Monday, October 18, 2010

Even more over-pricing in EAs desperate bid to win business

October asking prices increase by 3.1%

.. and mark-up ahead of the big fall. With transactions and sales at an all time low, EAs are marking up beyond our wildest dreams in order to "manage" the impending fall and to win business. Trouble is, in 3 months when they've not sold, they have the difficulty task of telling the vendor to drop the price. As REAL TRANSACTION figure paint a different story on price, Miles Shipside referred to this on BBC Radio 5 Live this morning as a "growing reality gap", pretty much saying that sellers would have to blink first in this silly stand-off created by greedy EAs.

Posted by doomwatch @ 09:56 AM (2152 views)
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35 thoughts on “Even more over-pricing in EAs desperate bid to win business

  • It hardly needs re-stating, but Estate Agents are clearly cerebrally challenged.

    You’ve got to wonder who would employ them when they’ve finished crippling their means of making a living, and how they’ll survive on ever diminishing welfare.

    I’ll add, in a spirit of fairness, that there are some good ones out there, but they’re being tarnished by a broom cupboard full of bad brushes.

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  • the idea is behind this they drop prices in a couple of months and the start price is still the same, but it looks like prices have dropped common scam by estate agents

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  • its a mexican stand off

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  • They can ask for all they like. Might be worth buyers getting into the habit of checking the currency the asking price is being quoted in! I would suggest if that £2m 5 bed semi is being quoted in Italian Lire.

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  • Firsttimebuyer says:

    This isn’t the case in the North-West, 5 out of the 10 houses that I’m keeping an eye on have been further reduced by around 6-8%, one has been reduced by 14% for a quick sale!!

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  • Better get in quick before they go up even more next month. Buy, buy, buy!

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  • Shipside adds: “Some estate agents are showing a much stiffer resolve than others about the prices
    they are recommending. For some agents and sellers there is the temptation to launch to the
    market at a speculative price, knowing one can always reduce it later. In these stock-rich, buyerpoor
    times such a strategy stands minimal chance of success for the vendor. However, the agent
    that wins the instruction to sell in the first place is often able to keep the seller exclusively on their
    books while recommending a series of price reductions to try and get the price to a more saleable
    level”.

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  • Shipside adds: “Buyers and sellers are staring each other out, and it’s a question of who will blink
    first. Even if they wanted to, buyers cannot blink unless lenders release more funds for mortgages.
    As that’s not going to happen, there are likely to be some blinking sellers this winter!”

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  • mark wadsworth says:

    Glorious article. Short and to the point.

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  • Looking at the bottom end of the property market, the asking prices are usually dictated by the amount of outstanding mortgage and credit owed on the property.
    If a BTL or FTB from the last few years is trying to sell with a 90%+ mortgage (and additional lending) orignally secured on the property it is unlikely that they can drop the price.

    A lot of boomers want to ‘down size’ and pay off there small mortgages + MEW, however they need to pay this off then have enough money left to pay for a cheaper house therefore can’t reduce there prices.

    It may be the case that people have been extending there credit and now need to increase there asking prices to pay off this additional credit.

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  • As mark w says, it is a refreshingly candid and informational article. I didn’t know that October was a month that caused bullishness amongst new sellers. It is good to know things like that. I’d like to know why that is? Maybe it’s because people are excited by the prospect of selling and being in a new dream house by XMAS? That doesn’t sound very convincing, so anyone got any ideas?

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  • Estate Agents are on our side. They long for a time where house prices are at a level that allows volume to pick up. It makes little difference to estate agents whether they sell a property for £200k or £300k, what matters is the flow of transaction, and at current prices there is no flow. This is why agents ( see Shipsides comments) are trying to talk the market down.

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  • Flash traditionally (or in recent years at least) buyers arrive at the market in numbers spring and autumn, and the price increases are undoubtedly a vertigal reflection of this. One had to admire sellers bloody mindedness I suppose. Why spring and autumn I have no idea although I guess winter and summer tend to be times when people take holidays.

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  • bellwether @10. I agree with the logic of your comment. However, over recent months I’ve been negotiating with senior EAs [not
    20 something dumb fu cks] and they have made it very clear to me they are acting in their “clients” best interest on price. The
    problem is, the baby boomers wanting to down size and “cash in” [especially here in the greedy Cotswolds] are still very reluctant to drop their bottom, so unfortunately Mrs Doomwatch will have to wait until the baby boomers have no choice but to start the dance of falling knives when someone turns the music volume up !!

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  • Directly from the horses mouth:


    I wanted to email to give you our take on the current market conditions
    as there is quite a bit of uncertainty out there at the moment. And also
    many conflicting reports!

    As estate agents, we are on the ‘front line’ and we are able to see
    exactly how buyers are behaving on a day to day basis. Figures provided
    by the various banks and building societies are useful, but not
    altogether accurate for the here and now. The problem is that
    completions were ‘sales agreed’ 2-3 months earlier and so the figures
    are generally out of date.

    This is why we feel better placed to advise on market conditions.

    At the moment, there does seem to be a general wariness from buyers to
    commit to a property. Buyers are concerned about the market and they are
    therefore worried about paying too much for a property.

    The important figure that we look at as an estate agency, is our
    conversion rate of sales compared to how many we have put on the market
    the previous month. I’ll go through some brieft statistics with you:

    In 2009 we agreed sales on 58% of properties that we put on the market.
    This is an excellent figure for any estate agent, let alone an agent
    that covers the whole country. This, for us, signifies a very strong
    market – a sellers market and therefore the chance to price your
    property a little more ambitously.

    Up until June 2010, we were agreeing sales on just over 50% of the
    properties we put on the market – a level that we would consider as
    steady. Still a sellers market – just!

    For the last 3 months, however, we have seen the ratio of sales come
    down to just under 30% – this is only a touch higher than the depths of
    2008, when agents were selling around 25% of properties. (Some areas
    were down to less than 10%!)

    There are a number of factors that have led to this reduction in sales
    over the last 3 months. First & foremost was when HIPs were scrapped.
    This has led to many, many more people lsting their property for sale,
    which lead to more choice for buyers – this is simple supply and demand
    – too much supply and not enough demand, meaning prices end up coming
    down – the same with any product in the world.

    Secondly, we have a new government that are talking of pretty savage
    cuts, which is worrying buyers – meaning even less demand.

    Thirdly, you have low interest rates. Although this should be a good
    thing, buyers are worried about these going up sharply in the next
    couple of years, meaning more buyers deciding to rent until this
    stabilises.

    Fourthly, the banks are still not lending money to people with smaller
    deposits – very frustrating!

    However, here is the good news – there are still buyers out there. It is
    not like 2008 in that respect at all (there was pretty much no one in
    2008!). To attract those buyers though, you have to price your property
    competitively. This means offering the very best value for money
    compared to everything else on the market within your area. And this
    isn”t just other houses in your road. Put yourself in your buyers
    position. Buyers at the moment are looking at 20 or so properties to see
    what they can get for their money (they are able to at the moment,
    because there is so much choice!). They will only go for the property
    that offers them the best value for money. And these are the houses that
    are selling at the moment.

    What we would suggest, especially if you have had little interest in the
    last 4 or more weeks, is to consider reducing the price of your property
    to attract more buyers in. We would urge you to have a serious think
    about this as we believe that the market is only going to continue to
    fall, what with all the factors above. It is all a gamble and we don”t
    know for a fact that the market is going to continue to fall. However,
    we were telling sellers who would listen that the market was about to
    crash as early as August/September 2007 (this prediction was based on
    exactly the same stats as this email – percentage of house sales
    plummeted in August and September 2007). And we also predicted what we
    are seeing at the moment back in April of this year (I have a newspaper
    clipping of my prediction from the Birmingham Post if you would like to
    see it!), so I like to think that we have a pretty good track record
    with market predictions.

    If you would like to alter your price, then email us back, or,
    alternatively, if you would like to dicuss this further, then please
    feel free to give us a call on 0845 678 0908.

    To give you a more independant view of the market, which we feel is a
    sensible and measured view on the market, you can download the
    ‘Rightmove Index Report’ for September by clicking here
    <http://www.rightmove.co.uk/news/files/2010/09/september-2010.pdf>

    Thank you for your time and we will try to keep you updated in the
    coming months

    Kind regards,
    Hatched.co.uk Ltd
    Phone: +44 (0)845 678 0908
    Fax: +44 (0)1462 451269
    Email: [email protected]
    Website: http://www.hatched.co.uk
    Hatched.co.uk Ltd. Company No. 6226662. Registered Address:
    Hatched.co.uk Limited, Suite 1, 6c Brand Street, Hitchin, Herts, SG5 1HX

    Please note that neither Hatched.co.uk or the sender accepts any
    responsibility for viruses and it is your responsibility to scan or
    otherwise check this email and any attachments.This e-mail message and
    any attachments are the property of Hatched.co.uk and are protected by
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  • Khards that post was totally uncessary.

    Doomwatch EA’s hands are rather tied as they have to compete for business with each other in a market where sellers have quite particular price expectations ie if they want business they rather have to promise the earth to prosepctive sellers.

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  • sibley's b'stard child says:

    Lovely snippet there Doomwatch:

    Shipside adds: “Buyers and sellers are staring each other out, and it’s a question of who will blink
    first. Even if they wanted to, buyers cannot blink unless lenders release more funds for mortgages.
    As that’s not going to happen, there are likely to be some blinking sellers this winter!”

    Let’s face it, the market can only correct itself by ensuring the inumerate and blinkered elements of the public are saved from their own financial ruin. Long may the lenders capitalise on the disconnect between base-rate and what they will be prepared to lend on.

    As bellwether says, one can only admire vendors’ stupidity/optimism. It really takes a unique mindset to ignore all the figures that point to a double-dip and price their home to the contrary. Yeah, good luck with that you tools.

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  • bellwether is absolutely right. They’d make more money if houses were dirt-cheap and people bought and sold more frequently. Mind you, I’ve often noticed that many estate agents fight against what is logically good for them. I think some of them take a kind of macho pride in talking up the market. Maybe this is not entirely illogical because a rising, bullish market causes buyers to be a bit more ‘respectful’ to them.

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  • bellwether. my post crossed but that makes sense @11

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  • mark wadsworth says:

    Khards, unlike Bellw, I think that is a splendid post (although you could have edited it down a bit).

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  • Again I believe that it is not the estate agents but the sellers and there financial positions.
    I have known home owners who have droped prices significantly because they can and they want to sell.
    I have also known sellers who just can’t because they can’t afford to drop there prices.

    I have seen estage agents drop the second kind of seller.

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  • sibley's b'stard child says:

    Khards, that’s similiar to the maildrops I get pretty much every week or two from various EAs in my area; however these are begging for new listings – coupled with hand-drawn posters in their windows ‘New Property Needed!”. It’s certainly a sign of the times.

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  • I worked in the 90’s and it was painful to accept falls in house prices because I owned a property.

    me thinks alot of these agents have PORTFOLIOS of property and realise they are in deep **** if the property market falls as it can breach agreements with banks over minimum equity versus mortgage

    here are some facts…turnover in 1988/1989 was 1.1 million properties….turnover at the nadir in early 90’s hit 1.4 mill albeit at lower prices

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  • sibley's b'stard child says:

    @ Taffee,

    Only the other week my mum told me how she was instructed to sell her mother’s house – I think this was 89/90 – as she couldn’t look after herself. The house was listed for 25k but got no viewings for months on end. Eventually some local property developer offered a 13k take-it-or-leave-it offer. This offer was declined (I mean, my mam’s father had worked for years to pay the house off). Weeks passed and still no joy. Eventually, the same developer – sensing blood – came back with a lower offer of 10k and my mum had no option but to accept.

    I guess, if the shoe’s on the other foot it must be bloody painful to accept a loss and behind every negative Halifax/Nationwide index that gives me cheer is a number of similiar downtrodden tales.

    *Sigh*

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  • I dont believe there are any more buyers than in 2008 , possibly less as investors are looking to gold for the next bubble to squander money into

    as for pricing competitively you need to knock 50% off the current price to achieve this.

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  • sibley…my uncle sold his mums house in wales for 7,000 in 1995 and you couldn’t sell 2 bed flats within m25 for £20,000

    flats will be hammered and people shocked

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  • 16. flashman said…bellwether is absolutely right. They’d make more money if houses were dirt-cheap and people bought and sold more frequently.

    I agree with your point, but realistically, even if houses were £50 each, I wouldn’t be interested in upping sticks and moving house every other weekend. It is such a pain to move that no matter how cheap houses get, it is unlikely to happen frequently. With this in mind it makes perfect sense for EAs to inflate a bubble in house prices. The “they need volume” theory is only really applicable at times such as we have now – where very few sales are taking place. And TBH, if they talked the price of houses down it would shoot the “house prices only ever go up” theory in the head, and they would a) lose a lot of vendors who have big mortgages and cannot afford to sell at a lower price and b) lose a lot of BTL buyers who do not want to invest any more and c) lose a lot of FTB buyers who will wait til prices reach the bottom. Realistically they should be aiming for “quite high but stable”.

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  • there was an article in the sunday times about someones house being valued at a £1 because it needed a new roof..

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  • tyrellcorporation says:

    ‘October asking prices increase by 3.1%’

    This rise is more likely to reflect desperate EAs trying to attract sellers onto their books (with high valuations) so they can at least secure some ‘stock’ for the next 6 months. Once on their books they’ll be constantly nailed down on price expectations with the final selling price some 15-20% lower.

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  • There seem to be huge numbers of vendors unwilling to drop their prices in what looks to be a falling market. These vendors are not serious about selling their property. They are speculative and are hoping potential buyers are not well informed or ‘fall in love’ with their house. Even if this is so, the majority of buyers need to persuade a bank to lend for the house. These houses wont sell and may as well be taken off the market. Then we would see exactly how many houses are genuinely for sale.

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  • see quiet guy got his way, there seems be no point even belonging to this website if some prat can get an article removed because he doesnt like it.. jeez what happened to freedom of speech

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  • general congreve says:

    Thanks Quiet Guy, looks like I’ll have to post this here now, cos the moderators removed my post from the topic forum and I can now no longer even comment on topics, let alone post one:

    Amongst the other 10 or so articles posted today, there were two or three relating to news stories on gold, including one that came from Money Week and was basically carrying the message property BAD, gold GOOD, surely in line with HPC thinking one would think, even if you know little about the gold side of the story.

    A couple of posters got on the high horse about this and reported to the moderators, claiming ‘this is a site about house prices, there is no place for gold discussion here’.

    After the point was robustly made my several posters, myself included, that it has every place here, as house prices are related to every aspect of the economy, especially the safety of your savings and/or STR fund (hence the central case for gold as insurance against inflation, bank failure and currency devaluation) it seems the posts were pulled anyway.

    If these articles were posted by gold dealers touting their services, I’d be more than happy top agree they should be pulled as that would be ramping, but this was news articles from the WSJ (actually arguing the case against gold) and Moneyweek, FFS!

    Did I miss something? Has HPC just been bought up by the banks to be used as a tool to suppress online positive gold sentiment through censorship?

    Thanks for wasting everyone’s time who contributed to these articles this morning, I believe one got as many as 30 comments, not to mention the fact that over half of the posters were not against the posting of the articles. Thank you moderators, give yourselves a pat on the back.

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  • A couple of posters got on the high horse about this and reported to the moderators

    There are quite a lot of people on this site, who know all about high horses – and getting on them. They know who they are……

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  • general congreve says:

    @32 – Cheers HPW. Discussion continued at the top of news articles as this one will disappear into the ether shortly.

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  • I agree with the moderators’ action. An article purely about gold belongs on a gold investors’ web site. This site is primarily about UK house prices, hence the name. Some days the articles on house prices are outnumbered by those reporting general economics news.

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