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Estate Agents Closing / Reeds Rain


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The pips are going to have to squeak sometime. Unless EAs can proactively encourage vendors to be realistic with prices in the middle market then there will be no mover uppers.

The local boss of Reeds Rains admitted as much back in March albeit with a bit of sugar on top

My View, By Ryan Andrews

The housing market is more positive than some imagine. Houses are selling and December, traditionally a slow month, was good for many agents here. There are sales in both new homes and resale properties with many first-time buyers now snapping up homes at auctions. It is not totally a corporate market with investors buying cut-price houses, although it is a very good time to invest in property.

The problem is a lack of a chain with many first-time buyers getting on to the property ladder when they buy a house at an auction.

Previously the owner of that house would trade on up the chain. But with so many people buying a repossessed house there is no movement upwards. Property priced up to £175,000 is selling but anything above £250,000 is slower. Houses must be realistically priced to sell.

Ryan Andrews is the regional operational director for Reeds Rains Estate Agents which has eight branches province-wide.

Read more: http://www.belfasttelegraph.co.uk/news/local-national/northern-ireland/sales-up-house-loans-up-is-the-property-market-moving-at-last-16130969.html#ixzz2EfhOLEFx

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Good business decision from reeds, no point paying rent, rates and wages for 70 people with the sort of sales volume we are seeing. Their losses must have been pretty large.

Some of the local EAs must be feeling the pain also but i suppose they must have hidden some of the money they made flipping those apartments during the boom.

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Meanwhile, Ryan Andrews of Reeds Rains said when it comes to clinching a sale the price has to be right: “If a house is realistically priced we can sell it in three months.”

What could possibly have went wrong - they have 190 properties on the books in Bangor alone. Surely they weren't trying to sell properties at the wrong price?

If you go to advanced search, other options, choose an estate agent - theres almost 350 of them (or more) granted some have more than one branch

http://www.propertynews.com/advanced-search/index.php?Sector=ResidentialSale

At an optimistic 3,500 sales per quarter that's ten per branch every 12 weeks. Average price £95,000 say 3% commission - a generous £3k per house or £30k per 3 months

Of course commission has to cover all sorts of costs and shouldn't be confused with profit. Driving to all those viewings with no sale, marketing, wages, rates, rent, utilities............

Rentals must be extremely lucrative. As pointed out below!!

Edited by Shotoflight
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The latest EA scam is to make money out of renting.

So they over-price the property, it doesn't sell, then the owner puts it to rent,. and the EA makes larger rental fees in 2 years than they would selling it.

I saw one rental agreement: 2 months rent, plus a whole raft of extras including extra fees for annual gas safety, electrical, and every call out the tenant makes.

Then they take fees from the tenant too as non-refundable admin fees etc.

Overall, I reckon they make a 1% estate agent fee every 2 years.

This explains why EAs persist in over-valuing properties, and how they stay in business when there are no sales.

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The latest EA scam is to make money out of renting.

So they over-price the property, it doesn't sell, then the owner puts it to rent,. and the EA makes larger rental fees in 2 years than they would selling it.

I saw one rental agreement: 2 months rent, plus a whole raft of extras including extra fees for annual gas safety, electrical, and every call out the tenant makes.

Then they take fees from the tenant too as non-refundable admin fees etc.

Overall, I reckon they make a 1% estate agent fee every 2 years.

This explains why EAs persist in over-valuing properties, and how they stay in business when there are no sales.

Ah but it's only temporary... Until the market recovers and they can get what its worth.

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At an optimistic 3,500 sales per quarter that's ten per branch every 12 weeks. Average price £95,000 say 3% commission

3% commission? Joe blogs off the street will pay below 1%. A corporate sale will get charged even less than that.

Edited by nigooner
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I guess all estate agents will close down once Google and Tesco have opened online estate agencies and the Boomers have died off (because they can't use computers unless it suites them),

Perhaps the thousands of unemployed estate agents could set up Beanie house re-modeling agencies. You know spend 1k and add 500k to the price of your house.

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Reeds Rains now says it is "reviewing our branch network in Northern Ireland".

"We are exploring the opportunity to change the operational model through investment in franchising," it added.

So they went from closing to wanting locals to take on individual branches under the Reeds Rains name. I know nothing about their business model but the couple of times I ever dealt with one of their branches I received a very sub standard service. I really can't see too many business people or former estate agents wanting to buy into their name when they had openly said they were pulling out of NI, admitting that it wasn't a viable business.

On the subject of EAs closing, I have not yet seen one close in our area which is strange as there are at least three too many to handle the amount of properties on the market and the sales being achieved would only keep two agents going, let alone six. With no improvement on the horizon I expect to see a few more close in 2013.

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So they went from closing to wanting locals to take on individual branches under the Reeds Rains name. I know nothing about their business model but the couple of times I ever dealt with one of their branches I received a very sub standard service. I really can't see too many business people or former estate agents wanting to buy into their name when they had openly said they were pulling out of NI, admitting that it wasn't a viable business.

On the subject of EAs closing, I have not yet seen one close in our area which is strange as there are at least three too many to handle the amount of properties on the market and the sales being achieved would only keep two agents going, let alone six. With no improvement on the horizon I expect to see a few more close in 2013.

What an absolute shambles - it's a pretty fundamental question - 'Are you closing the business?' 'Yes we'll be gone by the end of the year...errr wait no we're not really closing we're going to do some sort of franchise thing.'

I can recall the fiasco of the Remax franchises which arrived very late in the day and ended with some of the franchisees going personally broke.

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What i find astonishing is the fact you'll pay 0.5% for a real professional to do your conveyancing (whilst not overly complicated can be a disastrous if it goes wrong) yet people will pay a man in a shiny suit driving a yellow mini 1.5% to print a brochure and pop it in a window.

You think 1.5% is too little? I think its 1.5% too much.

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As the average price goes down and auctions take up a larger market share, this commission business model surely becomes unsustainable at such low percentages?

On a slightly different tangent - there must be thousands who paid over £250k in the 'boom' and the associated 3% stamp duty. Not only will there be substantial neg equity, but if the house value has halved as the stats would suggest, their stamp duty should currently be equivalent to - pro rata - 6%. Same goes for EA fees (and sols if they work on commission) - 1.5% becomes 3% of current value. Quite a chunk on top of the neg equity.

Edited by Shotoflight
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What i find astonishing is the fact you'll pay 0.5% for a real professional to do your conveyancing (whilst not overly complicated can be a disastrous if it goes wrong) yet people will pay a man in a shiny suit driving a yellow mini 1.5% to print a brochure and pop it in a window.

You think 1.5% is too little? I think its 1.5% too much.

It is too much for the standard of estate agency displayed from 99% of NI agents. But compared to the rest of the world it is the lowest % of anywhere but in other locations agents actually work for their fee. I definitely think poor agency has contributed to such a poor market in NI.

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As the average price goes down and auctions take up a larger market share, this commission business model surely becomes unsustainable at such low percentages?

On a slightly different tangent - there must be thousands who paid over £250k in the 'boom' and the associated 3% stamp duty. Not only will there be substantial neg equity, but if the house value has halved as the stats would suggest, their stamp duty should currently be equivalent to - pro rata - 6%. Same goes for EA fees (and sols if they work on commission) - 1.5% becomes 3% of current value. Quite a chunk on top of the neg equity.

The seller pays the Agent, not the purchaser.

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The seller pays the Agent, not the purchaser.

You're right - they should be split out though mover uppers will pay both (on house sold - EA fees - and house bought - stamp duty, perhaps not for the first time). I assume most recent purchases over £250k - the 3% stamp duty band - would have been mover uppers.

The reason it came to mind was because of comments on ROI newspaper articles where people who overpaid and paid proportionate stamp duty in recent years, thought this should exempt them from the new property charge.

Another reason why govts like high house prices - high (stamp duty) tax take

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How many people actually bought at boom-tastic prices, relative to the overall group of 'homeowners'?

For those who did, it's a disaster of course but for the time being repressed interest rates will keep them going.

Good question.

Volumes dramatically fell after Q4 of 2006. The statistics of the LPS are the Land reg returns which are reg 28 days after completion and completion takes place 2 or 3 months after booking. So the figures for Q4 2006 are reflection actual activity for Q3 2006 etc. But we can leave that aside.

LPS shows that price peaked in Q3 2007 but volumes at that stage were 60% of the average volume of 2006 (thankfully).

There were almost 100,000 transactions in 2006, 2007 and 2008.

However, if I am right there were;

30,000 at between £140k and £170k.

16,000 at between £170k and £200k.

16,000 at over £200k.

I cant remember all the figures but the CML tells us that during 2006/2007 the LTV of First Time buyers was about 85% and movers was about 75%. Movers, I think made up say 60% or the market so we assume a blended LTV of 78%.

Therefore taking this against the averages in the LPS survey you come up with a figure of:

32,000 borrowed between £140k and £170k

zero borrowed between £170k and £200k, and

zero borrowed between £200k

Of course this is not the case and that's the difficulty with averages. We all know that despite the assumed average LTV of 78% many people borrowed at close to 100% and therefore many people, particularly movers borrowed an much lower than 78% LTV.

After typing all this I see I have used the Standardised Price (RPPI)which shows a lower current price than the simple mean. That appears to be the figures quoted in the press.

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Another reason why govts like high house prices - high (stamp duty) tax take

Not picking of you Shotoflight but we all, including myself, on many, many times have fallen into doing this.

its the great 'they'

We all change from 'we the taxpayer', who are picking up the cost of bailing out the banks etc to 'they the Government' who loves SDLT duty etc. They are both the same entity.

We also slate 'us the tax payer' for propping up the market by giving SDLT Duty holidays to FTB'ers.

Thereby on one hand using the fact that the government earns tax on the price of houses as proof that the government likes high house prices to then, when they stop taking this tax its more proof that the Government likes and wants to keep high house prices. If the Government did a complete reverse and give a tax rebate when you bought a house (MIRS?)it would be yet again further proof that the government wants high house prices. The poor 'we the tax payer' is confused.

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Not picking of you Shotoflight but we all, including myself, on many, many times have fallen into doing this.

its the great 'they'

We all change from 'we the taxpayer', who are picking up the cost of bailing out the banks etc to 'they the Government' who loves SDLT duty etc. They are both the same entity.

We also slate 'us the tax payer' for propping up the market by giving SDLT Duty holidays to FTB'ers.

Thereby on one hand using the fact that the government earns tax on the price of houses as proof that the government likes high house prices to then, when they stop taking this tax its more proof that the Government likes and wants to keep high house prices. If the Government did a complete reverse and give a tax rebate when you bought a house (MIRS?)it would be yet again further proof that the government wants high house prices. The poor 'we the tax payer' is confused.

I like my bread buttered on both sides ;)

The SDLT holidays and co-ownership funding are rarely out of generosity but to bolster or "get the market moving" in 'difficult' times

Charging full SDLT for props over £400k CV would be a good source of income for Govt - we the taxpayer

ROI politicians made it abundantly clear high house prices were sustainable and desirable :ph34r:

I can't in fact recall any govt policies specifically and intentionally to reduce house prices

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  • 442 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
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      • up 5%



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