Frustrating Times At The Ea Offfice Indeed

[HonestEA -]

Here's an idea. Why don't you drop your fees to 2000pound flat fee and watch the business roll in as you out compete the other estate agents?

Commercial suicide for the large corporates to do this in a reducing volume environment. We have much higher fixed costs than small independent operators which I am still managing to cover with the higher fee strategy. The public wants ever more professional, well trained estate agents providing a fantastic service but at an ever reducing cost which is impossible to do in my experience. To take out the competition on fees alone we would need to be nearer £1000 than £2000, my average fee is just over £3000 at the moment which most people seem happy to pay for the service we offer. I would need to sell 3 times the amount of houses just to make the same amount of money, there is simply not that many sales to be had in the current marketplace even if I got to 100% marketshare which is never going to happen in the real world unless I am the last surviving agent in town. I can't deny that the cheap fees route works in a booming sellers market where the properties sell themselves. Every listing then is a virtually certain payday. In a buyers market you actually need to employ decent salespeople who can actually sell and with the average length of time on market extending to 63 days and rising according to Rightmove, the actual cost of marketing each individual property set against the fee returned starts to become critical.

[Blue Peter]

In a buyers market you actually need to employ decent salespeople who can actually sell and with the average length of time on market extending to 63 days and rising according to Rightmove, the actual cost of marketing each individual property set against the fee returned starts to become critical.

Thanks for the very interesting thread. And also your initial one about the guy coming in with a war-chest to buy from distressed sellers. Without looking it up, I think that you said that six months on (which we must be at about now), you might give your distressed sellers different advice. Have we reached that point in the game yet?

Just as a matter of interest, how much does marketing a property cost, roughly? I'd be particularly interested to know about rightmove: do they charge per listing? per listing per day? or some such.

Thanks again,

Peter.

[Mildura]

We are in a complete standoff at the moment. Most of the agents in my town are still ramping like there is no tommorow but they appear to be selling very little. I continue to give competitive valuations, am selling the vast majority of what I am able to get but cannot get nearly enough volume at the right prices to keep the corporate bosses happy. I pride myself on giving factual evidence based valuations, so when i do manage to get one on the market it is generally the right price and therefore sells even in this market. I have had to put the fees back up to a no compromise 2% sole or 3% multi agency to compensate for the reduced volumes.

Yep, same with me i'm afraid. Haven't posted on here for a while, but thought i'd have a look to see what's been said now things seem to be biting!

At the end of last year I started giving some fairly honest advice and watched nearly every client i saw go on the market with another agent at about 10% over what i'd recommended!! Having realised this approach wouldn't work i've gone back to pricing up, working on the theory that it's better to have a house on the market that you have a chance to get the price down and earn a fee at some point rather than watch another agent do exactly that and my pockets remain empty!!

Sooner or later enough sellers will HAVE to sell and reduce prices to a level where buyers will start offering, but it ain't happened yet!! (except in a small number of cases, and those vendors have found buyers!!)

[moshmonsta]

-35%

Medway towns, 1 hour train journey and 30 miles from central london on the North Kent coast.

We have spare roll of red carpet in the back office which I personally would be prepared to roll out . I would also be prepared to drive around to the vendors house and put the offer to them in person, especially if they were a seller of necessity. Waste of time if they were a preferential seller, would probably result in a disinstruction if I were to strongly recommend acceptance at the moment. Indicating to you which were the sellers of necessity and which were the preferential sellers would not be something I personally would feel comfortable with. Cannot speak for other agents in the High Street however.

OOoooh, I'm one of your would-be first time buyers that isn't holding the market up.

Please don't tell me you're working for those idiots Spicer McColl. We viewed some houses with them in August. ALL of which were horrible concrete blocky buildings just after Cecil road. Nasty concrete 1950s builds ridiculously expensive.

Even some of the nice victorian 3 bed (small gerden) terraces we saw are sill on the market which we are suprised about a bit. But then - Medway is a bit of a hole - but is all we can afford - having lived in london and worked here all my life, it also has high unemployment which I'm sure doens't help. So I doubt the locals can afford what should really be just under london prices for a flat/ terrace.

The spotty youth taking us round was adamant that they were a "bargain". Nice to see them dropping in value ( I love property-bee

[ronpember]

OOoooh, I'm one of your would-be first time buyers that isn't holding the market up.

Please don't tell me you're working for those idiots Spicer McColl. We viewed some houses with them in August. ALL of which were horrible concrete blocky buildings just after Cecil road. Nasty concrete 1950s builds ridiculously expensive.

Even some of the nice victorian 3 bed (small gerden) terraces we saw are sill on the market which we are suprised about a bit. But then - Medway is a bit of a hole - but is all we can afford - having lived in london and worked here all my life, it also has high unemployment which I'm sure doens't help. So I doubt the locals can afford what should really be just under london prices for a flat/ terrace.

The spotty youth taking us round was adamant that they were a "bargain". Nice to see them dropping in value ( I love property-bee

C'mon - do you seriously expect him to say who he works for? I' m just glad he's posting here - Ron

[moshmonsta]

C'mon - do you seriously expect him to say who he works for? I' m just glad he's posting here - Ron

Of course I don't! It's a rhetorical question really, Just part of my rant really! I'm just venting cos the above mentioned estate agent really pissed me off. We were taken round some nasty mouldy repossession falt that basically needed gutting. You could smell the mushrooms and see the cracks on the wall as you walked in - it was literally falling down. This proerty was on the market for about 150k and WELL overpriced, although it was larger than most.

I mean FFS, we're first time buyers - not f-ing builders and while we can probably cope with fitting a new kitchen/bathroom and a new paint job, a whole gut out and rebuilding the walls of a house is completley beyond our comprehension.

All the spotty youth kept saying was "ahh, but if you do it up then it will be worth at LEAST 180k. At which point I thought "********". What a timewaster. I'm never going back to them - I'm quite principled like that see.

[Mr Yogi]

This is by far the most interesting thread currently on the forum and really should be moved onto the main page. Estate agents are always vilified but the ones I know personally are actually quite nice chaps just doing a job - much like HonestEA.

It is interesting that HonestEA concentrates so much on forced sellers. This is something I have been banging on about for ages. Prices will only really start sliding when people who have to sell reduce their prices to attract a quick sale. If one person in a street accepts an offer of 20% below asking price then he immediately knocks around 20% off the value of every other house in his street. This is how the crash will unfold. The key people are the forced or distressed vendors.

It is also very interesting that HonestEA stresses agents' roles in persuading vendors to lower their expectations. It is commonly thought that estate agents have a vested interest in high house prices. In fact their vested interest is only in selling houses. In the current stalemate they are earning nothing - commissions will only start to flow when prices fall and buyers re-enter the maket.

Far from being the enemy of HPCers, estate agents like HonestEA are our new best friends!

Edited February 21, 2008 by Mr Yogi

[aussieboy]

This is by far the most interesting thread currently on the forum and really should be moved onto the main page. Estate agents are always vilified but the ones I know personally are actually quite nice chaps just doing a job - much like HonestEA.

It is interesting that HonestEA concentrates so much on forced sellers. This is something I have been banging on about for ages. Prices will only really start sliding when people who have to sell reduce their prices to attract a quick sale. If one person in a street accepts an offer of 20% below asking price then he immediately knocks around 20% off the value of every other house in his street. This is how the crash will unfold. The key people are the forced or distressed vendors.

It is also very interesting that HonestEA stresses agents' roles in persuading vendors to lower their expectations. It is commonly thought that estate agents have a vested interest in high house prices. In fact their vested interest is only in selling houses. In the current stalemate they are earning nothing - commissions will only start to flow when prices fall and buyers re-enter the maket.

Far from being the enemy of HPCers, estate agents like HonestEA are our new best friends!

This is certainly the most useful and, indeed, the most grown-up thread on the board. And probably the most useful thread for quite a few months.

Main board fodder, definitely, however there it will be swamped by Crash2006's postings on German banker scandals etc.

[mitchbux]

It is interesting that HonestEA concentrates so much on forced sellers. This is something I have been banging on about for ages. Prices will only really start sliding when people who have to sell reduce their prices to attract a quick sale. If one person in a street accepts an offer of 20% below asking price then he immediately knocks around 20% off the value of every other house in his street. This is how the crash will unfold. The key people are the forced or distressed vendors.

It is also very interesting that HonestEA stresses agents' roles in persuading vendors to lower their expectations. It is commonly thought that estate agents have a vested interest in high house prices. In fact their vested interest is only in selling houses. In the current stalemate they are earning nothing - commissions will only start to flow when prices fall and buyers re-enter the maket.

Far from being the enemy of HPCers, estate agents like HonestEA are our new best friends!

Very interesting thread.

We are in the process of buying and selling at the moment. Our agent and seemingly most of the others in our area have been talking the market down gradually. They've been giving more realistic valuations to new instructions and asking current vendors to reduce to just above the lowest amount they would accept. It appears that whilst they are not selling in droves they are experiencing a mini spring-bounce. It's got us a buyer anyway.

Meanwhile, in the area we are moving to they have been marketing new instructions at ever increasing figures, even though most of the stuff marketed last year is sticking at a lower price! Most of the stuff from last year hasn't been reduced, not even by £1K. It turns out a few of them had chains starting to build and they think that means they can wait for the chain to be complete and hey presto they will get the price they were initally offered.

I've been ear bashing every agent I've spoken to over there about the price ramping, actual LR figures and the lack of SSTC boards. Interestingly several of them have been agreeing with me, and have hinted that the ramping has not come from them, but from the vendors. I know that EA's are likely to tell a potential buyer anything they want to hear at the moment, but our negotiations have been very telling indeed.

We have been put in a very good position (we have a cash buyer) we decided to offer, we set a maximum we were willing to spend (a good reduction on the asking price). Initially the vendor was being very arrogant about it, but we refused to budge and OH expected us to be told to get lost. I dug my heels in and the EA did the rest, they were not going let vendor ego get in the way of a sale. That particular agent has gained a lot of respect from me.

[pablopatito]

I don't know how Estate Agents work. But is it possible that EAs are trying to pursuade their clients to lower prices when, if the seller held his nerve, he would get his higher price (albeit in a few months time)? Does an EA think "well, this house could sell for £190k in March, or £200k in May, but I might be redundant in May, so better to aim for a quick sale to help my company's cashflow, and to keep me in a job." Is that how it could work? We're about to put our house on the market and have had very differing valuations, so are not sure what to do.

We're planning on renting for 6 to 12 months before buying again. What I don't want to do is sell our house for £190k after taking expert advice from an EA, only for in the summer him to think, "great, we've made a few sales, cashflow crisis avoided, I'm still in a job, lets get those prices back up to £200k again." - leaving me with a 10k loss when I want to get back on the ownership ladder. Is that how it could work?

[bobthe~]

I don't know how Estate Agents work. But is it possible that EAs are trying to pursuade their clients to lower prices when, if the seller held his nerve, he would get his higher price (albeit in a few months time)? Does an EA think "well, this house could sell for £190k in March, or £200k in May, but I might be redundant in May, so better to aim for a quick sale to help my company's cashflow, and to keep me in a job." Is that how it could work? We're about to put our house on the market and have had very differing valuations, so are not sure what to do.

We're planning on renting for 6 to 12 months before buying again. What I don't want to do is sell our house for £190k after taking expert advice from an EA, only for in the summer him to think, "great, we've made a few sales, cashflow crisis avoided, I'm still in a job, lets get those prices back up to £200k again." - leaving me with a 10k loss when I want to get back on the ownership ladder. Is that how it could work?

As an IT contractor I can tell you it is better to be in work for 6 months at 200 per day than be out of work waiting for 6 months for that 210 per day contract.

Also, having been out of work for 6 weeks in the summer of '06 where our reserves were somewhat reduced, the prospect of another period of the same 3 months later wouldn't have appealed.

I would think the same is true for an EA.

Great thread btw and thanks to honest EA and others EAs who I always like to see posting.

[grey shark]

We're planning on renting for 6 to 12 months before buying again. What I don't want to do is sell our house for £190k after taking expert advice from an EA, only for in the summer him to think, "great, we've made a few sales, cashflow crisis avoided, I'm still in a job, lets get those prices back up to £200k again." - leaving me with a 10k loss when I want to get back on the ownership ladder. Is that how it could work?

Ultimately you have to make the decision yourself the EA can only advise/suggest to you , it's no good looking for a scapegoat if things go wrong .

Look at the current market for your chosen area and the current economic and financial situation and make a calculated risk assessment for your own personal circumstances , financial reward in markets often involves taking some risk .

[Disillusioned]

This thread is full of really good anecdotal evidence. I'd like to suggest that all posters on this thread give some indication of where they are in the country, if they are willing.

You could just edit this into the bottom of your post if you like...

I'm in SE London.

[grey shark]

I'd like to suggest that all posters on this thread give some indication of where they are in the country, if they are willing.

You could just edit this into the bottom of your post if you like...

I'm in SE London.

Agree with bubble face , imo it should be made compulsary , county at least .

All this talk when people say "in my area" or " my local EA office " or " bla bla bla "....... worthless without a area imo.

[pablopatito]

it's no good looking for a scapegoat if things go wrong .

I'm not looking for any scapegoats, I'm seeking an understanding of the possible tactics and mentalitiy of estate agents in order to interpet the advice they are currently giving me. I can do as much research as possible, but only estate agents can tell me what offers they have received this year, how many people have looked round houses they are selling, and the value of offers that have been accepted this year. Only they can really know what the market is currently doing.

[mitchbux]

I'm not looking for any scapegoats, I'm seeking an understanding of the possible tactics and mentalitiy of estate agents in order to interpet the advice they are currently giving me. I can do as much research as possible, but only estate agents can tell me what offers they have received this year, how many people have looked round houses they are selling, and the value of offers that have been accepted this year. Only they can really know what the market is currently doing.

I would argue that a good indication is the SSTC boards. Which agent has actually got any/most, but even those are not an indication of whether that particular EA is pushing his/her vendors to accept well below asking.

LR data whilst useful is only a picture of what happened 3 months ago.

If you are worried about an EA's valuation being low, just to get a sale, then market the property higher and be prepared to drop the price if/when viewings and offers fail to materialise, it's the only hard evidence you are going to be able to gather for yourselves about your property. The only problem with taking this approach is that you might end up chasing the market down, and whereas you could have got your £190K by pricing to sell straight away, you might end of taking £180K or lower in a few months time. You're not alone, it's a discussion OH and I had before putting ours on the market.

In our case the lower end was what we ended up dropping to. It got us someone who could actually buy, instead of the queue of people who told me they loved our house, but hadn't actually had a sniff of an offer on their own property.

I wanted to rent and sit it out for 2 years, but we have children who need to be settled. We are increasing our mortgage a little to buy the next house but it is bigger and in a nicer area, the mortgage will be smaller than renting a smaller house than our current one. OH's fuel bills for commuting are currently enormous, and the drop in that will be bigger then the increase in the mortgage, council tax and bills. Whilst it would be great to think that we had played the property market and gained, we have to take other things into account, and the decisions we have made suit us.

Only you can make a final call about what you think is best.

[mitchbux]

Agree with bubble face , imo it should be made compulsary , county at least .

All this talk when people say "in my area" or " my local EA office " or " bla bla bla "....... worthless without a area imo.

Apologies, I'm just a little nervous about giving away too much detail with everything still in progress.

We are in Derbyshire and moving within the county. East Midlands - the hard end of the crash!

Once everything is done and dusted I'll be happy to post more details/links of some of the silly behaviour in the new area.

[Disillusioned]

Agree with bubble face

That made my afternoon!

[davidg]

As an IT contractor I can tell you it is better to be in work for 6 months at 200 per day than be out of work waiting for 6 months for that 210 per day contract.

In general people only want to hire in work IT contractors so it is almost always better to be in work somewhere. Employers are a bit like birds, they find contractors that are already take and have had a good track record of partners much more attractive.

[davidg]

Well the average price of £140000 equates to a a repayment mortgage of around £1000 per month, say £800 for interest only compared to £600 pcm for the rental of the same house. A 12% reduction to an average of around £125000 would close the gap enough for many local FTBs to consider it seriously provided they can raise the required deposit.

The problem is, if there is a 12% drop in asking prices you will find sentiment will have changed and a lot of FTBs will hold off at 125K (or not be able to raise the credit) waiting for prices to drop further. Yes house prices are sticky on the way down, at least before panic sets in and people understand the game has changed. At the moment people are still very much into the houses only ever go up 10-20% per year and will have a hard time adjusting to the new reality.

Speaking as an investor, for a 600pcm rent I wouldn't pay over 90K, which is why I've not bought since 2001. There may be some convergence of rents and prices meaning 100K is realistic but deflation tends to take on a life of its own. Worst case those 2 bed terraces will be around 60K by 2012 in today's money. Remember that for me, living in Switzerland and hedged between the CHF, EUR and UKP, UK house prices have already dropped 10-12% over the last 12 months.... you need to stop thinking purely in UKP but in terms of what your currency is worth globally.

I think there will be some unforseen events over the next 12-24 months that will completely change perceptions. Already the House Price bulls didn't see the credit crunch saying that only a hike in interest rates or a recession could trigger a HPC.

Edited February 21, 2008 by davidg

[grey shark]

Apologies, I'm just a little nervous about giving away too much detail with everything still in progress.

We are in Derbyshire and moving within the county. East Midlands - the hard end of the crash!

No need really to apologise , it was just a observastion as it's good to read anecdotes but can be a tad frustrating on not knowing where the area is . Would be interested to know this from you , how much % did you get knocked off..........

a good reduction on the asking price. Initially the vendor was being very arrogant about it, but we refused to budge and OH expected us to be told to get lost. I dug my heels in and the EA did the rest,

Edited February 21, 2008 by grey shark

[mitchbux]

7% off a 4-bed det in a CdS that was already priced lower than two 3-bed det on the main road.

A 3-bed or 4-bed (can't remember which, as it was already SSTC when we started looking) on the main road completed a sale for £35K higher than our agreed price at the end of last year.

If you take that price and what we are actually going to pay, then it's a drop of over 14%.

The vendor was getting a bit arrogant with us, because in his eyes he was priced to sell (and looking at everything else we thought so too)

One nutter on the same estate is currently marketing a similar property (though without garage) at £85K higher than we are paying. If it all goes through OK then someone is in for a shock if they read the LR figures!

[grey shark]

7% off a 4-bed det in a CdS that was already priced lower than two 3-bed det on the main road.

A 3-bed or 4-bed (can't remember which, as it was already SSTC when we started looking) on the main road completed a sale for £35K higher than our agreed price at the end of last year.

If you take that price and what we are actually going to pay, then it's a drop of over 14%.

The vendor was getting a bit arrogant with us, because in his eyes he was priced to sell (and looking at everything else we thought so too)

One nutter on the same estate is currently marketing a similar property (though without garage) at £85K higher than we are paying. If it all goes through OK then someone is in for a shock if they read the LR figures!

Well done Mitch , reads well , looks like you've got a cushion built in for the expected falls , good luck with the move .

CdS =cul de sac

[sun n sea]

In a rising market any estate agent is going to push for the highest sale price in order to maximise their fee which is percentage based. Now things are sliding in the other direction estate agents will be pushing for lower prices just so they can make a sale as this will give them some sort of cash flow and enable the business to survive.

Now lenders are scared it will be them who dictate the prices- it doesn't matter what an Estate Agent values a place at if no lender is willing to provide the funds.

One thing is for sure the boom for the EA industry has gone BANG in a big style. I remember the late 80's when all the big financial companies bought out EA chains in the boom only to sell them a few years later for big losses.

[HonestEA -]

I don't know how Estate Agents work. But is it possible that EAs are trying to pursuade their clients to lower prices when, if the seller held his nerve, he would get his higher price (albeit in a few months time)? Does an EA think "well, this house could sell for £190k in March, or £200k in May, but I might be redundant in May, so better to aim for a quick sale to help my company's cashflow, and to keep me in a job." Is that how it could work? We're about to put our house on the market and have had very differing valuations, so are not sure what to do.

We're planning on renting for 6 to 12 months before buying again. What I don't want to do is sell our house for £190k after taking expert advice from an EA, only for in the summer him to think, "great, we've made a few sales, cashflow crisis avoided, I'm still in a job, lets get those prices back up to £200k again." - leaving me with a 10k loss when I want to get back on the ownership ladder. Is that how it could work?

It could work out like that if there is a significant market pickup, but nothing is certain in life and it would not be right to blame the EA for this outcome IMHO. Again it depends whether you are a seller of preference or one of necessity. If you are a seller of necessity then not selling in 2 months will have some consequence that can be financially quantified (ie the opportunity cost of not selling) which should be considered when you are deciding whether to accept an offer which is below your initial expectations.

Ultimately it is your perrogative as the client as to who you sell your property to and what price you decide to accept. If you genuinely feel that the valuation is too low, then keep on getting more agents around until you find one that agrees with what you want, that should not be too hard. It will not change the open market value at any given time however as the market value IS the best offer you are able to attract at the time you wish to sell. Past sales are a guide, but as to the future your crystal ball is just shiny as mine and probably just as accurate. All agents call the market as they see it at the point of valuation, pure and simple. Estate Agents are not the social conscience of the nation alas, they have a duty of care to achieve the best price for their client sellers. However, working in any local housing market as an EA gives you a previledged picture of the momentum or direction of the market at any given time and allows you to adjust your price recommendations accordingly. In my town as previously mentioned, I am giving valuations that reflect a downward drift of around 1% per month because that is what I am seeing in the prices of the sales that are being agreed. A good EA will have done his homework and should be able to provide you with all the recent sales of similar properties from all agents (not just his own), bring along the printout from the Land Registry to show you what the true historical figures achieved were and also show you what similar houses are already on the market that you would be competing against and how long they have been for sale. If the agent brings all this evidence to the table, the correct pricing point for your home should be self evident.