Question To Our Ea Readers

[Frank Mason]

Hi HonestEA, Mildura et al,

So we are now being deluged with -ve, bearish news. The economy is falling off a cliff, mortgages are rarer than hen's teeth, Gordon Brown will steer us through his delusional "no more boom & bust", builders & banks going bust. You've seen the news.

How long before this negativity actually makes a difference in house asking prices? Most vendors seem to be in denial, what's your take on it all? How do you encourage them to see sense? Surely lot's of overpriced houses on your books is doing your sales figures no good at all?

I've seen price drops in the areas I'm looking at (Reading, Basingstoke, Winchester, Swindon, Oxford) but they are the exception.

Obviously EAs have made a lot of money during the boom and many can sit it out, but how do we 'educate' the populace that it's a new game now?

Would be good to hear your views

Frank

Edited July 9, 2008 by Frank Mason

[thecrashingisles]

In my view there is a real fear about advertising a property at a price that is obviously cheaper than properties currently on the market. The reason: it still wouldn't sell which would cause panic about valuations in general. The market has collapsed faster than most people predicted and sellers and EAs still haven't caught up.

[bazzzzzzz]

Hi HonestEA, Mildura et al,

Most vendors seem to be in denial, what's your take on it all? How do you encourage them to see sense?

Frank

Correct if any of the new instructions in Shropshire are anything to go by. 3 bed semis coming on to the market for 300K-350K. Utter madness.

This continues only because it's tolerated by the EAs because they want the business. See Mildura's previous posts.

Why does the EA spend money trying to flog an overpriced house, knowing it won't sell? May explain why so many EAs are going under. If I was an EA I would refuse instructions from a potential vendor if they refuse to accept my lower quote.

[thecrashingisles]

Based on a conversation I've just had it seems that estate agents are still fighting the last war and are thinking too much about market share. They don't seem to realise that the name of the name isn't market share but survival.

[The Masked Tulip]

Perhaps it is time we all started putting offers in on houses, with no intention of buying, at 40% below EA valuation.

Go visit a property, let the EA know that you know it is a buyers' market and that you are currently considering numerous properties in the area - so much choice - and then put in the ridiculously low offer... even though 40% off now will no doubt be nothing compared to where prices are going IMPO.

[thecrashingisles]

Perhaps it is time we all started putting offers in on houses, with no intention of buying, at 40% below EA valuation.

Go visit a property, let the EA know that you know it is a buyers' market and that you are currently considering numerous properties in the area - so much choice - and then put in the ridiculously low offer... even though 40% off now will no doubt be nothing compared to where prices are going IMPO.

I don't think that would work but I do think we could point out where the asking price of a property is clearly above the current market. For example if you see a flat on the market for £240,000 that doesn't sell for a couple of months and then an identical flat comes on for £250,000 make sure you tell the estate agent that they're wasting everyone's time.

In a falling market, the lowest current asking price on the market ought to be a *ceiling* price for any new property coming onto the market.

[Wait & See]

Perhaps it is time we all started putting offers in on houses, with no intention of buying, at 40% below EA valuation.

Go visit a property, let the EA know that you know it is a buyers' market and that you are currently considering numerous properties in the area - so much choice - and then put in the ridiculously low offer... even though 40% off now will no doubt be nothing compared to where prices are going IMPO.

Sellers are still under some kind of illusion that their semi is worth 300k (that no-one can borrow). These properties will be on the market for 20 years unless sellers get a grip.

No Mortgages = No Market

[huw]

In my view there is a real fear about advertising a property at a price that is obviously cheaper than properties currently on the market. The reason: it still wouldn't sell which would cause panic about valuations in general. The market has collapsed faster than most people predicted and sellers and EAs still haven't caught up.

Or, you get your hand bitten off and then find that no-one else is ready to budge, or that the rest of the market doesn't fall as far as you thought.

Or, you'd have to price it below your outstanding mortgage and can't afford to refund the difference to the bank.

The above factors mean that the shake-out will be driven by forced/distressed sellers IMO. For everyone else, it makes sense to sit tight.

[thecrashingisles]

For everyone else, it makes sense to sit tight.

Not true. For estate agents it makes sense to talk prices down to get the market moving. If this means that some people end up underwater then so much the better for them because they will have more forced sellers on their books.

[Nomadd]

Sellers are still under some kind of illusion that their semi is worth 300k (that no-one can borrow). These properties will be on the market for 20 years unless sellers get a grip.

No Mortgages = No Market

That's a good point, as many of the EA posts have shown. It's sellers who have got themselves in a world of debt who are unable to grasp the fact that they lost money - or just won't make as much as they would have done last year. I don't think this is ever going to change. Only EAs losing their jobs and watching their businesses going broke will finally push the market to where it needs to go - by those EAs who want to survive.

Nomadd

[huw]

Not true. For estate agents it makes sense to talk prices down to get the market moving. If this means that some people end up underwater then so much the better for them because they will have more forced sellers on their books.

I meant it makes sense for most sellers to sit tight, I agree that EAs need transactions and would benefit from falls (though I'm not sure that high street EAs will see much of the coming bank repo business).

[OurDayWillCome]

The above factors mean that the shake-out will be driven by forced/distressed sellers IMO. For everyone else, it makes sense to sit tight.

They will have to take the house off the market then. A couple of 'stubborn' sellers I know have been told by the EA to lower the price by 10% or they will take them off their books.

[Thucydides]

They will have to take the house off the market then. A couple of 'stubborn' sellers I know have been told by the EA to lower the price by 10% or they will take them off their books.

I know of a similar case where the EA told the vendor if it didn't sell at the price it was within a specific time-frame, and the vendor refused to lower, then he would take ot off his books, so some of them know what's what.

[huw]

They will have to take the house off the market then. A couple of 'stubborn' sellers I know have been told by the EA to lower the price by 10% or they will take them off their books.

Yep. The fact that HIPs need to be renewed after a set period (I think?) will have this effect too.

[thecrashingisles]

I meant it makes sense for most sellers to sit tight, I agree that EAs need transactions and would benefit from falls (though I'm not sure that high street EAs will see much of the coming bank repo business).

It only makes sense if you believe that the market will turnaround quickly. Anyone with any sense knows that this is nonsense so if you're a genuine seller you should drop your asking price.

[silver surfer]

Perhaps it is time we all started putting offers in on houses, with no intention of buying, at 40% below EA valuation.

Go visit a property, let the EA know that you know it is a buyers' market and that you are currently considering numerous properties in the area - so much choice - and then put in the ridiculously low offer... even though 40% off now will no doubt be nothing compared to where prices are going IMPO.

I've recently made two cash offers (with every intention of buying!) at 30% below asking price. On the first the EA said he'd advise the vendor to rent rather than accept that price, and then cheerfully reported back that the vendor was "mildly insulted" by my offer. The second EA simply reported back that the vendor was "mildly insulted" by my offer!

That's okay. I'm thick-skinned, cash rich, and patient. I think this'll all work out just fine.

[It is different this time]

Sellers are still under some kind of illusion that their semi is worth 300k (that no-one can borrow). These properties will be on the market for 20 years unless sellers get a grip.

Agree with this part

No Mortgages = No Market

but disagree with this, as there are still mortgages out there but the problem sellers have is that these mortgages can't support their delusional expectations anymore. That's the reality EAs & sellers have to accept or sit on their unsold stock for years.

[Thucydides]

I've recently made two cash offers (with every intention of buying!) at 30% below asking price. On the first the EA said he'd advise the vendor to rent rather than accept that price, and then cheerfully reported back that the vendor was "mildly insulted" by my offer. The second EA simply reported back that the vendor was "mildly insulted" by my offer!

That's okay. I'm thick-skinned, cash rich, and patient. I think this'll all work out just fine.

July 2008 = mildly insulted by offer

July 2009 - kiss your **** for same offer.

[FortuneFTB]

I've recently made two cash offers (with every intention of buying!) at 30% below asking price. On the first the EA said he'd advise the vendor to rent rather than accept that price, and then cheerfully reported back that the vendor was "mildly insulted" by my offer. The second EA simply reported back that the vendor was "mildly insulted" by my offer!

That's okay. I'm thick-skinned, cash rich, and patient. I think this'll all work out just fine.

Just Mildy ? Make the same offer with a condition that they chuck in their car and see what feedback that gets lol

[pablopatito]

How much does it cost an agent to keep a property on their books. Their rightmove fees are fixed, they don't advertise the overpriced house in the newspaper, they take down the details from their shop window, and clearly they won't have ANY viewings. So it costs them nothing to keep them on, right?

I find it frustrating because I want to buy a house, sellers (presumably) want to sell a house, yet we can't agree a realistic price. So I sit and rent for 2 years and wait for the market to force these sellers into a realistic price. Or are they hoping for a 2009 Spring Bounce?

[It is different this time]

July 2008 = mildly insulted by offer

July 2009 - kiss your **** for same offer.

July 2010 - Wife included (a bit like buy one get one free)

[Thucydides]

How much does it cost an agent to keep a property on their books.

An agent told me it costs bugger all to keep a property on the books. A couple of grand for marketing in local newspapers, rightmove. Nothing.

[Guest sillybear2]

mortgages are rarer than hen's teeth

No they're not, silly lending terms have gone, but mortgages with decent deposits at verified x3.5 incomes are easy to obtain, that's why nobody can raise enough to buy at current prices!

[YoungFTB]

I know of a similar case where the EA told the vendor if it didn't sell at the price it was within a specific time-frame, and the vendor refused to lower, then he would take ot off his books, so some of them know what's what.

I see more and more EAs doing this, it's the smart thing to do

[huw]

It only makes sense if you believe that the market will turnaround quickly. Anyone with any sense knows that this is nonsense so if you're a genuine seller you should drop your asking price.

If you're looking to get out of the market then I agree, you might as well accept that you've missed the boat and take what you can get before the real crash begins.

But most sellers (I would have thought) will be looking to re-buy. Trying to do that in today's market is risky, because liquidity is needed to expose price information. Put simply, selling at a reasonable price doesn't mean you'll be able to buy at a reasonable price (in fact it's most unlikely right now). Why take that risk if you can just wait for the market to unfreeze, and for pricing to become more transparent again?

The other thing a seller could do is drop their price enough to find a buyer, but delay completion until they find a similarly acceptable deal of their own. That could take a long, long time though...