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!”
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.
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.
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).