A Day Of Reflection At The Ea Office Indeed

[HonestEA -]

Repossessions are really starting to come through in significant numbers in my local marketplace....

Yesterday I spent the morning taking 2 more repossessions to add to my growing pile. On the 2nd appointment, I met up with a contractor who works for one of the big 5 asset management companies in the UK. It was a surreal moment as he remembered me from the last recession, as we used to be appointed on a lot of the same jobs back in the early 90's.

The big five asset managers basically handle the vast majority of all UK reposessions, each Lender has a contract with one of them to handle all their reposession work and to act as a buffer between them and the angry repossessed people. Each asset manager in turn has affiliations with certain corporate EA chains and issues instructions to market to each local EA office. Anyway, this 2nd appointment was significant because the asset manager for this appointment was not one of our usual ones so I had not met with this guy until then, so I started to ask why we have got the instruction when they usually use one of our rivals.

It turns out the the rival agent has exceeded their internal limit for the number of repos that can be held by one EA in one town, and we are basically being appointed for that reason even though we are not the prefered agent for this particular asset manager. Talking frankly about business and the market, he let it slip to me that at the start of the year he was in charge of a team of 6 that covered London and the home counties and they were busy but coping. Today he now leads a team of 24, and splits his time training the new recruits whilst still doing a significant number himself and they are absolutely flat out with everyone in his team doing at least 3-4 appointments a day with overtime on tap with the diary booked solid for 4 weeks in advance! These numbers if true are quite significant and will start to adversely affect the market quite soon IMHO. I mean that equates to approx 100 per day in London and the SE alone, and remember there are 4 other asset managers who may potentially be carrying a similar workload. These sorts of numbers are easily comparable with those happening at the height of the last recession, not at the so called early stages. When I asked him if there was any trend to the type of property he was seeing, the answer surprised me. He basically said that was everything from a 1 bed converted craphole in the worst parts of London to a 6 bed penthouse apartment overlooking a famous racecourse that the local EAs reckon was worth around £3M! How much trouble must people be in if they can afford to walk away from something like that?

The afternoon was spent attending another repossession this time allowing access to the defaulting borrowers in order to retrieve their personal possessions before the trigger happy asset manager authorizes a total house clearance the moment the 14 day notice expires. This is the grottiest part of my job by far, basically standing there like a prize prat in their former home while some poor couple try desperately to cram their lifetime possessions into a hastily hired white van. I always try my best at empathy and they usually tell me their story. This chap unfortunately lost his job at the end of Oct 07 and was repossessed by a certain recently nationalised bank at the end of February 08 with a mere 6K in arrears but with over 40K in equity left in the property even at forced sale prices. The poor chap said the Banks attitude changed from understanding and accomodative at the beginning to hard nosed agressive coming into the New Year.

Edited March 11, 2008 by HonestEA

[mikthe20]

That's a very interesting anecdote - many thanks, and please keep 'em coming honest EA! Must admit much as I want houses to become affordabkle again, the actual pace of the collapse is becoming a little scary. Still, best to be informed and this sort of stuff is invaluable.

[Mikhail Liebenstein]

The afternoon was spent attending another repossession this time allowing access to the defaulting borrowers in order to retrieve their personal possessions before the trigger happy asset manager authorizes a total house clearance the moment the 14 day notice expires. This is the grottiest part of my job by far, basically standing there like a prize prat in their former home while some poor couple try desperately to cram their lifetime possessions into a hastily hired white van. I always try my best at empathy and they usually tell me their story. This chap unfortunately lost his job at the end of Oct 07 and was repossessed by a certain recently nationalised bank at the end of February 08 with a mere 6K in arrears but with over 40K in equity left in the property even at forced sale prices. The poor chap said the Banks attitude changed from understanding and accomodative at the beginning to hard nosed agressive coming into the New Year.

Blimey, sounds like the recently nationalised bank is acting extemely rapidly. I don't remember the last housing crash that well (slightly too young), but I do recall people often having 6-18 months of arrears. Now I don't know if this guy was in trouble before October 07, but if that is when it really started that is a turnaround in 4 months. Perhaps 6-18 months is how long it takes once the courts fill up, it will be interesting to watch the possession hearings website.

Someone did post the URL, but I have lost it.

[Guest KingCharles1st]

If the banks are being agressive- maybe they know that if they dont get these things on the market QUICKLY- they will be worth less than sod all in 6 months time- jeeez- this is a seminal post for me.

[gasket37]

Someone did post the URL, but I have lost it.

this one?

http://*******.com/y3mpo5

[yellerkat]

this one?

http://*******.com/y3mpo5

The previous link gave a sort of "back-door" way into the site - without registering - which now appears to have been firmly slammed shut. :angry: BAH!

[TheLastSamurai]

Honest EA, your anecdotals yet again make enlightening reading.

And this one gives a nice insight into the human misery flowing from liquidity problems.

May I ask a question out of interest: when you are taking a repossessed property, do you automatically stick it in an auction, or if it is a half decent property do you stick it in your window but at a market beating price?

I would have thought that repossessions could be a nice earner for a typical EA in the current climate, as you won't have any of the problems of vendors refusing to recognise the need to drop prices and so such properties give potential for quick turnovers and more efficient generation of fees.

Or is that benefit reflected in a lower commission dictated by the asset manager?

[gasket37]

The previous link gave a sort of "back-door" way into the site - without registering - which now appears to have been firmly slammed shut. :angry: BAH!

yes - i've just realised that after spending the last 10 minutes clicking around!

it'd assumed it was my woeful I.T. "skillz"

[HonestEA -]

May I ask a question out of interest: when you are taking a repossessed property, do you automatically stick it in an auction, or if it is a half decent property do you stick it in your window but at a market beating price?

I would have thought that repossessions could be a nice earner for a typical EA in the current climate, as you won't have any of the problems of vendors refusing to recognise the need to drop prices and so such properties give potential for quick turnovers and more efficient generation of fees.

Or is that benefit reflected in a lower commission dictated by the asset manager?

After repossession I get to fill in a ten to 20 page dossier depending on the lender which generally asks my opinion of open market value and a "forced sale" price. If I think that the property is unmortgageable then I will recommend an auction sale, otherwise I will recommend a sale on the open market. This report must also include details of comparable properties that have recently sold and those that are currently on the market. The asset manager also instructs a chartered surveyor to fill in a similar form independently of the agent, then after comparing the 2 reports will instruct the agent to market at the highest of the 2 valuations for a minimum of 28 days before considering a price reduction. This is to protect the lender from being counter sued by the ex- borrower for allegedly underselling the property. We have a duty of care to prove that we have actively marketed the property to achieve the best price and then we must sign a declaration to the effect that any offer recommended for acceptance is the best price achievable in the current market. Then the amount of that offer and the property address is advertised in the local paper inviting anyone who basically wants to put in a gazumping offer to do so within 7 days of the advert being published. All these procedures were established in the last recession when it came to light that some unscrupulous agents were sitting on properties , artificially depressing the prices claiming they couldn't sell them while at the same time taking backhanders to sell the best ones to their associates.

Yes you are absolutely correct on your second point. I have some collegues who run offices in SE london where 80% of their current register are made up of repossessions. The income from selling repossessions will keep the large corporates afloat in the recession if they can keep a lid on their costs.

Fees from asset managers are generally negotiated at the national level and can vary depending upon the negotiating skill of the senior management, the average being around 1.75% although some are lower than that.

[thecrashingisles]

Fascinating anecdotal. Thanks HonestEA.

[waitingandsaving]

HonestEA - many thanks for taking the time to post. It's great to hear how things are going now, rather than months down the line when the figures come out.

It's also fascinating to learn some of the procedures in place - had wondered why every now and then there were adverts listing a house address and a price, in a slightly different format to the other ads on the page - thanks for clearing that one up!

Presumably if one EA has a limit on the number of repos at any one time, all EAs have this - if a SE London office has 80% repos at the moment, what is the usual limit?

[mitchbux]

Repossessions are really starting to come through in significant numbers in my local marketplace....

Yesterday I spent the morning taking 2 more repossessions to add to my growing pile. On the 2nd appointment, I met up with a contractor who works for one of the big 5 asset management companies in the UK. It was a surreal moment as he remembered me from the last recession, as we used to be appointed on a lot of the same jobs back in the early 90's.

The big five asset managers basically handle the vast majority of all UK reposessions, each Lender has a contract with one of them to handle all their reposession work and to act as a buffer between them and the angry repossessed people. Each asset manager in turn has affiliations with certain corporate EA chains and issues instructions to market to each local EA office. Anyway, this 2nd appointment was significant because the asset manager for this appointment was not one of our usual ones so I had not met with this guy until then, so I started to ask why we have got the instruction when they usually use one of our rivals.

It turns out the the rival agent has exceeded their internal limit for the number of repos that can be held by one EA in one town, and we are basically being appointed for that reason even though we are not the prefered agent for this particular asset manager. Talking frankly about business and the market, he let it slip to me that at the start of the year he was in charge of a team of 6 that covered London and the home counties and they were busy but coping. Today he now leads a team of 24, and splits his time training the new recruits whilst still doing a significant number himself and they are absolutely flat out with everyone in his team doing at least 3-4 appointments a day with overtime on tap with the diary booked solid for 4 weeks in advance! These numbers if true are quite significant and will start to adversely affect the market quite soon IMHO. I mean that equates to approx 100 per day in London and the SE alone, and remember there are 4 other asset managers who may potentially be carrying a similar workload. These sorts of numbers are easily comparable with those happening at the height of the last recession, not at the so called early stages. When I asked him if there was any trend to the type of property he was seeing, the answer surprised me. He basically said that was everything from a 1 bed converted craphole in the worst parts of London to a 6 bed penthouse apartment overlooking a famous racecourse that the local EAs reckon was worth around £3M! How much trouble must people be in if they can afford to walk away from something like that?

The afternoon was spent attending another repossession this time allowing access to the defaulting borrowers in order to retrieve their personal possessions before the trigger happy asset manager authorizes a total house clearance the moment the 14 day notice expires. This is the grottiest part of my job by far, basically standing there like a prize prat in their former home while some poor couple try desperately to cram their lifetime possessions into a hastily hired white van. I always try my best at empathy and they usually tell me their story. This chap unfortunately lost his job at the end of Oct 07 and was repossessed by a certain recently nationalised bank at the end of February 08 with a mere 6K in arrears but with over 40K in equity left in the property even at forced sale prices. The poor chap said the Banks attitude changed from understanding and accomodative at the beginning to hard nosed agressive coming into the New Year.

Thanks for posting HonestEA. It's fascinating hearing about the what is really going on out there, and it's nice to know that EA's such as yourself do exist!

A question for you. Are you seeing many clients coming to you, who are putting there own home on for a quick sale before the banks foreclose? I'm interested to know whether there are many people out there who are facing up to their financial situation rather than sticking their heads in the sand until it's too late.

If anyone does find another back door way into the possession claims site can they post a link. I am so annoyed that they have made it registration only. Anyone can look at what I paid for my home, but I can't find out the names of those people who can't afford theirs anymore. Freedom of information my a**e.

[The Conveyancer]

would seem that things are moving apace.i was speaking to my conveyancing contact and he was saying that at the minute,his team is working at half 2007 levels in terms of completions per month..Obviuosly there could eb wider business issues in play but what is your view on transaction levels?Are they as bad as that?

thanks for the post.

edit to say

conveyancer,I see you're reading any view on tranction levels?

edit to say you've just gone,doh!

Back again.

I love reading posts from the Honest Estateagent. I just wish he was in my area instead of the t****** I have to deal with on a daily basis.

It is also good to see that the repos are starting. Good for my business and also good for me trying to buy by own house. I like repos, I have a deposit in the bank and can move fast, if you find a good one then it won't need too much work but the price is normally lower than average.

I don't need magnolia walls and a snotty estate agent telling what "has potential". I can work that out for myself.

Business should be speeding up in a few months then. Once no one buys them at the prices they are on at and the lender's drop the asking prices nice and quickly.

[Telometer]

Then the amount of that offer and the property address is advertised in the local paper inviting anyone who basically wants to put in a gazumping offer to do so within 7 days of the advert being published.

All very well in the early 1990s. IMO that should have to be on the internet. Who reads local papers these days?

[Tyler]

If I think that If I think that the property is unmortgageable then I will recommend an auction sale

Presumably this should never happen should it? I mean, if the mortgage company is the one doing the repossesion then presumably they were mortgagable two or three years ago, what could have changed in that time?

[Telometer]

Presumably this should never happen should it? I mean, if the mortgage company is the one doing the repossesion then presumably they were mortgagable two or three years ago, what could have changed in that time?

http://www.findaproperty.com/displaystory....p;storyid=20806

for instance!

[The Conveyancer]

Presumably this should never happen should it? I mean, if the mortgage company is the one doing the repossesion then presumably they were mortgagable two or three years ago, what could have changed in that time?

depends if something material has changed in that time. Depends if the solicitor acting on the purchase picked up the problem on the purchase, Depends if the lender's criteria has changed in relation to what they would mortgage, depends if it is leasehold and the term has now gone below an acceptable level, depends if it a leasehold property and the landlord has gone missing in that time, etc.

A lot can change in a fairly short amount of time.

[HonestEA -]

Presumably this should never happen should it? I mean, if the mortgage company is the one doing the repossesion then presumably they were mortgagable two or three years ago, what could have changed in that time?

Unauthorized removal of chimney etc , subsidence, fire damage, pest infestation, malicious damage by ex borrower, over ambitious amateur developer who strips a property to a shell then runs out of money....

[HonestEA -]

All very well in the early 1990s. IMO that should have to be on the internet. Who reads local papers these days?

Good point. I am sure the 7 day notices will have to be displayed on sites like Rightmove after a few test cases where the ex borrower argues in court successfully that advertising a 7 day notice in the local paper does not disharge their statutory obligation to achieve the best price when they could have reached millions more people by advertising on the internet. It is not standard practice at the moment however.

[HonestEA -]

Presumably if one EA has a limit on the number of repos at any one time, all EAs have this - if a SE London office has 80% repos at the moment, what is the usual limit?

Sorry I should qualify that . The quotas are per agent per asset manager. The limits are not publically disclosed and are probably under review but if you have a corporate EA surrounded by a load of small independents, then by default the corporate agent will get the repossession instructions from all five asset managers so they can obtain far higher numbers than they usually would. Asset managers are usually very wary of giving too many instructions to one agent in the same town because the agent can then effectively control the local market which is not healthy.

[HonestEA -]

A question for you. Are you seeing many clients coming to you, who are putting there own home on for a quick sale before the banks foreclose? I'm interested to know whether there are many people out there who are facing up to their financial situation rather than sticking their heads in the sand until it's too late.

No. They are in denial and are being repossessed in my area in increasing numbers, generally far more quickly than they had anticipated. This is reflected in the increasing number of repossessions that we see where no attempt has been made to prepare or move out prior to the date of eviction.

[HonestEA -]

transaction levels Honest EA?sorry to pester but do you have a view?

50% of 2007 levels is what I am seeing at the moment as well.

[The Conveyancer]

50% of 2007 levels is what I am seeing at the moment as well.

And just to back that up, I really believe that if you could find an honest EA in my area they would say the same thing

[Disillusioned]

After repossession I get to fill in a ten to 20 page dossier depending on the lender which generally asks my opinion of open market value and a "forced sale" price. If I think that the property is unmortgageable then I will recommend an auction sale, otherwise I will recommend a sale on the open market. This report must also include details of comparable properties that have recently sold and those that are currently on the market. The asset manager also instructs a chartered surveyor to fill in a similar form independently of the agent, then after comparing the 2 reports will instruct the agent to market at the highest of the 2 valuations for a minimum of 28 days before considering a price reduction. This is to protect the lender from being counter sued by the ex- borrower for allegedly underselling the property. We have a duty of care to prove that we have actively marketed the property to achieve the best price and then we must sign a declaration to the effect that any offer recommended for acceptance is the best price achievable in the current market. Then the amount of that offer and the property address is advertised in the local paper inviting anyone who basically wants to put in a gazumping offer to do so within 7 days of the advert being published. All these procedures were established in the last recession when it came to light that some unscrupulous agents were sitting on properties , artificially depressing the prices claiming they couldn't sell them while at the same time taking backhanders to sell the best ones to their associates.

Yes you are absolutely correct on your second point. I have some collegues who run offices in SE london where 80% of their current register are made up of repossessions. The income from selling repossessions will keep the large corporates afloat in the recession if they can keep a lid on their costs.

Fees from asset managers are generally negotiated at the national level and can vary depending upon the negotiating skill of the senior management, the average being around 1.75% although some are lower than that.

Great posts, HonestEA.

By what percentage do you tend to mark the forced sale price down from the open market price, when you are filling in the dossier for the lender?

[HonestEA -]

Great posts, HonestEA.

By what percentage do you tend to mark the forced sale price down from the open market price, when you are filling in the dossier for the lender?

10%