Are Estate Agents The Key To The Crash

[Warwickshire Lad]

The collapse in Countrywide's profits and their subsequent downsizing got me thinking as to what extent the EAs are really going to be the key that causes the crash.

EAs all over the country must surely have been thinking that if a big name like Countrywide can have something like that happen to them - it can happen to any EA anywhere.

So, the fear-level at EAs is rising, and as more EAs go bust (which they inevitably will) they are going to get scared.

I think that the Spring run-up in asking prices this year was totally unjustified. Asking prices were falling since July 2004 (according to Rightmove) and this carried on into the winter. They should have carried on dropping.

I think this run-up was a combination of :

1) Young inexperienced EAs who have never seen the market fall

2) More EAs than ever trying to compete with each other

3) Greedy vendors only too happy to listen to these wild overvaluations

So, the question to my mind is when the fear-level at EAs everywhere gets so great that they start getting desperate - at what point do they start to have group crisis meetings to say "right, we've got so many properties on our books, and barely any buyers - I don't care whether the vendors complain or not, this has gone on long enough - we're going to slash a percentage off everything on our books".

Can they do this ? Would they do this ?

I think we could be looking at this scenario within a year from now.

Edited August 14, 2005 by Warwickshire Lad

[zorn]

So, the question to my mind is when the fear-level at EAs everywhere gets so great that they start getting desperate - at what point do they start to have group crisis meetings to say  "right, we've got so many properties on our books, and barely any buyers - I don't care whether the vendors complain or not, this has gone on long enough - we're going to slash a percentage off everything on our books".

Can they do this ?  Would they do this ?

<{POST_SNAPBACK}>

No, they can't do it. Estate agents have no power at all to set asking prices, which are always set by the vendor. The most they can do is to refuse to market a property at an asking price that they believe to be too high.

[Guest muttley]

Estate agents may turn bearish,but I doubt they can cause a crash (or would want to).

Given the choice of reducing their asking price or seeing their estate agent go bust,most vendors will happily choose the latter.

[Once in a lifetime]

The news about Countrywide was a mile stone for me, something I've been

waiting for, to confirm crash on target!

Sentiment will flow down like the Styx river from hell.

Newbie estate agents will suffer

1. Because they are arrogant

2. Some would have poured their money into BTL

3. Instead of trying to convince vendors to drop to a sellable price

they troll on this forum trying to convince 'us' to buy?

4. Also… Stupid, Greedy, Overconfident, Bombastic, Deceitful,

Cunning, Scheming. Etc… Etc...

5. Something else...?

Additional:

Quote zorn: 'No, they can't do it.

Estate agents have no power at all to set asking prices,

which are always set by the vendor.

The most they can do is to refuse to market a property

at an asking price that they believe to be too high.'

Don't agree, they lead vendors along, most sellers rely on EA's valuations.

Edited August 14, 2005 by burnt before

[pad]

No, they can't do it. Estate agents have no power at all to set asking prices, which are always set by the vendor. The most they can do is to refuse to market a property at an asking price that they believe to be too high.

<{POST_SNAPBACK}>

Vendors are influenced by the valuations of the estate agents - find me anyone who has put their property on the market with the agent who gate their property the lowest valuation.

[oracle]

No, they can't do it. Estate agents have no power at all to set asking prices, which are always set by the vendor. The most they can do is to refuse to market a property at an asking price that they believe to be too high.

<{POST_SNAPBACK}>

wouldn't be entirely sure of that.....there may be a quiet,unspoken concensus among estate agents forthcoming,that in order to "price for sale",prices need to be reduced,and this may happen via THE MAJORITY of agents reducing valuations mentally prior to instruction by a vendor.

....which will be REALLY bad news for the HBOS/NW survey data in months to come,as part of their data is obtained from ASKING PRICES(which have just been knocked down by 5% before the vendor agrees with the estimate)

...BIG falls are coming!

[Guest]

oracle -

I'm sceptical about this whole 'EAs are going to lower asking prices sometime soon' idea.

You're a buyer looking in the EA window and you see a set of prices. Next weekend you look again and *every* price has been lowered.

What do you do? Rush out and buy right then?

I'd appreciate comment from anyone who remembers last-time-around.

[oracle]

well they have to do something to stimulate demand,or they lose their jobs!!

for them to get commission they NEED to sell houses!

[Catch22]

oracle -

I'm sceptical about this whole 'EAs are going to lower asking prices sometime soon' idea.

Two different agents recently valued my daughters house, she had a perceived value of 220K in her head. I figured it was well wide of the mark, but kept stum as I've found friends and family can some times become aggressive if you suggest their valuations are excessive.

Anyway both agents valued it at between 180 to 190K...195 MAX if very lucky. I told her to market it and stick firm at 198K. It sold to the second viewer [sold and renting] for asking, on the second day of being on the market.

The reality is, the overvalued houses currently on the market, no doubt valued by said agents 3/6/12 months earlier, sold my daughters house for her.

[shermanator]

Living in Dulwich Village, SE London, it's quite difficult to gauge what's going on as we have relatively few EAs and the properties are always in demand because of the schools; not that Dulwich will be immune from the halving of property prices by 2010!

However, I have a shop in Holland Park and regularly stroll up to Notting Hill and pass Foxtons. Loads of youngsters in cheap suits on the phone and the PC. Then rushing around in the company's MINIs. You'd think all was great, wouldn't you? Well it ain't. Speaking to one ex-employee, she said they're doing no deals. Last year, there were simply no properties to sell, now vendors are putting their homes on the market, but getting greedy and not accepting even reasonable offers, so it's all ground to a halt.

Then I was driving around Putney and saw a parade of shops where 7 out 10 were EAs; one had already gone bust.

Don't be fooled by all this EA waffle about a "soft landing". If things were so good why have Countrywide closed 33 offices and issued two profit warnings? They're in a state of denial as are the greedy vendors who will see the price of their main asset being chipped away by around .5-1% a month.

Crash what crash, the 'experts' will say. A crash is only such, AFTER the event.

[red]

well they have to do something to stimulate demand,or they lose their jobs!!

for them to get commission they NEED to sell houses!

<{POST_SNAPBACK}>

I have just spoken to an EA who stands next to me at the footy...he works in Kent and said it has been dead for a year and volumes are down 50% and he has OVER TWICE the amount of properties on his books than he did last year.

He said that half of his office call vendors asking them to reduce prices on a weekly basis but they won't budge; the other half call potential buyers trying to arrange viewings but no-one is interested.

He is aware that a 20-30% crash will not put him out of business if he can get his volumes up so he is actively trying to get prices down...I wished him well!

p.s. He also has around 50 BTL properties that he is considering dumping on the market!

[Loanshark]

One way for agents to price properties is to us phrases like 'offers in the region of' or 'offers over'

Agents might also start charging vendors a fee when they put the house on the market this way they will get some income.