Estate Agency Cartel?

[Mikhail Liebenstein]

Here's a thought.

Whilst I recognise it would clearly be illegal for estate agents to engage in price fixing, e.g. let's all agree we'll only offer clients 4% fees and no lower.

Would it be illegal if a group of agents got together in area and all agreed to push for lower valuations?

I don't really see this as price fixing, but rather sharing information on the state of the market. At the end of the day an estate agent's product is not a house, its actually helping to facilitate the sale of a house by their client.

Perhaps I should organise an estate agency state of the industry conference? We could invite speakers like FP and Eric along, and if we charge the agents accordingly(£500 a seat) we could stump up some nice speakers fees.

Edited July 27, 2008 by mikelivingstone

[Patfig]

Here's a thought.

Whilst I recognise it would clearly be illegal for estate agents to engage in price fixing, e.g. let's all agree we'll only offer clients 4% fees and no lower.

Would it be illegal if a group of agents got together in area and all agreed to push for lower valuations?

I don't really see this as price fixing, but rather sharing information on the state of the market. At the end of the day an estate agent's product is not a house, its actually helping to facilitate the sale of a house by their client.

Perhaps I should organise an estate agency state of the industry conference? We could invite speakers like FP and Eric along, and if we charge the agents accordingly(£500 a seat) we could stump up some nice speakers fees.

It could be illegal indeed, but proving it would be tricky and why bother as we all want lower prices anyway.

[Elizabeth]

There is a great deal of difference between illegality and a common understanding. If you shared a common understanding with most estate agents in the area that prices needed to go down to get the market moving then just as with the boom mentality the people who stood outside the general consensus would look unbelievable to punters. People make money by going with the herd, either amongst it or leading it.

[CrashConnoisseur]

Perhaps I should organise an estate agency state of the industry conference? We could invite speakers like FP and Eric along, and if we charge the agents accordingly (£500 a seat) we could stump up some nice speakers fees.

Yes, set up a company offering seminars on how to persuade clients to reduce their asking prices. You could call it In-slide Tact.

[Selling up]

I don't see that an agreement to lower valuations can be seen as price fixing.

If it could be proved to cause inappropriately low valuations then it could be fraud ("Granny told to sell her home for a fiver").

But in the current market how could any lawyer claim low valuations were inappropriate?

[Elizabeth]

I don't see that an agreement to lower valuations can be seen as price fixing.

If it could be proved to cause inappropriately low valuations then it could be fraud ("Granny told to sell her home for a fiver").

But in the current market how could any lawyer claim low valuations were inappropriate?

Why do you need an agreement at all? Hold the conference, invite the punters, get them to understand the reality, you really don't need anyone to sign up to anything verbally or otherwise. People can then operate entirely independently singing from the "new financial reality hymn sheet" you have given them. And in this environment sellers are going to be very suspicious of any estate agent that is widely off the mark in the positive direction (why are 3 REs say my house is only worth 85K and you are saying 115K?). We have moved into the time of pessimism.

[waitingandsaving]

Estate agents round here are already openly pushing for lower prices - the NDAEA (Norwich and District Area Estate Agents - a group of local EAs that have regular meetings) have regular columns in the local property rag - each week a different EA in the group has their say.

This week was different however, usually there is one, or maybe two EA bylines. This week there were three.

David Richardson of Arnolds said

Good value homes will always sell

snip.....In our experience at Arnolds, pretty cottages, houses in premier locations and those which are very competitively priced will sell. There has been a substantial downturn in sales and the reduction in property prices has scared off a number of potential buyers. However, consider that even if 50pc fewer transactions are taking place, there is still a considerable number of sales and purchases happening. To ensure that your property is one which achieves success, it is essential to offer quality or value - or preferably both!......If your property is not dead gorgeous you will need to appeal to the market by ensuring that the price is properly pitched... It is vital that you listen to good professional advice and follow it by pitching your price at a level which will appeal to the market.

In simple terms, a house priced £225,000 last year is now worth less than £200,000 and some prices have fallen substantially more.

We are aware of transactions of property priced a year ago at £249,500 selling at £159,950 - a fall of 36pc! Whereas it is not necessary to be that drastic (and it is questionable whether the original asking price was appropriate) if you really want to sell your home you will need to compete with the increasing number of properties. The rules of supply and demand apply just as much as those reflecting falling property values, so make sure your price is right....

(bold my emphasis)

Clive Hedges from Keys says "the market in Norfolk is alive and well- you've just got to believe it!"

Crash! Slump! Plummet! Words we read in nearly every daily newspaper we pick up at the moment. But that's not really the true picture for the property market, particularly in Norfolk... ...Choose an agent who has worked through a difficult market (this means they will need to have at least 12 years' experience behind them) and secondly, take heed of their advice.

Properties are still selling, admittedly not in the numbers they were, but at re-aligned prices.

Your property may not be worth what it was a year ago and, although this may be a bitter pill to swallow, neither is the one you want to buy....

The last guy, from Howards, encouraged people to get their budgeting and mortgages sorted out before looking to buy, and pointed out that if you bought your current home 5 years ago, the major increases in prices seen over that time should protect them from negative equity, and that only 2.5% of the total mortgages last year were 100% mortgages, so things aren't so bad...

While I wouldn't necessarily call it a "cartel" - I can't believe they sit around in their meeting not talking about pricing properties, and going on the last few weeks of similar bylines from various NDAEA agents, I would strongly suspect that they have made a group decision to start pricing appropriately.

I remember HonestEA and Mildura on the Anecdotals thread talking about how if they price appropriately they don't get the house to sell, as vendors still often go with the EA that gives the highest valuation. Unless EAs have some form of agreement, then nothing will ever get sold, and vendors will be reluctant to reduce prices if they've been told from the off that it'll sell at such a high price. I guess on the other hand what they say in the open in a newspaper, may not necessarily reflect what they say to a vendor on a valuation....

[kilroy]

Here's a thought.

Whilst I recognise it would clearly be illegal for estate agents to engage in price fixing, e.g. let's all agree we'll only offer clients 4% fees and no lower.

Would it be illegal if a group of agents got together in area and all agreed to push for lower valuations?

I don't really see this as price fixing, but rather sharing information on the state of the market. At the end of the day an estate agent's product is not a house, its actually helping to facilitate the sale of a house by their client.

Perhaps I should organise an estate agency state of the industry conference? We could invite speakers like FP and Eric along, and if we charge the agents accordingly(£500 a seat) we could stump up some nice speakers fees.

they don't need to, surveyors are doing it for them

[Alfie Moon]

Perhaps a better way to reach the audience that we want to reach (Estate Agents etc. + general public including house sellers and buyers) would be to put together a fairly detailed outine for a TV programme to submit to the BBC, ITV, C4, C5. The basic outline might be to explain why the property boom occurred, why prices are falling and will continue to do so, and why a major correction in prices is necessary for the economy, housing market and is in fact good for more people than it is bad. It would also be useful for such a programme to highlight the kinds of myths that the VI's will try to use to get the public to believe that house prices are about to start rising again, and that paying as much as possible (rather than as little as possible) is a good idea. The programme outght to also argue that the Government should not act to try and support high house prices (certainly not with tax payers money) and that the historically tried and tested solution of house prices falling is the way to go. Such a programme would need one or two front presenters (FP would be ideal with all his experience and increasing recognition by the TV companies). There would probably need to be 2 or 3 case examples to illustrate the main points being made and a number of short interviews with key players and stakeholders........ HPC ought to be able to provide some of the people needed as well as other material to inform the programme (eg key arguments to be made). Putting such a proposal together is certainly achievable. The selling it to TV companies as an idea would be the more difficult part. However, it might be possible to target slots such as ITV's 'Tonight' programme. The time is ripe for this kind programme and I suspect a very large proportion of the population are ready to see/hear it.

Such a programme might highlight that whilst many Estate Agencies will either go out of business, or will cut their staff numbers down drastically, the Agencies that will survive and do the best are the ones that are open and honest about the dropping market and actively talk the market down. Seeing it on TV might get through to the rather large % of Estate Agents (so it would seem) that need to wake up to the reaqlity of the property market no longer being in booming territory but rather is collapsing all around them. Only the wise and fittest will survive - the rest will be toast (and/or working in McDonalds).

Edited July 27, 2008 by Alfie Moon

[Bloo Loo]

Good, accurate valuations should all be very close, as well, they are valuing a property.

If prices fall, the valuations fall. no need for a cartel, just a need for accurate valuations.