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Trying It On

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Just got back from having a swift beer with a mate who's house hunting near Worcester. Less than two weeks ago an agent sent him details of a property they had just taken on. Small farmhouse on market for £799k. They drove past it on the weekend and he was not impressed but his wife still wants to have a look...

Anyway, he called the agent today to book a viewing - only to be told that they had already reduced the price to £699k!

Naturally he asked why the price had come down £100k in just over a week... only to be told the classic line "the owner has decided that she wants to sale it". Err... so what exactly was she thinking originally then?

Perhaps in the first week or so everyone told the agent it was a complete no-hoper at that price?

I dunno, but when I heard this I couldn't help but think the agent/vendor was trying it on... I wonder how many other houses out there are so significantly over-priced just waiting for a schmuck to come along..? Funny how easily the price falls when the owner starts to take selling seriously too...

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Guest Winners and Losers

Just got back from having a swift beer with a mate who's house hunting near Worcester. Less than two weeks ago an agent sent him details of a property they had just taken on. Small farmhouse on market for £799k. They drove past it on the weekend and he was not impressed but his wife still wants to have a look...

Anyway, he called the agent today to book a viewing - only to be told that they had already reduced the price to £699k!

Naturally he asked why the price had come down £100k in just over a week... only to be told the classic line "the owner has decided that she wants to sale it". Err... so what exactly was she thinking originally then?

Perhaps in the first week or so everyone told the agent it was a complete no-hoper at that price?

I dunno, but when I heard this I couldn't help but think the agent/vendor was trying it on... I wonder how many other houses out there are so significantly over-priced just waiting for a schmuck to come along..? Funny how easily the price falls when the owner starts to take selling seriously too...

How strange considering the current 'shortage in housing'. Surely people would be prepared to pay any price?

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I may be wrong, but I'm pretty confident that there are a very significant number of home owners out there who are looking at the current situation (gas bills, unemployment, council tax, etc) and getting a little nervous. As a result, they're deciding to put the house on the market at a very optimistic price just in case someone comes along (you could call them the 'mug punter') and falls in love with the place and offers something near the asking price. The reality is, they're highly unlikely to get a bite, but there's no cost in testing the market. If I'm right, this must inflate the asking-price based indeces (e.g. Rightmove) significantly.

One good outcome from forthcoming HIPs is that it should reduce the number of speculative placements in these circumstances as some real cost will be incurred even without a sale.

Cheers

LL

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I may be wrong, but I'm pretty confident that there are a very significant number of home owners out there who are looking at the current situation (gas bills, unemployment, council tax, etc) and getting a little nervous. As a result, they're deciding to put the house on the market at a very optimistic price just in case someone comes along (you could call them the 'mug punter') and falls in love with the place and offers something near the asking price. The reality is, they're highly unlikely to get a bite, but there's no cost in testing the market. If I'm right, this must inflate the asking-price based indeces (e.g. Rightmove) significantly.

One good outcome from forthcoming HIPs is that it should reduce the number of speculative placements in these circumstances as some real cost will be incurred even without a sale.

Cheers

LL

Maybe that explains why the average asking price (Rightmove) is £200K, while the average price paid (Nationwide) is only £158K.

That would leave these people trying to ask 26.6% too much for their house.

Taking it the other way you should be looking for a discount of 21% off asking before you try and make any other deductions.

This tallies nicely with what I see locally, where 1/2 of all properties I've researched have been well over the ceiling price for the street/neighbourhood.

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I may be wrong, but I'm pretty confident that there are a very significant number of home owners out there who are looking at the current situation (gas bills, unemployment, council tax, etc) and getting a little nervous. As a result, they're deciding to put the house on the market at a very optimistic price just in case someone comes along (you could call them the 'mug punter') and falls in love with the place and offers something near the asking price. The reality is, they're highly unlikely to get a bite, but there's no cost in testing the market. If I'm right, this must inflate the asking-price based indeces (e.g. Rightmove) significantly.

What keeps the bubble going is confidence. If this confidence starts to fall, there are fewer transactions at the inflated prices, and those who have to sell at any price (death, divorce, downsizing) will do so. These new prices set the market, eroding confidence further.

And its not just those who set a high price and then reduce. Those who take the house off the market after a few months, unsold, are also sending a message to the buyers.

So lets have a cheer for all those who go for the unrealistic asking prices - no matter what they do afterwards, they're contributing to the crash!

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Also at the tail end of one of the biggest bubbles ever how do you price a house. Some buyers will still be in boom mode so are prepared to pay very high prices. Other buyers will think it is ridiculous and won't buy until prices come down. Some EA will have no idea of what to do in a bear market and won't be able to convince the seller that low and behold the price is actually less than a similar house went for.

For a house on an estate I guess until recently it has been the price of the last house sold plus an increase for every month since the last one sold.

However for a farmhouse there is probably no recent data of similar houses sold in that area, hence complete fantasy figures.

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  • 302 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% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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