My Story Re Ea Valuations

[fed up renting]

The other weekend I visited a friend, things are not good with home life, so they had their house valued by a few agents, apparently there has been a steady stream of people in their situation according to the EA's

They had about 4 agents come around, personally I would have said her house was worth around £220K maybe £240K, and certainly all the other agents valued it around that figure, however the Halifax in that area said they would probably get £300K, but advertise it for £325K.

I just burst out laughing (she wasn't amused), so I had a look on rightmove in that area at houses just like her's and in that price bracket, sure enough, which EA has the most houses up for sale at the price? - the Halifax, I wouldn't have said her house fitted into that bracket either. Strange, but the ones that valued it less were very small independent ones too, you'd have thought if anyone was after the commission money more it would have been the smaller businesses.

So how does one in her situation go about putting her house on the market for a true figure when EA's like the Halifax keep putting more hot air into the bubble.

I don't know what they are going to do, but I will be very interested to see how much they do put it on the market at, how can you be so wildly out on valuations? madness.

[Rain'ard]

You mentioned that the small independents valued it less.

From a conversation I had with had with an EA recently, and posted “1988”

She said that the small independents who have been in the game all their lives, have a more realistic take on the current conditions. They usually have capital as back up and can afford to ride the a storm. She thinks the newbies, the ones who’s short ar-sed cars are more Smart’er than they will go under.

I wonder if there is any truth in this.

[Timmy Manson]

IMHO being part of a bigger organisation the Halifax EAs can weather a period of low sales volumes, whilst the small independants go to the wall, then when Halifax is one of the only estate agents left in the area ( and vendors have no ne else to go to ) they can persuade vendors to reduce there price.

Might just be a case of good old big business using it's size to kill the little businesses in the area.

[kerplonk]

It's called 'sole agency' desperate EA deal

What estate agents have realised is, if they give a ridiculously high price for a property, the owner is dazed and infatuated with the idea of all that money and 'signs on the dotted line' which gives Halifax or whoever, a 3 month sole agency marketing agreement. With this the commission will be something like 2 or 3%.

The house goes on the market, nothing happens, no viewings.

Eventually the owner gets p-ed off and says, right, reduce it a little, so they take 10k off or more and more. But the estate agent still gets the nice fat commission on the original sale price, AND no other competitor EA sharks swimming around. They look like they have all the houses and it's very persuasive to other potential sellers - "look at all the other sole agency agreements we have with other sellers" blah blah blah

My boss is a classic. Had her house 'over'valued (in my opinion) by about 200k. Came in that morning high as a kite, saying, it's worth 700k, I can't believe, he showed me the papers and I said, let me have them, give them to me now!! at that price I'll sign anything.

hence the madness continues.

Dont' worry it will all end in tears. Their house still hasn't sold. Initially she was talking about it selling in a week. It's been on the market for 2 months now. They did that new things of open-weekend viewings. Apparently half the street turned up for a nosey around.

Then she went ballistic at them about 2 weeks ago. Since then the EA has found a buyer to come round for a 'second viewing'.

But we had a giggle, saying maybe the days have returned when EAs had to pay people to go round for a second viewing, as sellers get more and more desperate.

[Jonesy]

Strange, but the ones that valued it less were very small independent ones too, you'd have thought if anyone was after the commission money more it would have been the smaller businesses.

<{POST_SNAPBACK}>

I wonder if it's the result of different staff incentives - the independent being aware of his/her business knows that it's only worth taking on properties if they have a reasonable chance of selling and getting the commission, no point taking on property that you can't sell.

Perhaps the people working for the big chain get rewarded according to the number of sellers they sign up so tend to over value to get the business, plus there's the possibility that having signed up the seller they'll wait a few weeks then encourage them to cut their price.

[fed up renting]

But we had a giggle, saying maybe the days have returned when EAs had to pay people to go round for a second viewing, as sellers get more and more desperate.

<{POST_SNAPBACK}>

Excellent, you've just found a new "niche" job market for current market conditions, lets start drawing up a contract

[Rain'ard]

As I wrote my last post, I noticed two glamorous ladies out side my window delivering stuff.

Hello, I thought, they’re back.

I went out side and asked, “Are you desperate estate agents.”

She indicated in the affirmative.

This is what I read from the hand out.

“After a very successful start to 2005 we anticipate the demand for flats to increase further through the summer with the election out of the way and interest rates remainu8ng stable. If you’re thinking of selling now, in the near future or are already on the market, please feel free to give us a call and arrange for a Free Market Appraisal.

[Father Fred]

"I wonder if it's the result of different staff incentives - the independent being aware of his/her business knows that it's only worth taking on properties if they have a reasonable chance of selling and getting the commission, no point taking on property that you can't sell.

Perhaps the people working for the big chain get rewarded according to the number of sellers they sign up so tend to over value to get the business, plus there's the possibility that having signed up the seller they'll wait a few weeks then encourage them to cut their price."

Very true Jonesy.

I have always thought that the only thing that matters is how much commission income is made... selling a property is pretty much pointless if it is a cheap property at 1% commission, and taking on a property that is unsellable is equally if not more pointless. Taking on properties that go on to be sold, signing up people at higher commission rates and selling properties is what matters.

FYI I get commission but no targets! My boss is of the school of thought that if the market is good then I'll sell, if it's bad I won't! No point putting me on targets!

FF

[Antsy]

A new EA is just about to open in Sydenham, though they are part of the Robinson Jackson chain. Interesting business decision... Should be equally interesting to see how they do.

[zzg113]

From your account of the valuation, I would not say that their valuations were "wildly out".

You say,

certainly all the other agents valued it around that figure

So the majority of the estate agents valued it at a sensible price, and you had one joker.

the ones that valued it less were very small independent ones

If you think about it, it is fairly obvious why this is: small independents do not have deep pockets, and are not prepared to take on wildly overpriced property which they know will simply sit on their books for months and waste their advertising money. So they value realistically.

However, the big chains (such as Halifax) DO have deep pockets, and can probably afford to go much longer without a sale, and hence why they quote ridicuously high prices so that they get the instruction, and then either hope that a mug comes along and buys it or they get the vendor to reduce their price at a later date. Remember, the important thing for an estate agent is to get the instruction; you cannot sell a property that is not on your books.

Also, some inexperienced EA's are still using pricing policies that they used during the boom, ie price it way too high and then wait for the market to catch up (because the market was rising daily). They have not realised that this will not wash anymore.

Edited July 6, 2005 by zzg113

[MarkG]

I noticed two glamorous ladies out side my window...

“Are you desperate estate agents.”

Sounds like a bad porn movie .

Edited July 6, 2005 by MarkG

[smarty]

Sounds like a bad porn movie

Two estate agents foaming at the mouth at the chance of a sale

[Rain'ard]

Sounds like a bad porn movie .

<{POST_SNAPBACK}>

It would be if I was in it

I did shout though. I'm not paying your prices if you dont drop `em

[MarkG]

I'm not paying your prices if you dont drop `em

LOL. You should write the script: maybe it could fund a deposit on a house .

[Rain'ard]

Well MarkG I can start it off for you.

the Script

“My geezer and I went to look at this property. Coo it was so hot we just had to take our clothes off. I’ve never had a man with such a large mortgage before.

He said it’s not the size it’s the interest that matters.

Well I certainly took an interest.

When we got going I mewed and I mewed till there’s no tomorrow.

I hope there’s no tomorrow.

[dogbox]

IMHO being part of a bigger organisation the Halifax EAs can weather a period of low sales volumes, whilst the small independants go to the wall,

Not at all. Most of the big chains got out of E/A business last time round. At the end of the last slump were just a handful of chains, the rest were small independants.

You will see newish independants going though. Chap I know sold his printing business and was a multi lillionaire at age 45. About 3 years ago he sunk tons into buying up small independants. Now about 1/2 his branches have gone tits - up and he's sold the rest to the managers. I understand he's lost a packet.