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DownsizingDiva

Can Eas Survive The Winter Without Lower House Prices?

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Looking at RM this week, not one property within a 1 mile radius of where I am looking has gone SSTC or Under Offer, and only one went SSTC in the previous week.

As the "Dragon" (can't remember her name now) said on R4 this week, "there is no property market".

How long can Estate Agents survive like this? Surely the penny must drop over the next few weeks that they must persuade sellers to lower their expectations on prices in order to sell, rather than keep talking up the market and offering to list houses at unobtainable prices just to get "the business" (which of course it isn't until the house is actually sold).

Or are they all raking it in with the increase in rental commission revenues?

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Looking at RM this week, not one property within a 1 mile radius of where I am looking has gone SSTC or Under Offer, and only one went SSTC in the previous week.

As the "Dragon" (can't remember her name now) said on R4 this week, "there is no property market".

How long can Estate Agents survive like this? Surely the penny must drop over the next few weeks that they must persuade sellers to lower their expectations on prices in order to sell, rather than keep talking up the market and offering to list houses at unobtainable prices just to get "the business" (which of course it isn't until the house is actually sold).

Or are they all raking it in with the increase in rental commission revenues?

i think you'll find that EA's are more resiliant than you imagine. Contrary to most poeples opinions on this forum that EA's are not idiots, they are in general fairly intelligent and their business models are pretty simple. They have a bread and butter income from rentals and then make profits from sales. This means they can essentially sit there forever. They might not make huge profits, and they might be getting rid of the bells and whistles, but alot of them will still be around this time next year.

One thing you will see is the older ones throwing in the towel. The sort that were going to retire sooner or later. They'll do it now rather than loose too much waiting for the 2020 market improvement.

Edited by 51%deposit

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i think you'll find that EA's are more resiliant than you imagine. Contrary to most poeples opinions on this forum that EA's are idiots, they are in general fairly intelligent and their business models are pretty simple. They have a bread and butter income from rentals and then make profits from sales. This means they can essentially sit there forever. They might not make huge profits, and they might be getting rid of the bells and whistles, but alot of them will still be around this time next year.

One thing you will see is the older ones throwing in the towel. The sort that were going to retire sooner or later. They'll do it now rather than loose too much waiting for the 2020 market improvement.

In my experience, I have found that most EAs are NOT in general "fairly intelligent" at all. Quite the opposite.

You seem to be contradicting yourself - they can "sit there forever" ticking along quite nicely on rental income and the occasional sale to pay for the shiny suit and mini cooper on the one hand, but then on the other, you suggest that some will get out now "rather than lose too much".

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In my experience, I have found that most EAs are NOT in general "fairly intelligent" at all. Quite the opposite.

You seem to be contradicting yourself - they can "sit there forever" ticking along quite nicely on rental income and the occasional sale to pay for the shiny suit and mini cooper on the one hand, but then on the other, you suggest that some will get out now "rather than lose too much".

Joined: 18-September 09

:rolleyes:

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Joined: 18-September 09

:rolleyes:

Err isn't Mr 51% the same person who used to be 50% Deposit?

Good post on the estate agents forthcoming misery by AndyAndy:

Next trigger - as the estate agents run out of cash.

Don't believe the hype - the volumes of sales are rubbish. I've got free access to all statutory accounts for UK companies and LLPs and estate agents are ususally one or the other. They are broadly filing their 2008 accounts now (different year ends but generally filling now for sept - dec year ends). Often filing late too.

And no wonder they are late - on 2007/8 volumes the picture isn't pretty. Take a typical regional or city wide agent with 22 branches or so and 190 employees. Cost of Sales and overheads for an agent of this size are typically £6m or so. Now in 2006/7 accounting periods turnover might have been (say) 8.5m meaning the 10 or so senior executives of the business were averaging £250k each before tax. Now for 2007/8 ie after NR but factoring in little of post sept 08, turnover typically falls to £5m. Cash resources have dwindled on a loss of £1.5m. Now looking ahead volumes have fallen dramatically. Turnover must be down at £2.5 - 3.5m. Banks, knowing the truth in their hearts are not going to extend in excess of £1m of unsecured credit to a business that is wobbly to say the least to fund the ensuing loss.

Yeah - they will cut their costs but you cannot cut millions without closing the business. A few more estate agents closing will spook people.

http://www.housepricecrash.co.uk/forum/ind...t&p=2163943

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I think I must live in the UK's best area.

Every place I've seen go on the market in the last few months has sold. That's the truth as well.

Sibley, what an extraordinarily rich fantasy life you must lead.

It feels almost cruel to disabuse you of these notions, so yes, okay Sibley, you DO live in the UK's best area; it's where houses are made out of rainbows, everyone rides around on unicorns, adult movies on betamax never ever wear out and a herd of hot Thai hookers will ride you all the way to Jupiter every single night.

Dream on, dreamer.

Dream on. :blink:

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In my experience, I have found that most EAs are NOT in general "fairly intelligent" at all. Quite the opposite.

You seem to be contradicting yourself - they can "sit there forever" ticking along quite nicely on rental income and the occasional sale to pay for the shiny suit and mini cooper on the one hand, but then on the other, you suggest that some will get out now "rather than lose too much".

I agree DD. The guys who left my school to become EA's were academically pretty dim . Lets face it's one of the few jobs where you can wear a suit (look the part) like a professional and have pencil shavings for brains. There is very little difference between them and taylors dummies. Being devious and sharp does not equate to being particularly intelligent and nor does wearing a suit.

They went bust and will continue to go bust because they lack business acumen and nous to persuade people to sell at lower prices. I think they will be the same as the Dodo by 2020. Probably earlier. Big culling this Autumn/Winter methinks.

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I think I must live in the UK's best area.

Every place I've seen go on the market in the last few months has sold. That's the truth as well.

So you have moved from Maidstone ? :P

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I hope they all go down, they are all c***s,and serve no purpose other than there own self perpetuation.

I cant believe that such a pathetic bunch of underqualified chancers are charged with dispensing the UKs only asset.

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There's no need to take that tone, and no, I wouldn't want you anywhere near me with that attitude.

"Captain Mainwaring sir, Captain Mainwaring! They're shooting at us. The Germans are shooting at us" - Corporal Jones stating the bl**ding obvious.

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I agree DD. The guys who left my school to become EA's were academically pretty dim . Lets face it's one of the few jobs where you can wear a suit (look the part) like a professional and have pencil shavings for brains. There is very little difference between them and taylors dummies. Being devious and sharp does not equate to being particularly intelligent and nor does wearing a suit.

They went bust and will continue to go bust because they lack business acumen and nous to persuade people to sell at lower prices. I think they will be the same as the Dodo by 2020. Probably earlier. Big culling this Autumn/Winter methinks.

im not saying they are rocket scientists, but they are not as stupid as you make out. To start off with, people dont leave school and become estate agents, they become sales negotiators etc. Estate agents, ie the business directors, are usually in their 40's and 50's and own the business. Its them im talking about, not the gel wearing children they get to show punters around the properties.

Using the above quote:

And no wonder they are late - on 2007/8 volumes the picture isn't pretty. Take a typical regional or city wide agent with 22 branches or so and 190 employees. Cost of Sales and overheads for an agent of this size are typically £6m or so. Now in 2006/7 accounting periods turnover might have been (say) 8.5m meaning the 10 or so senior executives of the business were averaging £250k each before tax. Now for 2007/8 ie after NR but factoring in little of post sept 08, turnover typically falls to £5m. Cash resources have dwindled on a loss of £1.5m. Now looking ahead volumes have fallen dramatically. Turnover must be down at £2.5 - 3.5m. Banks, knowing the truth in their hearts are not going to extend in excess of £1m of unsecured credit to a business that is wobbly to say the least to fund the ensuing loss.

anyone earning £250k is not going to blow it all on beer, and they will probably have enough to keep an estate agency open, even if they get rid of all the staff and cars etc. In many instances they owned ther shops and at worst the rents dont kill them.

im not thinking directly of chains etc, but rather small 1-3 site estate agents. Quite often its not even their primary business.

As i said, i think their alot more resilient than you think. Like cocroaches.

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many branches will continue to close, and the ones that remain will do so with ever fewer staff, no doubt about it. sales volumes are at summer 2008 [a time when 'the market' was widely accepted as being as non-existent] levels, with lower prices to boot...

many will survive though, more's the pity. i don't have stats but at the peak of the bubble there must have been close to double the number of EA branches to what there'd been ten years earlier. right now we're still knocking the froth off the top...

Edited by the flying pig

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Well I'm seeing more and more DIY house sales (offered for sale that is) around me. Don't know if this has anything to do with people desperately trying to realise as much return as possible from a sale for whatever reason or that they feel EAs aren't earning their crust at the moment.

Whatever the reason, it's going to make it harder on the poor old EAs. Poor little loves, where are they going to find the money to buy their posh Italian loafers and pin striped suits from now?

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im not saying they are rocket scientists, but they are not as stupid as you make out. To start off with, people dont leave school and become estate agents, they become sales negotiators etc. Estate agents, ie the business directors, are usually in their 40's and 50's and own the business. Its them im talking about, not the gel wearing children they get to show punters around the properties.

Using the above quote:

anyone earning £250k is not going to blow it all on beer, and they will probably have enough to keep an estate agency open, even if they get rid of all the staff and cars etc. In many instances they owned ther shops and at worst the rents dont kill them.

im not thinking directly of chains etc, but rather small 1-3 site estate agents. Quite often its not even their primary business.

As i said, i think their alot more resilient than you think. Like cocroaches.

An "estate agent" in common parlance is someone who act as an agent for the sale or rent of estates. Not someone that owns an estate agency. They are business owners, which is a completely different thing. You don't say "I was shown around the flat by a gel-laden child employed by an estate agent" do you?

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How long can Estate Agents survive like this?

Or are they all raking it in with the increase in rental commission revenues?

I think you answered your own question.

Estate Agents adapt.

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