Aug 182014
 

If you don’t know, this would indicate that you, along with quite a few estate agents genuinely do not see that there is a need for improvement in the way houses are marketed and sold in this country.

There are 3 basic reasons for this happening.

1. Too many houses which go onto the market currently fail to sell at all.
This results in an increased shortage of available properties to buy, which also tends to move prices further in an upwards direction.

I estimate the current rate of failure on agent-instructed sales is approaching 50% currently, but there appears to be no reliable data on this for some peculiar reason. I wonder why?

2. The difference between the price one pays when buying and what is obtained when selling is greater than it ought to be, the result of which is fewer actual sale completions than might otherwise be attainable; when one thinks about this.

In theory, there should be little or no difference between buying and selling prices at any one time - except for tax and stamp duty plus area or locational differences and accommodation size and quality differences. Of course, the fees and the other ancillary costs of moving do need to be accepted as being payable.

3. The price differentials caused by 2 above, i.e. by estate agents’ general over enthusiasm to get more houses onto their books all the time, is what causes the problem described in 1 above. This is what is called a negative feedback loop. That is, it has a negative or opposite affect on the operation of the market.

Until this is satisfactorily corrected, the housing market will continue to operate in its present hopelessly inefficient or imperfect way.

This must actually harm the national economy - especially when the country is trying to get out of the previous deep recession - and that is still the true situation in the UK.

IF, instead of agents continually competing with each other to increase their own individual share of the number of houses coming onto the market at any one time, agents were to actually work in harmony with each other to help those wanting to move house, the likelihood of individual house buyers simultaneously completing when buying and selling would be very greatly increased. This would have an equally substantial effect on the whole nation’s economy.

This is the primary reason why a fundamental CHANGE in the way houses are marketed in the UK is desperately needed.

P.S.
Someone (probably an agent calling themselves Steve with a given email address of:
stevejh83@hotmail.com
recently tried to post a comment here but this email does not exist!
Please provide your real name and email address, so that we know who you really are, and then we will be prepared to post your comment. It’s only fair. The editor.

Feb 192014
 

A prime example showing the way in which the market operates is badly distorted, is London.
Sharply rising prices are undermining government efforts to help more people on to the housing ladder in London.

In The Financial Times today it is reported and I quote: “Sharply rising prices are undermining government efforts to help more people on to the housing ladder. The average price of homes bought by first-time buyers rose 7.4 per cent – significantly faster than the 4.7 per cent increase experienced by other buyers, the ONS data showed.
Stephen Smith, director of Legal & General’s mortgage club, said the situation in London would “soon make the capital unaffordable for ordinary families”.”

Plus “The rest of the country was seeing price rises that were broadly comparable to the rate of inflation, Mr Smith pointed out. “As such, the wider picture in the UK shows a pretty orderly market with a modest rise and no housing bubble,” he said.”

But what is not fully reported is that volumes of completed sales are running at a mere trickle compared with pre-crash throughput; and even that wasn’t particularly high at the time.

Again this strongly suggests that things are far from right in house-marketing circles.

My take on this is that we are almost running at pre-crash house price levels again, suggesting that the house price crash only lasted a year or two. ONS graphs clearly confirm this is so. In effect we are back in a house-price bubble, even though there is no commensurate economic recovery - quite yet.

Until prices moderate themselves down to market affordability levels, sales throughput cannot possibly re-establish itself.

My proposal for accomplishing this without the need for direct intervention in the marketplace (the latter never being a very good idea), is to re-organise estate agents so that they have to deal with both sales and purchases on behalf of individual clients.
If they were to be responsible to do both, they would get real hands-on experience of current market prices and thus be better able to advice both buyers and sellers on the state of the housing market at any particular time (and location).

Unless this is done very soon, first time buyers will be shut out of large parts of the UK, the very thing the government does not want to happen.

If first timers are shut out, prices will eventually fall anyway but by that time immense damage will have been done to the Nations’ economy. That is too high a price to pay for letting the market simply sort itself out and most economists know that complex markets like the UK housing market don’t naturally tend to sort themselves out anyway. It’s well known that such markets need clever external management in order to become and remain efficient.

Doing nothing about this, simply isn’t an option.

For full details of how our proposals could be put into effect, please go to an article on our blog entitled:

Earlier article on our blog site: Full details of our current proposals.

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

Why we shouldn’t feel sorry for estate agents anymore!

Jan 102014
 

Fact.
House prices rose about a third too much in the eight years prior to the 2007 price crash.  Had that not happened the downturn in house prices would have been far less acute (fairly obviously). It happened because the way the housing market is played, primarily by estate agents, is misleading. If we are to avoid another house price debacle house marketing practices need a complete revamp.

As estate agents themselves appear to have no wish or desire to change the way they operate (and I know, I’ve tried to consult with them often enough), our government ought to act to enforce the changes which the housing market itself desperately needs if it is to become ‘efficient’. Here is a superb opportunity for any political party to do the right thing and win votes for having done so, as the house-owning public will like these fundamental changes.

Here’s the link: House price rises leading up to the next election will overheat the housing market

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

Sep 062013
 

A dream about trying to buy a house:

Last night I had a dream which was so vivid that I remembered it because of the strong emotional effect it had had on me.

I dreamt that I was on the quest to find a final house for us to enjoy in our latter years of retirement.
We knew the area we preferred to live in, so it was simply a question of finding a suitable house.

We noticed a few which were for sale and which we might like to view.

My role in our marriage (as a retired surveyor) was to see whether the preferred house might be available at an acceptable price for the house in question.

We made contact with the agent of the one we’d first like to view.

I was immediately disappointed to find myself on my guard as instead of a price we might have expected, we were greeted with an agent appearing to suggest that the final price rather depended on other interested parties and on the size of our purchasing budget!

So, the vendor’s agent was already trying to weigh up the different applicants as to their buying power, rather than assuming a set price for the house in question.

This alarmed me and I complained to the agent in question that I had spent my career in property sales and management and was concerned about the way he seemed to be conducting dealings regarding this sale.

Instead of listening to my concerns, he told me he was arranging a firm’s gathering with all his staff, and me, and that the case for my complaint would be put before him and a decision made immediately!!

As if by magic we quickly found ourself in a garden-area behind the office and the agent, sitting as arbiter, invited me to begin laying out my concerns to the whole office.

Without having time to prepare I began to explain.

I first intimated that it should not be for an applicant to declare how much he or she might be able to spend including the size of the loan he or she might be able to raise. Instead, I averred, the price should be decided beforehand and stated on the particulars for the property so that every applicant should be treated equally as far as asking price is concerned. Crucially though, it should be based on a careful assessment of the value of the house in the current market, not of a token-amount thought up by the agent working in concert with the seller. In passing, I stated that even an owners’ ‘perception’ of the value of their home is not the same as knowing the true market value of the property in question and sometimes estate agents are even less knowledgeable than the house owner - as they don’t know the property concerned in any great detail.

He then called one of his senior negotiators to speak. She explained, that what I was saying was rubbish and that prices depended purely on how much each buyer could pay. Therefore, she crooned, we’d need to know how much the different applicants might be able to pay so that we can then decide which one may be invited to buy the house which they had expressed an interest about!

My heart sank as I knew this meant that they would make the house as expensive as they could for whoever might be lucky (or unlucky) enough to be the preferred bidder.

I then endeavoured to explain that this is not a fair way to adjudge how much something is worth.

For example, I pointed out. If you are selling a second hand cooker or any medium-sized item, you wouldn’t expect the buyer to tell you how wealthy he or she currently was!

The seller names his or her price by assessing the basic price if new, and by making an appropriate adjustment to arrive at an asking price depending on its current state of repair, age etc., as well as the likely demand expected during the time available to sell - in the location where the sale is to be conducted.

If you then find there are few applicants the seller, (or his agent should he have one) should further discount the asking price, until between one and three people have expressed an interest or made an offer.

Such offers are NOT dependent upon finding out how much each buyer might be able to afford. They are more about a question of sensible negotiation between the parties.

A second example may be seen by examining antiques or general salesroom behaviour.
The buyer usually asks the seller how much he wants for the item.
The seller says he is hoping for £x.
The buyer usually says “I could offer you £y. It’s my best price but I’ll give you that now.”
Sometimes a bit more haggling is done, then a deal is struck and the paperwork begins.

Both parties are generally content with the outcome.
Often these items are unique and so there is low supply, in a similar way to unique houses.

I explained to the hearing that this simply isn’t happening with estate agents and those selling houses. The result is the whole thing has become a living nightmare to all buyers.

Instead of knowing they can haggle with the seller over the price of a house, the seller is using strong-arm tactics to try and force the price ever upwards depending on how wealthy each potential purchaser may be!

I’m saying this is wrong, it’s out of control and it needs to be addressed by those overseeing the whole process of house sales. Ultimately that’s our government of course.

We need vendors, (and their agents) to learn and retain the skill of haggling again! In other words there are some questions that should be taboo - including the: “Now empty your pockets and show us all your bank accounts question!”.

The other side then countered with “But there is a shortage of supply so we need to get the best price possible in the current market!”

Demand:
I exclaimed that this is nonsense. The level of demand and supply for any particular house for sale, is the number of people actually interested in that house currently - the demand. The time aspect is the time the vendor has at his disposal for selling, or simply a reasonable amount of marketing time.

Supply:
The supply is the crucial issue. It refers to the one house in the specific location the specific buyer is interested in; not the total number houses in the whole country! There is a grotesque misunderstanding being perpetrated about these simple economic terms, which are badly misunderstood by most vendors and the agents advising them. This leads to damaging confusion and chaos for the housing market itself.

The principal agent then called a halt to the proceedings and, although I held my breath thinking that a decision either for or against selling the house we’d expressed an interest in might be about to be made, what he then said was quite the reverse.

He said, “Well I hear what you have explained and I shall think about all this and we shall see - in due course.”
It was clear that he was simply planning to carry on trying to tempt an unsuspecting buyer into revealing all, in order to get a bid acceptable both by him and by his vendor client irrespective of any other offers, or lack of them.

The whole process of discussing this seemed to have been a complete waste of time. I went to my partner and explained that unfortunately we could not come to terms on this property and may be forced to keep looking elsewhere.

I awoke, rather disappointed about this repeating nightmare scenario, not least as the house we’d quite liked would still probably be in the hands of the agent trying to engineer a rip-off sale to the next unsuspecting buyer, for quite some while to come. We’ve frequently seen for sale boards up for over a year lately.

I felt we had no option but to withdraw our declared interest in that house and go and try and find a likeable house which was being sold by a more reasonable set of negotiators than that.

The problem is, this seems to be becoming more and more difficult as most estate agents tend to adopt similar strategies when trying to get sales through.
They seem to work on the principle that as there is a national shortage in the supply of houses compared with the demand for them, the more houses each agents keeps on their books, (however long for) the better for them! This is flawed logic that urgently needs correction.

If their logic was sound, where there is an excess of demand over supply, as it generally the case here, they would start selling the houses more quickly to work to satisfy the demand and lower it.

Instead, they tend not to worry about how long it might take (even though there is clearly an excess of demand over supply) and prefer to pride themselves in getting the absolute best price possible, using the nefarious tactics outlined above and vying with each other as to which agent is the best at this - they even have award ceremonies to celebrate how much they have each made and which negotiator is the best in year!

I rest my case - for the time being at least.

Footnote:
My purpose in writing about this is to show that there is a need for government to review and enhance the methods used by agents and not to besmirch the reputation of estate agency without a justifiable reason.

We at Property Match (UK) have developed a 10 point plan, or set of rules, for rectifying the current shortcomings within the profession, which will be published later this year.

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

Jun 032012
 

The RICS is recently reported as saying “We will work with other bodies to establish, by 2015, a single industry-wide regulation and independent redress scheme for the whole sector.”

Well in that case, we’d like the Property Match organisation to be part of the process and be included in the formative discussions for establishing a single industry-wide regulation and independent redress scheme for the whole sector.
WHY? Because as well as trying to get a so-called industry-wide redress scheme going, certain organisations representing estate agents are simultaneously lobbying the Government to prescribe that all house marketing must be done through accredited estate agents!

Aside from this very serious and dangerous proposal (which is largely being conducted under the table) my concern is that if an improved method of marketing houses is not put into place before the economy starts lifting itself from its recessionary phase, it will take the housing market a lot longer to re-set itself and get turnover increasing again.

The time-lag involved will be a further unwanted damper, slowing the recovery of our economy and as a nation, we really don’t need that right now!

It was commented on EstateAgentToday recently:

http://www.estateagenttoday.co.uk/news_features/House-buyers-lose-interest-says-Hometrack

“Ask 1000 ‘clients’ what their ‘best interests’ are. My prediction would be that somewhere in the region of 995 of them will state something along the lines of - get me the best price for my property”.

We disagree profoundly. Instead we believe most house-owners wishing to move this year would say to estate agents: -

“Actually, I want you to market my property to best advantage so that I can sell it at a realistic price within a timeframe of a maximum of three months.”

“I also want you to put me in touch with some equally efficient estate agents in the area in which I want to buy, who will show me a selection of properties that will: -

a) Meet my accommodation and location requirements.
b) Be in-line, price-wise with what you are obtaining for the house I am selling (in terms of what I am getting for my money), other than allowing for nationally established price differences in respect of my new location, versus my old one.”

“If you can do these things, I would be happy to accept an evidence-based and hence able to be vetted, Market Appraisal from you and to base my initial asking price on this.”
“I will do this in an effort to achieve a swift and successful move (by using a chain of similar sales, if necessary) so that I don’t find I have overpaid for the house I wish to buy, in comparison with the one I first wish to sell.”

I would then appoint you to act for me as my agent in representing my best interests in all of these matters simultaneously - and NOT just try and get the best possible price on my sale property alone; no matter how long that could take!”

Therefore, a new ‘Independent’ watchdog with considerable powers to enforce sanctions against estate agencies across the UK that fail to provide an acceptable service to house owners is required and not just an independent redress scheme as is apparently being proposed by RICS.

A proper new watchdog would transform the way the UK housing market operates. This is urgently needed to be put in place before the current down-turn in our nation’s economy ends.

Instead of:
Leaving estate agents to keep over-testing the market and causing buyer apathy …

Instead of:
Suggesting banks should lend more to first-time buyers and others desperately trying to move …

Instead of:
Trying to build more and more houses to try and increase their supply, we should better use the ones we have already got, using unoccupied property to better advantage and helping people to move from house to house more effectively.  This would be a faster-acting policy than simply trying to build more new houses in any event.

As well as:
Having a Government approved Property Ombudsman to establish enhanced Codes of Practice to better process claims of mis-selling and other such impropriety, there needs to be an ‘Independent’ watchdog with powers to impose harsher sanctions against any estate agent found misrepresenting a client’s property interests.

The new watchdog would need to have added powers beyond those available at present which are contained in the Property Misdescriptions Act 1991 and the Consumer Protection from Unfair Trading Regulations 2008.

HOW such a body could formed and administered is, of course, open to question.
Our educational establishments have something very like this in the form of OFSTEAD.

Estate agency clearly needs something very similar to that and just as comprehensive, in terms of its powers.

Instead of:
Estate agents competing to win new instructions for themselves (as at present), they should need to correctly advise their clients on how best to sell each particular property - within an agreed timescale.
That would have to include doing properly researched and realistic market appraisals from which each asking price would be derived and which would require to be in writing and include all relevant comparison calculations.
Prospective buyers should also have the right to see this information upon request.

Instead of:
Estate agents competing against each other (as at present), they would need to work more as a team, helping those wishing to move from one place to another by freely referring enquiries from a vendor’s agent to fellow agents selling other client’s houses in the buyer’s search area (and using equally well researched market appraisals).

The result would be, better price parity between various locations (and across different estate agencies), allowing more people to move from one area to another and getting the nation’s labour force better accommodated and more mobile than ever before.

At present, moving by using chains of sales, has become virtually impossible because of an existing lack of the required cross-agency facilities.
At present, carefully crafted checks and balances need to be implemented to get the housing market, which is vital for the growth of our economy, properly functional once again.

As far as house prices are concerned:
At the right (or market) price, sellers can always sell and buyers can always buy.
Therefore, all that is required to get the UK housing market moving again, is to find a reliable method for measuring the right price for each property to be marketed - and that shouldn’t involve buyers necessarily having to try and raise ever bigger deposits and larger mortgages.

Further information about this may be seen on our web site.  Property Match (UK) is planned to run alongside estate agency services, mainly in case they fail to provide sufficient or adequate improvements to the services currently offer by them.

For this please see: Asking Prices: More info on finding correct asking prices.

In other words, based on past performance, Property Match (UK) Is definitely going to be required to compete with outdated and badly run estate agencies.

Posted by: Property Match (UK): Press Release: Peter Hendry, Consultant in Housing Valuation

Feb 212012
 

This is really the final piece of the OLD jigsaw, which explains the good and the not so good relationship between those selling or indeed letting houses, and their appointed estate agents.

Knowing how to better this is knowing how to shape the future. May you enjoy reading it and may all those involved in such matters, prosper from the intuition they can gain from this unique muse about the housing market.

Here’s the thing. Human beings are, by nature, essentially optimistic. Fine…

Given this however, a group of sales people calling themselves estate agents, have as their main strategy (or business model) a plan to do their market appraisals in an overly optimistic way to beat their competitor agents and get an increased share of business as a result. Unfortunately, this is an extremely bad business model.

The given objective of this ‘flawed’ plan is to find sufficient business, or selling contracts and for a proportion of these to convert into actual commission - in the end!

The rest? Ah well… as they say, is history

Some houses will just languish on the agent’s books in a downturn, simply gaining the agent concerned, extra advertising kudos and may with luck and a tail wind eventually become actual sales.

Some will get sold at a reduction, at the request of the client but will still earn the agent good sales commission.

Some will get withdrawn unsold but then will usually move to a fellow agent’s books so in most cases the agents, as a troupe, will continue to sell most of the houses actually sold and will therefore be unperturbed about the lengthy time it takes to sell on average.

The majority of sellers (or clients) on the other hand, will have to be more patient than ever, especially in the downturn, and most will need to be content merely with being hopeful of success whilst this scenario is playing itself out; that is if they wish to get a sale at anywhere near the level of prices being chalked up by the troupes of agents competing with each other for their initial instructions! How very sad.

To look at things from a more revealing angle and help to put things into a new perspective (whilst not wishing to extol the virtues of the average estate agent unduly), their behaviour is more akin to that of eagles preying upon far more numerous but much slower-flying cranes. We are told by the venerable David Attenborough in one of his nature programmes recently, that cranes actually started to become the eagle’s staple diet in the high Himalayas, where eagles originated from many moons ago. To explain, in this simile the cranes are the house-owners whilst the estate agents are the eagles, more recently evolved, but preying upon cranes to obtain their food (or in the case of estate agents, their commission).

It may be seen in this new light that agents (or eagles as there may more appropriately be described) are cleverer and more adept than the average crane (or house-owner). They should therefore be respected rather than being denigrated, for they are far from being unintelligent or stupid although understandably, some cranes with strong feelings may sometimes wish to try and portray them as such!

The fact is, there’s a finite pattern occurring here. It’s that the agents have evolved to a state higher in the ‘food chain’ than the cranes.

One way forward may be for all cranes to understand or accept this and perhaps slowly begin to teach the eagles to start eating seed rather than meat? That, I think you will agree, would be unlikely. It simply wouldn’t work would it.

It would seem that the only other alternative, and therefore the way to go, is for the eagles themselves to begin to realise (amongst themselves) that killing for food, won’t bring them everlasting satisfaction. There is always a downside to killing. It may well stave off hungry days in the immediate term but it isn’t a passport to becoming ‘loved’ in the community - the plethora of life on Earth as we know it. Ultimately, it will leave them frustrated, hated, unhappy and despised, as if they are poachers stealing from their own employers.

So, the thrust for change needs to come from within estate agency itself. Those agents that want to become truly respected and accepted professionally, must themselves change and primarily help and serve each individual client, instead of playing the stakes by putting their own potential profits first and foremost - as an average or bog-standard eagle might.

That’s a difficult thing for any predatory form of life to start doing of course, let alone the average estate agent. For this reason we suggest ‘society’ needs to help them to achieve this by being more mindful and aware about agents’ concerns and their worries for their own survival. We need to teach them not to kill but to improve their own behaviour, ultimately changing their whole mode of operation, or lifestyle. To do this we should support them in the process of getting a new and better life which they can only achieve by helping each individual client of theirs to succeed in their individual quest to move house.

Things would really start flying in the housing market if that happened. For all those who understand this new way, lets bring it on and let the good times roll.

How can this be quickly achieved? Estate agents simply need to look at adopting new and better methods of doing their clients’ market appraisals more accurately. Those who want to find out exactly how to do this, please go to the Property Match (UK) web site or read this blog for an overview.

Instead, right now, a widening gap is opening up between those who can afford houses and those who can’t. Do we think the coalition government has a mandate to remedy this? You bet.

One has to question the wisdom of any government that will allow such confusion to occur in the housing market in modern society on their watch, especially when the growth generated by a smoother running housing market could make all the difference between economic success and failure for the very government concerned. Surely, there can be no excuses behind which they can successfully hide for long enough not to be called to account on this?

Property Match (UK) - Pioneering ways of improving house marketing, for the whole country.

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

Feb 082012
 

Estate agents are only as good as the number of houses they are able to actually sell. Not a lot these days.
So many of them are going wrong because they don’t actually know how to do a proper house valuation, so they’re getting all the asking prices wrong! This confusion is what’s slowing the housing market down.
An increasing number of people actually want to move, need to move - even in the downturn. The problem therefore needs sorting out urgently.
Better advice should be provided by estate agents, using more exact evaluation methods, when advising owners putting houses on the market for the first time.

Unfortunately having discussed this with several of them recently they seem to have no inkling whatsoever that the problem is of their making!

Until they understand this, nothing can be done to improve the chances of buying and selling in what has become a chaotic marketplace; even though many people wish to move house and have needed to for some time. Many are instead being forced to let and then rent their next house themselves.

One of the primary reasons for owning one’s own home was so that the owner would have control and so could move to another house as and when they decided to.

Unfortunately, this advantage seems to have been decimated by the chaotic pricing variations we are seeing across the market. You might expect agents to be in control of this, as it is their business to sell houses. Sadly you’d be wrong. The result is uncertainty and less business for everyone - including the agents themselves, rather ironically. If only the asking prices being quoted bore some resemblance to one another, then moving would still be do-able, even in a downturn.

I blame the agents. They should have seen this coming and put far better evaluation methods into practice in order to advise their selling clients more appropriately.

It will take some while for things to shake themselves out if no-one is prepared to grasp the nettle and devise a better way to market houses.

If anyone can explain these apparent deficiencies in estate agency methods and practices, they are welcome to do so and contribute to this attempt to help the housing market back to health in 2012.

At least we, at Property Match (UK), have a plan to help get the people who really want to, moving house once again.

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

Dec 272011
 

RICS Homebuyer Reports are all too often, fundamentally misleading and are therefore not fit for purpose anymore.

That’s the conclusion by one of the old guard amongst surveyors who used to do these in the days when you could just tell it like it was.

There are problems nowadays. One, is the requirement to pepper all reports with copious quantities of disclaimers, caveats and suggestions to get further tests and more specialist reports. The result of all of this is often that most ordinary buyers will simply not understand the relative seriousness and insignificance of what are often minor matters and will take fright, often deciding against buying the house at all!

A second problem is that surveyors are discouraged from saying what’s good about any particular house (incase they might make a mistake). Not exactly helpful!

Surely even-handedness is what’s really hoped for by both buyers and vendors, not the expensive fence-sitting verbiage and the arse-protecting garbage that we get in survey reports nowadays.

The RICS ought to sit up and take notice, if it wants its professional standing in the property sector to be retained.

For as long as these problems are unresolved, we advise potential purchasers to get an experienced local builder to go round the house with them instead.

Who agrees or alternatively, would anyone prefer to defend the RICS?
We’re interested in hearing about readers’ particular experiences during the past year or so.

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

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

Sep 142011
 

The continued very low interest rates exist essentially because the Exchequer’s levers, for correcting the economy, have frozen. He now appears powerless to do anything about this problem, which is a problem in itself!

This is causing extreme pain for those who have diligently saved throughout their lives, for their old age.

The other effect that continuing low interest rates is having - in the face of rising inflation is, it is putting the housing market into utter turmoil with wildly varying asking prices and such confusion that sales are floundering, just when we all need stability, in this particular marketplace.

What can be done? If low interest rates must continue, the way houses are appraised for sale needs urgently to be tightened up, so that buyers are no longer continually misled by wrong asking prices.

This problem is further compounded by a widening regional discrepancy in asking prices. The increasing gap in actual completed sales prices also seems to be widening across different regions. This obviously causes difficulty for those attempting to move from one area to another.

The author, a retired property valuer, has been aware of these problems in the private housing sector for a considerable time, and it is abundantly clear that very little is being done to resolve them.

The large discrepancies between asking prices of similar types of property, even in the same area must stop. This is resulting in differing sale prices eventually being achieved for such properties, due to market confusion.

If instead, prices quoted on sales particulars more closely matched actual achievable prices for the houses in question, people would be able to see what they could afford to buy and what they could not. More transactions would be achieved as a direct result.

This is the true goal and would get the housing market working smoothly, and remaining stable, in all external economic situations.

This is precisely where the Government should be more proactive. To create a future stable housing market, with a steady number of sales and purchases proceeding to completions, should be its ultimate goal.

It would be perfectly possible to arrange this by changing the way houses are currently evaluated by estate agents.

The outcome may involve a slightly greater fluctuation in actual sold prices depending upon the present economic conditions, but because all the asking prices would be more closely related to one another, less damage to individuals’ budgets would occur.

Moving house, even in difficult economic circumstances, would become possible. This is the holy grail, both for individuals investing their earnings in their houses, and for the increased electoral opportunities for any government offering this.

It would not be difficult to re-train estate agents to do this, instead of perpetually trying to lift prices for their selling clients, whatever the market conditions. (It appears this is all they currently know how to do in order to keep winning new instructions.)

What they should, instead, be doing is providing best advice to their clients on how much to sell their existing properties for; in the the current market conditions. To achieve this they would need to face up to having to charge an upfront fee for providing full advice. Market appraisals would then become proper market appraisals, not just instruction-winning tools.

Everyone would be winners.

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