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Fred Bear

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My friend is retiring back to the Caribbean and is selling her house. I have studied the local prices (asking and selling) and am sure her house in London E12 is worth (ie will sell for) £200,000 max. This was what she was expecting (and would have been happy with) last year when we were discussing it. This would have given her enough to buy a bungalow back home. Estate agent #1 suggested an asking price of about £210,000 which sounded about right to me. Agent #2 said £225,000 and agent #3 said £230,000. She was overjoyed at this last valuation and is now looking forward to retiring into a new house and with a nice lump sum. She is now convinced in her own mind that her house is 'worth' £230,000. Needless to say after many viewings she has received no offers. She is feeling depressed, and has now suggested dropping the price to £228,000! I feel angry about the way the agents have built up this expectation presumably just to get the contract. I do not consider this is a case of greed - the house is her only asset after being ripped off for years by banks and other money lenders - but that's another story. Any comments?

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This is an excellent example!!!!

EA's profess that its the GREEDY sellers that are the problem. This example shows that this 'content with £200K' seller now BELIEVES that she is losing money that was never there!

Thats why I believe they are scum (Most of them not you Mildura ;) ). There should be laws that stop EA's choosing figures out of thin air! They are speculative. I am sorry but I hope her house sells for less than £200K now!

Greed is one of the worlds WORST evils imho. It normally ends in tears.

TB

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Any comments?

You have to remember that for the Estate Agent the sale occurs when they get the property on their books.

That's their primary objective. Your friend got 3 quotes and went for the highest.

When the market was booming this strategy worked fine, either because someone would come along and pay the highest price, or you could just wait a while for the market to catch up.

Now that the market is stagnant, your friend could be waiting a long time (see british expats).

If the EA knows what they're doing they should now start talking the price down to get the sale.

If your friend had any sense they'd cut the price and get out of this market while they still can.

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Thats why I believe they are scum (Most of them not you Mildura ;) ).

Aw, thanks TB!! <_<

Agree withyou about greed as well - it's very easy for an EA to tell a potential client an inflated figure and 'buy the instruction' it takes a bit more skill to provide an accurate valuation...

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Interesting observations on this thread. Just so happens my wife took a temp job in an EA for a couple of weeks recently for some pocket money (we have low opinions of the trade also but hey if their desperate we'll take what we can ;) ) - her job - to phone round all the houses that had been stagnant for x amount of months and suggest up to a 10% drop in price! Seems to back up your theories.

'Greed is a fat demon with a small mouth and whatever you feed it is never enough.' - Janwillem van de Wetering

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IMO the root of the problem lies with the fee structure. If the fee was say 1/4% on the first £200K and 8% on the amount achieved in excess of that figure the agent would then have a clear incentive to get the best price and not simply tie up a deal quickly. The agent owes 100% to the instructing client and this type of fee structure focuses the agent on the client.

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IMO the root of the problem lies with the fee structure. If the fee was say 1/4% on the first £200K and 8% on the amount achieved in excess of that figure the agent would then have a clear incentive to get the best price and not simply tie up a deal quickly. The agent owes 100% to the instructing client and this type of fee structure focuses the agent on the client.

I had to think about this one fora few minutes before I got it. I assume you are suggesting that commision structured in this way would lead to lower initial valuations because it would be easier for the selling agent to exceed that initial valuation and get into the high commision price range. It would require all agents to adopt this method of allocating commision to work - I can't see that happening though.

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being ripped off for years by banks and other money lenders

what do you mean by 'other money lenders'??? this person sounds like a complete doughnut and deserves everything she gets :lol::lol::lol:

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Well E12 is the Manor Park area just down the road from Stratford (4 mins by rail) which of course is hosting the 2012 Olympics!

Personally I would not pay £122k (let alone £222k) to live in Manor Park but its amazing what the potential of two weeks of sporting action in 6 years time is doing to property prices in Newham at the moment.

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If she is not a greedy seller, why did she go with the agent who provided the higher valuation?

I don't think this is necessarily a good idea.

frugalista

She got below what the majority of the Estate Agents who saw the property said it was worth. Sounds to me like a falling market.

So even though she went for the highest EA valuation she actually got below the Middle valuation.

In theory her house was worth £230k 4 months ago and now it is worth £222k - 4% less. Does that translate into a 12% drop YoY for 2006/2007. I'm sure if she had got £238k people would have been making such claims to prove HPI over the same period.

Edited by adibrown

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House has just sold for £222,000. I hadn't heard of a 2-bedroom house in this area selling for more than £200,000 before. Frankly I'm gobsmacked.

With this money at current exchange rates to the US dollar, she will be able to build or buy a luxury 5 bedroom house in most parts of the Caribbean ;) .

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I think going for the highest valuation is more a case of human nature and recent market trends than all out greed.

When I sold my flat I had 4 agents come around and view the place. Three of them valued it at around about the same figure and the third valued it way above (a value that it would never had sold at). I remember the 'tingle' I got when he mentioned the figure. Obviously I knew enough to realise what was going on and never would have gone for that agent. But still 90% of people I told thought I was mad for not going with the highest valuation. It still suprises me how people don't realise that EA's do this and the longer a house is on the market the less attractive it becomes. It also supprises me why an EA will advertise a home which they have little hope of selling (commission only comes once the sale is completed IME).

I actually went for the lowest valuation in the end (as I really didn't see how it would sell otherwise, consequently I was right) but I still remember feeling slightly peeved when the first viewer made an offer 10% under the asking price. Of course this was a ridiculous reaction as I would have done the same thing in his situation, but if I'm honest, that's the initial feeling that came over me.

I've seen homes on the market where I live for years (yes years) with little or no change in the asking price. Without a change in sentiment the seller will always get a 'tingle' when they hear that over-inflated valuation, I fear a turnaround of this sort takes time, but until then the rouge EA's will take advantage.

Edited by laughing_goat

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Frankly I'm gobsmacked.

Why?

We are in the grip of a housing boom unprecedented in history and you are suprised it sold so quickly at that price.

I don't understand.

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In our street, the prices for houses went up by almost exactly £10,000 each time a new house came up for sale, this went on from 1998 till mid 2003 and has been absolultly flat ever since, this is what the agents do, they push it until it can go no further. then they behave for a bit. They are the counterpart to the lending buisness, both benefit from higher prices.

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Guess these people are learning the money suppy isn't infinate. You can only borrow so much. After that, its stagnation time.

As an aside to this, I've already heard from my bosses overseas how much I can award my workers (Middle management Types) this coming year as a pay rise.

The mediocre get a whopping 0% rise.

If someone is really good, and I can live without them, I'm allowed to go to 1.5% :o

Good luck to them if they are trying to get a megabucks mortgage on that!

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IMO the root of the problem lies with the fee structure. If the fee was say 1/4% on the first £200K and 8% on the amount achieved in excess of that figure the agent would then have a clear incentive to get the best price and not simply tie up a deal quickly. The agent owes 100% to the instructing client and this type of fee structure focuses the agent on the client.
Have you come across a book called Freaconomics? It's an Economist using statistical analysis in a few interesting ways. For example, he asks why property agents houses typically sell for about USD10k more than identical houses sold by the same agents. Surely they'd want the highest price possible as they're on commission?! He points out that they only get a small percentage of that extra price, so why bust a gut putting out extra ads, showing more people round, keeping the place spick and span, for another couple of hundred dollars. Now when it's there own place, and they're getting an extra $9.8k... then it's worth their effort. It's a different market over there, so a different game, but interesting that the numbers are there to prove it all the same!
As an aside to this, I've already heard from my bosses overseas how much I can award my workers (Middle management Types) this coming year as a pay rise.

The mediocre get a whopping 0% rise.

And this would be due to the strong pound?

Presumably the below mediocre get a 1.5% cut?

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  • 301 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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