A Strange State Of Affairs...

[wifeling-smi]

I'm almost ashamed to post this query.

My mother is in the process of selling her house and 'downsizing' to a smaller one. For the past few years she has been pestering me to 'get on the housing ladder' because 'house prices are going up'. This has been true for the past few years (in her area anyway), however, now something VERY STRANGE is happening.

My mother had 3 valuations for her house -

1st @ £410,000

2nd @ £380,000

3rd @ £365,000

She chose to go with the 3rd valuation of £365,000 for a 'quick sale'. This seems to have worked because within 12 hours of the 'For Sale' sign going up, she'd had people to view and an offer at the asking price. The buyers have since organised a bridgeing loan to pay for it. (!)

Whilst looking for houses to move to - she initially gave herself a price ceiling of £185,000. Unfortunately there wasn't anything suitable for her in this price range...so she raised the price ceiling to £220,000. Over the past few weeks I have noticed she's viewing properties with price tags of around £250,000. When I questioned her over this, her answer was that she was 'sure that the vendors would take a lot less than the asking price'. The estate agents have also backed this theory up on 4 of the 6 houses she is viewing, saying that 'there will be room for significant negotiation'.

However, when I gently told my mum that she needed to find somewhere quickly because house prices may start going down and she couldn't afford to lose her buyer, I got the short, sharp reply of "house prices are still going up though Emily - the market is booming!"

Now, am I missing something??? Here is the true picture as I see it - My mum has 'sold, stc' her house for more than £20,000 less than the average valuation - she is expecting (encouraged by her estate agent) to pay significantly less than the asking price on most of the houses she is interested in. HOW can she (and others) still say that prices are going up and the market is strong??? I'm feel like the little child in the story of the 'Emperor's New Clothes' and want to scream "it's all a lie - a big fat lie and you're all part of it"...

[Tonester]

Remember when they say "sellers are pricing house more realistically" that doesn't mean house prices are going down, oh no.

[Zen-Master]

Remember when they say "sellers are pricing house more realistically" that doesn't mean house prices are going down, oh no.

Certainly not - it's a negative increase.

[undersupply]

Certainly not - it's a negative increase.

An inverted increase....

Less of that negativity!

[Pluto]

Estate agents aren't controlling the prices - vendors are.

Until vendors become forced sellers this will continue.

Interest hikes will be the catalyst.

Edited February 26, 2006 by Pluto

[DTMark]

A local radio ad for an EA starts with something like:

"Having problems selling your home? Is your house becoming more like a prison than a home?"

Then...

"Thanks to Broomheads, there's never been a better time to sell your property"

When you give it even only the slightest bit of analysis it's like watching The Matrix coming to life.

[Converted Lurker]

Estate agent analogy with some relevance, friend of my wife has had house up for sale for 14 months. desperate to move to Spain to be nearer her parents who moved there 2 years ago. House up for 290K 14 months ago, still at 290K. The agent has advised her that locally the market is picking up and she shouldn`t reduce the price, even though she has had a handful of viewers and no offers during the 14 months. I asked her, ME, with as much consideration as I could possibly muster, if she was not tempted to lower the price given the lack of viewers/offers/stagnant market? I got the glare, with the accompanying statement "Well the agents are the experts, they surely know what they are doing!"

Despite this movement in society that everyone is a property expert I`m of the opinion that most are clueless and do in fact trust their agent to do the best by them and yet the same folk would criticise the agent for the house they are buying at a drop of a hat

[undersupply]

Estate agent analogy with some relevance, friend of my wife has had house up for sale for 14 months. desperate to move to Spain to be nearer her parents who moved there 2 years ago. House up for 290K 14 months ago, still at 290K. The agent has advised her that locally the market is picking up and she shouldn`t reduce the price, even though she has had a handful of viewers and no offers during the 14 months. I asked her, ME, with as much consideration as I could possibly muster, if she was not tempted to lower the price given the lack of viewers/offers/stagnant market? I got the glare, with the accompanying statement "Well the agents are the experts, they surely know what they are doing!"

Despite this movement in society that everyone is a property expert I`m of the opinion that most are clueless and do in fact trust their agent to do the best by them and yet the same folk would criticise the agent for the house they are buying at a drop of a hat

This doesnt add up because surely its in the ea's interests to turnover more properties at a lower price rather than have them on the market for ages?

Maybe the ea is acting in her interests, I can't see how it benefits the ea not to sell asap.

[laurejon]

This seems to have worked because within 12 hours of the 'For Sale' sign going up, she'd had people to view and an offer at the asking price. The buyers have since organised a bridgeing loan to pay for it. (!)

12hrs and an offer on the full asking price!!!!.

I would think anyone who is barely sane would realise she has undersold.

The agent with the lowest offer would have a mate in mind with the reddies to hit a deal, with an unsuspecting vendor.

Tell your Mum to change the agent, and go for the Top Valuation but be open to offers below.

[newaccount99]

This doesnt add up because surely its in the ea's interests to turnover more properties at a lower price rather than have them on the market for ages?

Maybe the ea is acting in her interests, I can't see how it benefits the ea not to sell asap.

An agents one concern is getting the sales commision.

To have any hope of getting the sale they need the instruction in the first place.

They are only likely to get/keep the instruction if they have built some rapport with the vendor.

An EA will typically read a vendor and market the property based on what the vendor has explicitly or implicitily instructed.

I got the glare, with the accompanying statement "Well the agents are the experts, they surely know what they are doing!"

Will typically translate as:

Vendor: I want to move to Spain, but in order to do so I need a good price.

EA: Well in that case you really shouldn't market below £290K.

Vendor: Well you are the expert, and know what you are doing.

Alternatively

Vendor: I want to move to spain as quickly as possible.

EA: Well in that case you really should consider marketing it at £270K

Vendor: Well you are the expert, and know what you are doing.

The reason for the glare? You have just crossed her belief/expectation not the EA's...............

[pyewackitt]

Let's review this...

Your mother is potentially about to sell her property for nearly £50K under the maximum valution - that''s a pretty steep discount compared to that which many other sellers would accept.

She says she wants a quick sale... but why do this if she REALLY believes prices are always going up - surely if that's true she should always try to get the top or at least the average valuation?

It appears she's talking like a bull but actually acting like a bear... without realising... its counter-intiutive to believe the market always goes up and that property is a rising invesment, then to sell up for the lowest price possible. What does nethouseprices say about other places on her road? Is the price comparable to next door for example?

And I'm sure once she has the money in the bank the new downsize property might actually cost her more than she expects as not every sellers is willing to take offers below asking yet... would she be firm enough to wait if offers aren't accepted? or haggle? or would she just stump up the asking price if the vendor of her downsize property refused to accept less? She needs to ask herself these questions.

Perhaps also remind her that £50K she isn't going to get is the difference between her original new property price band and the band she's currently looking at... it may not seem like its a big difference to her until you remind her how much of a pension annuity this amount could represent.

It must be hard to try and point out the economic realities when having to fight against positive spin annecdotal evidence...

I wish you and her all the best!

- Pye (Property Speculation Ninja )

Edited February 26, 2006 by pyewackitt

[undersupply]

An agents one concern is getting the sales commision.

To have any hope of getting the sale they need the instruction in the first place.

They are only likely to get/keep the instruction if they have built some rapport with the vendor.

An EA will typically read a vendor and market the property based on what the vendor has explicitly or implicitily instructed.

Will typically translate as:

Vendor: I want to move to Spain, but in order to do so I need a good price.

EA: Well in that case you really shouldn't market below £290K.

Vendor: Well you are the expert, and know what you are doing.

Alternatively

Vendor: I want to move to spain as quickly as possible.

EA: Well in that case you really should consider marketing it at £270K

Vendor: Well you are the expert, and know what you are doing.

The reason for the glare? You have just crossed her belief/expectation not the EA's...............

Ha Ha, I was only looking at the economics of it, but I suppose when youre dealing with mad nest builders youve got to look at pyschosocial factors as well

[SarahBell]

If they've had an offer so soon its under value surely? ;-)

[laurejon]

Selling houses is what is known as 180 Degree Selling

The agent looking at a property worth say 400k has to satisfy both the Vendor and the Purchaser.

So an agents job is not to value anything, his job is to arrange a mutual meeting of minds on the what they are each prepared to accept.

Invariably an Agent will pressure the Vendor as these are easy targets to get a drop.

To win the Business an Agent will give a high Valuation, appear to Market the property with a single advert in the local rag but not expend any effort. He will then approach the Vendor after 4wks and say I think the price is a little high and push the Vendor down.

Vendors are Static, Potential Purchasers are on their heels and away if they dont like it. There are plenty of others to see is the attitude.

[undersupply]

Selling houses is what is known as 180 Degree Selling

The agent looking at a property worth say 400k has to satisfy both the Vendor and the Purchaser.

So an agents job is not to value anything, his job is to arrange a mutual meeting of minds on the what they are each prepared to accept.

Invariably an Agent will pressure the Vendor as these are easy targets to get a drop.

To win the Business an Agent will give a high Valuation, appear to Market the property with a single advert in the local rag but not expend any effort. He will then approach the Vendor after 4wks and say I think the price is a little high and push the Vendor down.

Vendors are Static, Potential Purchasers are on their heels and away if they dont like it. There are plenty of others to see is the attitude.

What can a vendor do?

Will the internet destroy traditional estate agents?

[laurejon]

A vendor must have their ear to the ground, read the local papers and get a good idea of what is available in the Area.

Good idea is to research for at least a month to get a good picture.

I never ask for more than one valuation, I myself tell the agent what I want after he tells me what he thinks its worth.

Its your biggest assett, you need to make sure you look after it.

[newaccount99]

A vendor must have their ear to the ground, read the local papers and get a good idea of what is available in the Area.

Good idea is to research for at least a month to get a good picture.

I never ask for more than one valuation, I myself tell the agent what I want after he tells me what he thinks its worth.

Its your biggest assett, you need to make sure you look after it.

You are of course right, unfortunately not everyone is quite so clinical and analytical about it though.

What doesn't help is that the market is often littered with people not overly motivated to completing. Whether it be through indecision, ego or just some other strange psychological reason.

I had a friend who once had their house for sale for about 6 mths.....countless offers as much as 10-15% over asking.....The person still owns the house 6 years later

Sellers packs will hopefully get rid of these types, supply may dip but it will be less frothy due to more motivated/serious vendors.

[bazzzzzzz]

What can a vendor do?

Will the internet destroy traditional estate agents?

Rightmove certainly think so. That's why they have excluded internet based estate agents like first4sale.com from their website. Rightmove have been referred to the OFT by first4sale.com. OFT are investigating whether Rightmove have breached anti-competitive laws:

http://www.responsesource.com/releases/rel...d=24380&hilite=

Edited February 26, 2006 by Baz63

[laurejon]

As with all business you have to distance yourself from emotion, and that is very hard when you may have brought up your children in the house and lived a happy life there.

Most people find leaving their house a bit of a pull, but when they have done it few look back for long.

In the last five years there are very few people who can actually say I knew the crash would not come till late 2007.

Anyone who bought post 2000 was winging it, and the people who have made the most are those who initially had the least to lose.

The problem with the property business the more you make the harder it is going to be for you if you fail.

If you never had it, it's not a big deal to lose it!!!.

Ideally if you want to get big in property, setup a limited company and see how you go. Never put your own house up as security. If the company goes bust, then just setup another, its that simple.