Interview With The Estate Agent

[Peter Hun]

This is just the start of the process.

Prices are going down 50-55%, but it will take many years to happen. Banks will be unable to lend, no matter what the Government do, as their existing debts are way too much to allow any new lending.

The next step will be wage cuts, its happening soon in Ireland.

Prices at auctions are a good indication of real values (-5-60% off peak). Derivitives point to the same 50% cut and (apaprently) UK banks are looking at a 45% fall in Spain.

50% fall puts prices at above the trend line for average price increase.

Everything points to a 50% fall. The interest rate cuts etc will simply prolong the agony.

[Timm]

Agreed. When I say a good offer I mean 20/25% off peak . Please don't accuse me of being a bull. I might get upset!

Unless you're selling a newbuild in Leeds this should be achievable.

What % below peak is your asking price? It needs to look cheap to get the interest.

Is your agent getting viewings / shit offers* / keeping in touch? In fact, who are they?

[Greenstuff]

4. Current sale prices are way down. In the range 20 –25% off peak. While prices seem to be stabilising at this level, these falls are not yet showing up in the indexes, particularly in Oxford so further reported falls can be expected. Some of the fall in prices is visible as asking price reductions, but offers of 15% below already reduced asking prices are being treated seriously, both by EAs and vendors.

This is IMO the key.

I have a 3 yo and have stayed friends with some of the mums from his baby group, two of them have now decided to buy but they have both got around 25% off peak and are happy, their mortgages are affordable, they are moving up to much needed bigger properties and are aware there may be bigger drops but just want to get on with their lives.

I live in a different area thats a small village, houses here have historically been snapped up the day they came on so were subject to massive ramping by the white sock brigade.

Houses are still being advertised at peak - maybe a max of 5% off here and there but vendors refuse to drop prices thinking they have something extra special.

As we are happy in this area and want to stay we have reluctantly just signed another years lease but on a much nicer house as a sort of compromise - it will be sold in a year 'when the market picks up' - LL should know he's an EA!

I have to say if it was offered to me now at 25% off peak I would seriously consder buying it, if valuations simply dropped 25% the market would start moving I'm certain.

[It is different this time]

Perhaps they see the loss of perhaps 20% as an acceptable cost of insurance (against losing the whole lot overnight)?

Perhaps they do but investing in a depreciating asset is not a smart move when you are in a recession, as they don't know whether their loss will be 20% or 40%

[spivT]

Everything points to a 50% fall. The interest rate cuts etc will simply prolong the agony.[/b]

How so ?

[puppee]

EXCELLENT NEWS THIS IS GREAT.....................

But I would say that as I am trying to sell my house at the moment!!!!!!! All I want is one good offer...please......After that roll on affordable houses for all at sustainable prices please, but hold the cataclysmic global economic armageddon. Not today thanks........

you know the saying you missed the boat when house prices were rising well i think you missed the boat on selling you stay on board a bit to long

[Lander]

[MississippiJohnHurt]

Re the OP's point about cash buyers...I don't doubt that there is interest in property from cash rich people searching for yield instead of leaving cash in the bank. However, people like this are presumably quite savvy in general - certainly the crash won't have escaped them - so they'll be aware that they'll have to be have their money tied up for at least the medium term to offset the short term paper losses they'll face. Are there really that many people who a) have that amount of cash and b ) don't mind it being tied up for a long period? Enough to stop the rather massive downward forces we're seeing? I can't see it. Also people like that will be wanting a deal which will set new price levels in the area. I think it's actually a positive thing for vested interests like me who want to see a large decline in prices.

The way I see it, we've only just begun. Long way down yet.

Edited January 23, 2009 by FallingKnife

[silver surfer]

going to feel like they've been bitch-slapped by Shiva.

[Hip to be bear]

Unless you're selling a newbuild in Leeds this should be achievable.

What % below peak is your asking price? It needs to look cheap to get the interest.

Is your agent getting viewings / shit offers* / keeping in touch? In fact, who are they?

Been on for 5 weeks. We are getting viewings and genuine interest. The first couple to look wanted to put in an offer but the husband found out that his job was not secure 2 days after viewing. We have since chased them and he has lost his job. Another couple want to buy but have only just put their property on the market.

On at 199950. We have just reduced to 189950. I estimate peak would have been 235000 to 240000. This is effectively a drop of approx. 20% from peak. We spoke to 3 agents before instructing and went with the one in the middle. I had a row with the Mann and Co agent who told me he would put it on at 225000. I told him he was a deluded prat and no he wasn't going to get my business by promising me the earth, just so he could get his cheque for getting the instruction...(that was the jist).

With regard to Mann and Co, I then looked at what else they had on their books and it was all at 2007 prices or similar, so putting ours on at a lower price would have made their other similar properties look ridiculous.

The agents are doing a reasonable job. 2 viewings tomorrow, and speaking to them and other agents in the town there is definitely some action out there. Offers seem to be around 7-12% under asking price.

I'm not going to say who the agent is unless you are interested in buying as I don't want you lot doing some research and then making a few assumptions and telling me I am a prat!!!!!! Lets just say we didn't buy at the best time and we have spent some money on the house that we hoped would be our home for years to come, but situations change.

Personally I would take 175000 if we can get that now, and thank my lucky stars that I am not trying to sell for a lot less in 6 months after the bull trap if that is what this is.

[The Conveyancer]

I have found the opposite with cash buyers. To start off with when prices fell the investors were snapping up the "bargains". However they are now seeing that maybe things are a lot worse than they first thought they have stopped buying.

[NotMyHouse]

I agree with the OP. I think this effect has been discussed on another thread and it comes back to lack of confidence in fiat currency.

In our case, we have enough to buy the house we want in cash. Do we:

1. Buy it now at 30% off, do it up as we like it (thanks to the price reduction), live in it for the next thirty years, but accept that for a while, it might be worth less than we bought it for?

2. Leave our money where it is (in NR) and take the risk that the UK is going the way of Iceland, with Sterling becoming worthless?

3. Park the cash abroad, with no guarantees that any currency is going to do well or savings be protected?

4. Go into gold and accept the volatility, with potentially a huge upside and downside?

Ultimately, Mrs WHWL and I want somewhere that will be our permanent home. If the whole financial situation wasn't so fraught, we would probably stay with position 2 and wait another year. However, there is the downside of the worry and uncertaintly of what might happen if there is a big fiscal failure.

If we go for option 1, we are not having to borrow and we will then have the house we want. I'm not surprised that a few other cash buyers are thinking the same way at the moment.

In 2007 when we STR'd, the downside risk seemed much lower. The situation has changed considerably since then, so getting a house at a decent discount isn't necessarily the wrong thing to do.

Of course, if I was younger and single, I'd probably go for option 4!

Edited to say that we're not expecting an answer! We do know what to do in our situation.

Edited January 23, 2009 by WantHousewithLand

[Wad]

An interesting post.

I agree with a lot of it. There are cash buyers out there - BUT - as others have said we are in a transition phase with cash buyers getting 25% off now because of the credit crunch but I suspect a further 15 - 25% drop after that will be due to job losses. Oxford has not yet seen the effect of job losses but it will.

There are a limited number of people with cash and once they are in the market they cannot come in again without borrowng. At some point even cash buyers even if there are any left will fear going in because of job losses and rapidly falling prices

My view based on earlier house price crashes and other markets is that prices always overshoot on the up and down side.

It is too early now to but I do think that late summer early Autumn 2009 we will see fair value and then real 'cheap' houses in 2010. The real risks now are evenly balanced between going in too early and waiting too long before hyperinflation takes off.

To be honest - I am prepared to go in slightly too early to avoid the consequences of hyperinflation destroying my savings. I suspect many will wait too long because they are traumatised by the drop.

Edited January 23, 2009 by Wad

[Rosepetal]

I agree with the OP. I think this effect has been discussed on another thread and it comes back to lack of confidence in fiat currency.

In our case, we have enough to buy the house we want in cash. Do we:

1. Buy it now at 30% off, do it up as we like it (thanks to the price reduction), live in it for the next thirty years, but accept that for a while, it might be worth less than we bought it for?

2. Leave our money where it is (in NR) and take the risk that the UK is going the way of Iceland, with Stirling becoming worthless?

3. Park the cash abroad, with no guarantees that any currency is going to do well or savings be protected?

4. Go into gold and accept the volatility, with potentially a huge upside and downside?

Ultimately, Mrs WHWL and I want somewhere that will be our permanent home. If the whole financial situation wasn't so fraught, we would probably stay with position 2 and wait another year. However, there is the downside of the worry and uncertaintly of what might happen if there is a big fiscal failure.

If we go for option 1, we are not having to borrow and we will then have the house we want. I'm not surprised that a few other cash buyers are thinking the same way at the moment.

In 2007 when we STR'd, the downside risk seemed much lower. The situation has changed considerably since then, so getting a house at a decent discount isn't necessarily the wrong thing to do.

Of course, if I was younger and single, I'd probably go for option 4!

Edited to say that we're not expecting an answer! We do know what to do.

That's pretty much where I am. However, I am concerned with the latest predictions of 50% drop - it doesn't make 30% look like such a bargain and we will probably want to move again in about ten years so if 2007 peak is a once in a lifetime peak due to the unprecented lending we could well be stuck if we come to sell in ten years!

I have gone from str'ing to being happy to buy the next house and have a small mortgage, to wanting to buy with no mortgage to wanting to buy with no mortgage and having a nest egg in the bank. There is no pleasing some people - especially me

[Timm]

Been on for 5 weeks. We are getting viewings and genuine interest. The first couple to look wanted to put in an offer but the husband found out that his job was not secure 2 days after viewing. We have since chased them and he has lost his job. Another couple want to buy but have only just put their property on the market.

On at 199950. We have just reduced to 189950. I estimate peak would have been 235000 to 240000. This is effectively a drop of approx. 20% from peak.

(...)

The agents are doing a reasonable job. 2 viewings tomorrow, and speaking to them and other agents in the town there is definitely some action out there. Offers seem to be around 7-12% under asking price.

(...)

Personally I would take 175000 if we can get that now, and thank my lucky stars that I am not trying to sell for a lot less in 6 months after the bull trap if that is what this is.

You've obviously done your research! I can't give you any advice, because I don't know your house or the local market (nor do I have a cyrstal ball).

However:

Your price ranges are similar to the price ranges that apply to my target properties. The places I am looking at had a peak ceiling of 250k, a fair number of them are on the market at 200k - 210k, and are selling at around 190k. You seem to be around 15k less than these figures. If you were in Oxford I would expect to hear that you had sold within a couple of weeks.

One thing you may wish to consider: Get rid of the 950. Having a price of say £189,000 would, in my opinion, make it more prominant. I don't know why, there is probably some pchycological effect.

Also: See if the agent will relaunch the property "in return for the PR". This means a new photo (tommorrow should be sunny), a big "priced reduced" flash, get it in the paper (if they still use it), get it in a decent position in the window, get it phoned out again to the mailing list and previous viewers, get them to "accidently" e-mail it to EVERYONE they have on their books* etc etc. The idea is to get people who may have dismissed your place in the past to reconsider it. They should be doing this anyway, but you should make sure. Oh, and if you haven't already: get a sale board, wash the windows, hide all your stuff except the Dualit and shoot the dog.

*This practice can be annoying, but it is amazing how many people looking for a Georgian rectory at £2m also have a family freind looking for a smaller place. All of the buyers reg by your agent are potential advertisers of your home.

[Bloo Loo]

NEWS

Estate Agent says SALES picking up... cash buyers get your deals here.

someone remind me......How many completions were there in December??

I had a valuer round today, valued at £220-230K, 3 identicals within 100 yards all up for more than £269K, the £269 got sold a month ago but dropped when the valuation came in. EA told her to drop 50K (219K) to get a sale.

these are all nice 4 bed detached around 18 years old.

Just to add, that surviving EAs will see an increase in business, even at these low levels....cos the remaining business is handled by fewer.

Edited January 23, 2009 by Bloo Loo

[babesagainstmachines]

Where are the first time buyers getting the money from?

Answer - they can't. Until they can, there is no stopping this crash.

[GrillsBears]

Where are the first time buyers getting the money from?

Answer - they can't. Until they can, there is no stopping this crash.

******** lack of ftbs didn't stop the boom did it?

That's why Northern Crock will be used to bail out btls. Keeps the young enslaved and saves the people who caused it all to happen.

[Fudge]

How many cash buyers are there out there?

Can't be too many I wouldnt have thought. Not enough to sustain the housing market.

[Bloo Loo]

******** lack of ftbs didn't stop the boom did it?

That's why Northern Crock will be used to bail out btls. Keeps the young enslaved and saves the people who caused it all to happen.

Nr are getting 5bn.....hardly market breaking amounts....and of course, they are BONUSED to pay back the taxpayer, so duff loans are not their bag either.

[Timm]

NEWS

Estate Agent says SALES picking up... cash buyers get your deals here.

someone remind me......How many completions were there in December??

There were'nt many SSTCs either. Now there are. Some of these SSTCs will show up as completions in early spring.

I had a valuer round today, valued at £220-230K, 3 identicals within 100 yards all up for more than £269K, the £269 got sold a month ago but dropped when the valuation came in. EA told her to drop 50K (219K) to get a sale.

these are all nice 4 bed detached around 18 years old.

So prices are dropping and vendors who drop their price will sell?

That's kinda my point.

Where are the first time buyers getting the money from?

Answer - they can't. Until they can, there is no stopping this crash.

Yup: no news of FTBs coming out the woodwork.

[Bloo Loo]

There were'nt many SSTCs either. Now there are. Some of these SSTCs will show up as completions in early spring.

.

SSTCS are always coming up around here, only to end up either for sale or for rent.

[GregG]

Show me a QUALITY property in the south in a good area near good schools at 50% off. I haven't even seen one with more than 15% off peak. Lots of cheaper rubbish about.

I've seen 25% off peak for a nice house near good schools in North Maidstone. (The best part as near to Motorways.)

450 selling for 375 is not uncommon. 399, sold for 320.

That said it is difficult to know what PEAK really was.

Probably the best indicator is new builds. I've seen five bedroom detached houses that were definitely selling for £500k in 2007 selling for £375k and below just recently. But I've put silly offers of say £325 in and not had a bite.

So stuff has dropped here in Kent but not many sellers are in blind panic yet.

[Guest An Bearin Bui]

In 2007 when we STR'd, the downside risk seemed much lower. The situation has changed considerably since then, so getting a house at a decent discount isn't necessarily the wrong thing to do.

I would say your situation is typical of a lot of the cash buyers that estate agents are reporting. There are a lot more STRs around this time than last time as the boom was so widespread and drawn-out. It's now 2+ years on for many and I would say some STRs might be having second thoughts on whether they were right to sell up, especially with all this talk of quantative easing.

Brown is taking Paul Krugman's advice of 'promising to be reckless'. Krugman's theory is that the government doesn't need to actually create inflation but just create the impression that they're willing to go with inflation if needs be. By creating an impression of recklessness, they can ferret stashed panic money out of the banks/mattresses and into assets / business. It's just a way of combatting deflation and I would say it's working with a certain tranche of people. I can see why - if I were 45+ and had sold to rent with 100k+ in the bank, I wouldn't have the nerves of steel required to keep it there now while renting.

Either way, I think this represents niche demand and not a widespread recovery, especially with joblessness figures set to rise.

[The Masked Tulip]

I know 3 cash buyers in the Swansea area - all 3 are refusing to buy simply because we are not seeing any substantial reductions. There are a few reductions but even with the reduction the asking price is too much.

A house which I have seen on the market for about 380 with various EAs for 3 years now finally came down to 350 in the past 10 days - the house is probably worth 250K* tops and needs work. Can't see the seller even considering a 30% below asking price offer as they have only just made a reduction.

The next 6 months should be interesting though.

Local car engine factory has a deadline today for about 300 of its 400 staff to accept voluntary redundancy. The local land registry offices has offered redundancy to all 700 of its staff aiming to cut about 400 and Corus is on its knees. A friend of mine is acting depressed at the moment and it i because he expects to be out of the steelworks by the end of March.

* LOL - I remember looking at a house for 250K about 7 years ago and thinking that 250K was too much. Now I am simply trying to get sellers to reduce downto 250K - nuts huh!?