account if they over-value at market appraisal time (and many estate agents openly admit they do, in order to win new instructions).
One can’t help thinking, how can doing that be in the interests of their selling clients when it results in protracted sales campaigns, far beyond the hopes and expectations of that client, or even worse, it achieves no sale at all?
Another advantage is that if the asking price does not have the word ‘Valuation’ with it, everyone will then know, and be forewarned, that the price being asked isn’t substantiated. In other words, if the agent is not prepared to stand by the asking price as being genuine, it can’t be genuine.
The first corporate to adopt this new idea will gain a massive advantage over their competitors.
Having done this, unless all other agents swiftly follow, they would be left behind in the rush to offer an improved service, which house owners are bound to like.
They are bound to like these new proposals because they would ‘level’ the playing field and make it possible for both individual moves and chains of moves to happen more smoothly, once again.
Obviously, in order to justify tagging the word ‘Valuation’ to the figure being stated as the price, additional appraisal methods would need to be employed by the estate agent, to ensure that the figure quoted was pretty close to the current value of the property being marketed. However, for most agents, only a small amount of further training would be likely to be needed by those staff carrying out the market appraisals.
The extra training, though short, would make a vast difference to the number of houses successfully bought and sold each year across the whole country.
If the majority of houses on sale were correctly priced, the buying public would gain in confidence considerably and thus become far more interested in moving again.
This one simple switch of emphasis, about pitching asking prices more correctly, would bring the much needed vitality back into the housing market.
Without it, the same old patterns must continue. That of buying in the grip of general panic (like a flock of sheep being made to run through a field gate by being chased by a rather well-trained sheep-dog - the agent) when prices are at least seemingly rising fast.
In the alternative, having to be patient as stagnation sets in, market VALUES start to dip and people are overcome by the fear of a fall in the value of their houses whilst being unsure whether or not the asking prices of the houses they hope to buy will truly reflect such falls, by comparison.
It’s time to correct the terrible twin aberrations, relentlessly reeking havoc in the housing market every seven or eight years. Instead we should welcome a wave of confidence back into UK home ownership and keep it there, once and for all.
Though setting the correct asking price is the way to go, it’s a serious business. It needs to be done scientifically and mathematically, using comparison data from recent similar sales, as provided by HM Land Registry. Such information should be used, with great skill, to deduce the correct market price for each house that’s about to go onto the market. Surprisingly, most agents don’t carry out or even offer to carry out this work before giving their opinion about the current value on a house they are hoping to be instructed to sell.
They are letting everyone down by not doing this, which is very sad.
This has even wider economic implications for people’s flexibility in a challenging job market, because evidence clearly shows that home owners, both those with a mortgage and those that own their home outright, find it most difficult to move at present.
The time for change is upon us. Who amongst our readers cannot see that? Who can?
We hope you find this new idea for improving the way houses are bought and sold across the UK refreshing and interesting. If so, please comment. If you hate the idea please comment too! We’d like that.
Posted by: Property Match (UK)/Asking_Prices: Peter Hendry, Consultant in Housing Valuation, Property Match (UK)