Tuesday, Sep 14, 2010
Estate Agents Need Price Drop
RICS: August Housing Market Survey
Look at your local agents comments
Christopher Shallice FRICS FAAV, Hix &
Son, Holbeach, Lincolnshire, 01406 422
777 - Many properties have been brought
to the market since the demise of HIPs, a
considerable number of which are not
realistically priced with little chance of
selling. It is very obvious that only
properties which are competitively priced
are selling.
Posted by wdbeast @ 10:12 AM (2044 views) Add Comment
25 Comments
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1. doomwatch said...
I know a local agent on this RICs list who has recently put a property on the market with an asking price
12% above his view on what it's worth. He did this to win business and expects it "to be knocked down".
It's this stupid practice that is slowing the market down in England & Wales. It's funny that in Scotland [looking at this survey], where the proper transparent home
report is in operation (require proper survey & valuation from a RICS surveyor), stuff is selling well and achieving expected prices.
2. debtfree said...
Tom Goodley MRICS, Strutt & Parker, Norwich, Norfolk, 01603 617431 - There appears to be a lot of over priced houses on the market, and a shortage of buyers. The basic economics of supply and demand must prevail.
Well said Tom.
3. uncle tom said...
The agents comments always reveal a great deal in these reports..
..in summary, buyer confidence has collapsed..
4. sibley's b'stard child said...
David Nesbit FRICS, D.M.Nesbit & Company, Portsmouth, Hampshire, 023 9286 4321 -
"...Some owners stubbornly refuse best advice and wonder why interest is limited."
If I may, i'll permit myself a chortle.
5. drewster said...
Remember, buyers, the estate agent is on YOUR side. They would rather sell a £100,000 house quickly and collect their £1,000 commission, than spend a month trying to flog it for £105,000 only for the sake of an extra £50 profit.
6. techieman said...
"Antony Bromley-Martin MRICS, Strutt & Parker LLP, Chelmsford, Essex, 01245 254600 - The fallout after the general election and the summer holidays have conspired to create a slow and uncertain quarter. I sincerely hope to report increased activity and results next month -
and I see no reason why not with the onset of the autumn market"
Arwel Griffith FRICS, Robert Sterling Chartered Surveyors, Walthamstow, Waltham Forest, 0845 838 0930 - Cautious time at the moment, a bit like the last moments of 'Deal or No Deal'. Who knows what the Coalition Government might do next, but we all know, the next
decision could be crucial. They need to think long and hard about the damage a second dip in property would cause.
maybe he should watch the first thirty seconds of this???? :
7. timmy t said...
drewster - that nicely highlights the fundamental flaw in the EA business model... The one who tells the vendor they should (and could) sell it for 100K won't be instructed, because one of their competitors will be encouraging them to sell it for 105K. It might only be 50 quid to the EA, but the vendor sees it as a 5K loss if they don't go with the highest valuer.
8. sibley's b'stard child said...
In fairness Drewster, (as per Doomwatch's anecdote) the EAs are simply the architects of their own demise. It's one thing to say they're on the buyer's side however that is diametrically at odds with the accepted practice of over-pricing property a) to satisfy the would-be-vendor's greed therefore achieving the listing and b) on the assumption that the buyer will negotiate a few % downwards anyway.
Couple that with most peoples' experiences of EAs and I find it difficult to square that particular circle.
9. drewster said...
timmy - Yes, that is also true. But once the EA has secured the listing, they will do as little as possible to market it in the first few months. Then they put pressure on the seller, "look it hasn't had any viewings in three months, why don't you drop the price?".
10. uncle tom said...
Nice post techie..
..and of course, this is why all the big house builders are whinging like fury..
..their vested interest, their near stranglehold on new build, is being challenged..
I believe this government, through incentives, will get plenty of homes built; but they won't be conceived by unelected regional assemblies, won't be designed by fat cat architects, creating over-priced rabbit hutches for other people to live in..
..the focus will be on building the homes that people need, in places that they would like to live.
11. str 2007 said...
I know we refer to 'vested interests' here, I'm not sure DC was referring to the housing market in that speach.
And what a Motley audience in the background - where was that speech made ?
#On the subject on Estate Agents and fees.
What's happened to Tescos and Haart carving up the market ?
All it takes is for an agent in each town to charge smaller upfront fees to photograph, write a description and put plans ont Rightmove and all other agents are all but finished.
Anyone with a decent saleable house will pay (the correct price say £1500 upfront -instead of £5-6k on completion) and all those with duff houses will go the commission only route and agents will be sunk without fees very quickly.
12. doomwatch said...
techieman @ 6
"So David, take on the vested interests and ensure George brings in Land Value Tax in the April 11 Budget, as
this would be in the best interests of the nation".
13. Crunchy said...
6. techieman's
2nd vid. Vote for 'change.?' I could have been watching Obama, aka Soetoro? The Anglo American union is alive and well.
Cameron skips over the banks vested interests rather too quickly for my mind and BTW David, who bank rolled you?
The left right paradigm is alive and kicking. There is little 'change' when it comes to main issues between Brown and Cameron.
They put a fresh face on an 'unelected' bloated body. We want choice, not change.
14. pelethar said...
Comments are really similar to those in the early stages of the 2008 crash. Just like now, they were totally obsessed with the media, using flimsy excuses about why current month/quarter activity was subdued, and making unsubstantiated forecasts about a big pickup just around the corner.
Agree with a previous poster that this translates to mean that buyer confidence has evaporated, and the market is on (or possibly already over) the brink.
15. estrader said...
"unsubstantiated forecasts about a big pickup just around the corner"
They are not unsubstantiated. In any asset class this is exactly what should be expected. Rising volume on falling prices, this invariably leads to lower prices in future.
16. Smasheroonie said...
@11 str 2007.
"And what a Motley audience in the background - where was that speech made ?"
If I remember correctly the speech was made in a university with a view to woo over the young. The bugly crowd behind DC were meant to be the university students but an investigation found none of them actually attended the university. There was some suggestion that they were conservative party supporters but I find this rather cynical.
17. pelethar said...
An estate agent saying "looking forward to a big pickup next month" is making an unsubstantiated claim, because he's not offering any justification for it. Just because someone else thinks he's right, it doesn't change the fact that the claim itself was unsubstantiated.
18. timmy t said...
Have to say I agree with estrader on this. EA's are far more bothered about volume than price, and on the basis that prices are falling, it's only reasonable to expect volumes to go up.
However, this is my favourite quote:
"The uncertainty regarding jobs and interest rates in having a marked impact on buyers. Current activity remains low due to the holiday season."
He was so close to getting it right but just couldn't bring himself to say it.
19. estrader said...
pelethar,
There is justification. In ANY asset class, volume will rise as prices are falling. This can be seen time and time again going back as far as you want in history. Agree with it or not, it is an incontrovertible fact.
20. ontheotherhand said...
estrader. hmmm. In the long run you are right that demand for a product should rise with a lower price all else being the same, but you use the word 'volume'. I'm not so sure for housing. Sellers have to be willing/able to accept a lower price. Buyers have to think that house price deflation is about to finish, otherwise why not wait? So long as buyers are waiting, volume falls off. By 2004, prime "A" property in Tokyo's financial districts had slumped to less than 1 percent of its peak, and Tokyo's residential homes were less than a tenth of their peak, but volumes of sales are still low.
21. estrader said...
ontheotherhand,
That is easy to explain, prices in Tokyo have been falling for around 20 years. Prices never move in an absolute straight line in either direction. What I say is 100% correct, trust me.
22. estrader said...
"So long as buyers are waiting, volume falls off"
P.S: The public doesn't know how to wait, they can't help themselves and that is why what I say is right. They will be suckered in on the next drop, thinking "now" is the time to buy causing a small rally....then prices will drop again which will bring in those those who thought they were smarter than the last lot, etc...etc...etc
23. pelethar said...
Nobody is arguing with that point - but that is NOT what the EAs are saying here - or at least not the vast majority of them. When they talk about the market picking up, they are really referring to it getting back to how it used to be before the credit crunch - i.e. sellers and buyers all having total belief that prices would continue to rise, thus feeding a buoyant market with high volumes AND increasing prices.
Virtually no EAs (there are a very few intelligent exceptions) are saying "good, prices are dropping, this will cause volumes to increase". They are saying "prices are stagnant, volumes are low, but this is due to summer hols/christmas/media comment/whatever. Next month/quarter will be different". I'm sure you'll agree that such a statement is unsubstantiated.
24. Phil S said...
I dont agree that EA's always overprice. When I sold my house, I priced it £10K above the highest valuation. Low and behold, it sold for asking price to the first viewer.
Timmy t has it in a nutshell. If EA's fees were performance related, such as them receiving a higher percentage commission if they achieved a higher selling price, then they would be incentivised to get the best price.
25. braindeed said...
6. techieman's
2nd vid. Vote for 'change.?' I could have been watching Obama, aka Soetoro? The Anglo American union is alive and well.
Cameron skips over the banks vested interests rather too quickly for my mind and BTW David, who bank rolled you?
The left right paradigm is alive and kicking. There is little 'change' when it comes to main issues between Brown and Cameron.
They put a fresh face on an 'unelected' bloated body. We want choice, not change
This goes to the heart of some of my postings regarding the lack of objectivity shown towards Broon in relation to the Housing Bubble.
Broon and now Dave (+.....way back to the Baroness at least) are straight-jacketed by the electorate's (by and large) desire for housing 'riches'.
Piss on that fire, and the 'free-market' press and the sheeple go 'a lynchin.
Theres's still no wholesale desire for a big 'pop'.