Seventy per cent of properties put on the market so far this year are still for sale, Rightmove reported this morning.
The number of unsold homes per estate agency branch stands at 78, the highest Rightmove has ever recorded in July.
Rightmove said the figure is “a sobering reflection of current marketing conditions”.
It said the high number is an indication that many equity-poor sellers are unwilling or unable to cut their prices – although they may have to, as Rightmove also reported that, for the first time this year, asking prices have been dropped by sellers new to the market.
The fall is to the tune of 1.6%, equating to an average of £3,797, which goes some way to eating into the gain of 8.1% over the first half of the year.
Even in London, asking prices have fallen for properties new to the market, down by 1.4% to an average of £432,641.
The number of new sellers also fell, down by 12% on this time a year ago, with many owners unable to raise the deposit to fund their next move.
The asking price on Rightmove now stands at £236,597.
The site said that the fall in asking prices this month is the highest drop in three years, since 1.8% in 2008.
But even with a fall in asking prices, a huge gulf persists between Rightmove’s asking prices and those of around £163,000 being quoted by Halifax, Nationwide and the Land Registry.
Rightmove director Miles Shipside said that with seven out of ten properties marketed this year still unsold, sellers in the second half of this year would need to do something different to catch elusive buyers.
He said: “Many equity-poor aspiring sellers will be trapped in their current homes, either unable to come to market or stuck on the market and unable to reduce to a price that will attract buyer interest.
“Those that are equity-rich have an opportunity to increase their chances of success by launching to the market at a price below their over-priced and stale competition.”
A second survey by Rightmove, due out next week, is set to show a fall in housing market sentiment among consumers.
%20(002).png)
%20A%20property%20tale%20for%20our%20times.png)
Comments
Chris: You missed the entire point of my post - not once, but twice.
Firstly, I was pointing out the MASSIVE advantage to our friend Unhappy Chappy of paying a percentage commission over Fixed Fee basis.
Secondly I referred to "...every ADDITIONAL thousand they achieve" - not every thousand. You know as well as I do, Chris, that when you take on a property you know - to within a reasonably tight band - how much it will actually sell for. You will also discuss this band with the vendor at appraisal. Say that you expect 27 Acacia Avenue to sell for £145-£150k. You achieve that figure, then you achieve the fee range you expect. Below it - you are under budget. Above it - then you score. And, yes, much of it is swallowed in this market by abortives and costs (although these should be 'built in' to your income predictions to start with...) - but in the alternative market that is almost a dim and distant memory, EVERY sale had an element of 'bunce' and lined many, many pockets - INCLUDING MINE!
Lastly, of course it doesn't go straight into your 'pocket' - I was simplifying things to demonstrate that only £24 was 'lost' to UC but he 'scored' by the balance. A balance that is FAR better in his pocket than his buyer's - and the best possible reason to plump for %age Fee.
One minor point. You state that 40% goes to the taxman and the balance then has to pay the overheads. That's not strictly true, is it? You pay tax on PROFIT, not INCOME. You have already paid the staff, rent and rates, Rightmove and regional rag before HMRC gets a sniff at the balance...
@ PeeBee
"you realise that a Fee of 2% means only twenty pounds in the Agents' pocket, four to the taxman - and NINE HUNDRED AND SEVENTY SIX to you for every ADDITIONAL thousand they achieve!!"
I wish that was true. £20 to the agent, minus 40% tax leaves £12 to the agent and £12 to the taxman if you could the £4 of VAT.
From that £12 per £1000 the agent gets, he still has to pay the staff, the office running costs, the advertising costs for this property and the other properties he has failed to sell. If he's lucky he can take a wage out for himself!!!!
In 2008, 40% of the estate agent industry went to the wall with over 48,000 jobs lost and this trend continues. Not to worry though, the corporates will still be trading, paying their valuers to list property at stupidly high asking prices and charging 4% commission disguised as a fixed fee.
Unhappy Chappy: "...I pay reasonable fees. I will not pay over the top but I am happy to pay for the amount of marketing my property receives."
What do you call "over the top" - and why?
WHY should you judge it on the AMOUNT of marketing? The ONLY true measure is the sale - and the higher the sale price, the better for you!
Sorry if this sounds like an insult to your intelligence (it is certainly not intended so...) but surely you realise that a Fee of 2% means only twenty pounds in the Agents' pocket, four to the taxman - and NINE HUNDRED AND SEVENTY SIX to you for every ADDITIONAL thousand they achieve!!
Unhappy Chappy, the fees are normally calculated by the agent like any normal business. Business running costs (Staff wages, office running costs, cost of advertising etc.) v income. (Number of sales and selling fees)
An agent operating a shop in the center of London will be paying a small fortune and his selling fees would need to be substantial, but that is why the percentage model works. If the cost of his office is high because he is operating from an expensive part of the city, it stands to reason that the properties he sells are also expensive, so his fees based on a percentage of the properties sale price will also be high. No one expects to sell a 1-million pound property and only pay £1500 +VAT. Someone selling an £80k flat in the midlands would expect to pay around £1500 +VAT for a reasonable service. Based in the midlands, our average fee is around £2400 +VAT across a wide range of selling prices. £70k up to £500k with the majority of sales in and around the £175k mark.
The asking price is a factor that determines the speed of a sale, but it is not the only factor. Sure if you put a property worth £170k onto the market with an asking price of £140k, it's not going to be around too long, but there are other factors like a good location and other competing properties in that area similar to it. Something rare, unusual or special will also obtain higher levels of interest and could sell quickly, even if the price is higher.
Some things make very little difference or the difference they make is so insignificant, it is difficult to put a value on, yet some vendors will demand a higher selling price none the less. You know the one "Our garden is 3-foot wider than next doors, so it must be worth an extra £20k, or we have changed our internal doors for antique pine!!
Ridiculous. When valuing property in this market, you must price property against the cheapest 10% of similar properties. In otherwords, if there are already 100 1960's 3-bed semi's on that side of town in average condition ranging from £130k to £175k and the bottom 10 are no higher than £138k, then you need to value your property no higher than £138k unless it really is special in some way. (I.e. is has an extra garage or something) Any higher and it is unlikely to sell.
Your question about marketing costs v property value. Most agents use the same advertising tools for every property on their books, though some may offer fancy brochures for the bigger properties or an insertion into a glossy mag etc. but the reason percentage fees & higher fees are required the more expensive the property, stems from the extra time these properties spend on the market. The theory is that there are less buyers about with money to buy expensive properties, so they take longer to sell, more brochures are sent out, more weeks in the property newspapers, more of the agent's time is spent trying to get this property sold.
Sometimes you can get lucky though and you sell a big one straight away and often vendors ask for a fee reduction when this happens, but I will reply saying that I should put my fees up for selling it so quickly for him!!
Currently the smallest properties seem to be the hardest to sell, so maybe we should charge a higher percentage for these at the moment. First time buyers and buy to let investors are not as abundant as they once were, so the little stuff is hanging around at the moment !!
Chris - I agree with much of what you have said
I dont belive anything i ask for would be effected by the data protection act and I have a good bs detetector :0)
Yes a good agent needs reasonable fees......I pay reasonable fees. I will not pay over the top but I am happy to pay for the amount of marketing my property receives.
Is £1500 an adequate fee?
Does the amount of marketing vary on this vary on the value of the house?
Your valuation system seems pretty normal but it seems you are saying the only thing that sells houses faster are lower prices. Is this correct?
Unhappy Chappy, how would you know if the agents you are talking to about their stats (% of sales v listings, time to sell etc.) are telling you the truth? Very few agents will be showing actualy facts and figures, nore would they be able to prove much because of data protection.
Sure check out their fees and ask them if they are being paid for listing your property even if it doesn't sell, but they might not be honest about this. A good agent needs reasonable fees to do the job right. The running costs of a branch and all the advertising that should be going in to market a property is significant. An average small size branch will have a running cost of over £15k per month and the larger 10-person branch will cost around £45k per month and these costs must be met if the agent is to survive. Some vendors agree to pay the fees asked for by that agent and some choose to go to an agent charging much less. Very often bargain basement fees (Less than £1500 to sell a property, means either one of two things. 1) They have very low overheads or are shifting large volumes of property or 2) They are cutting back on the advertising of properties so success of finding a buyer could be compromised.
When I value a property I show the vendor what has previously sold in the area and compare those properties to his. From this I offer them a valuation range (I.e. Worth between £160k & £170k) and suggest an asking price based on his required time frames to sell the property in. Plenty of time allows for a higher asking price and limited time normally requires a keen/ competetive asking price. Usually the vendor states that they have plenty of time as they want the asking price to be as high as possible. Later when they get little interest, they reduce the price accordingly.
Agents that get paid to list properties whether they sell or not and/ or have fixed fees based on the asking price often over-value or don't give a valuation at all, but simply ask the vendor what he/ she wants to put the house on the market for!!!
While I knock agents that do this, they actually help other agents that value correctly because our stock looks more attractive price wise and their over-priced stock eventually comes our way when the vendors are fed up waiting for something to happen and we get the opportunity to get it on our books for the right price. They are also motivated more when they realise that your fees are slightly better too and they keep driving by our sold boards!!
The greed of vendors decide the asking prices coupled by some agents that are only too happy to sign them up!!
Peebee - See we can agree on somethings..... i like me too :0)) and I have never disliked you. I find our debates interesting thank you
Please let me assure you I realise performance is massively important. I also ask to see evidence of this.....
What is the average time to turnover.
What is the % of no properties lost
Show me your metrics.........I will decide how you performance is.....If the agent does not want to show me fine it tells me more than if they do!
Value for the vendor is the balance beween performance and cost........the saying you get what you pay for is not in my experience always true!
I am not saying % fees dont work.....they do in some but not in all instances
Im sure If our paths had crossed it would have been an interesting negotiation but if you had not been instucted it would have been one you had lost :0)....well unless I came back to you later to say you were right many vendors do.......I dont think I ever have though!
Hey how about a performance league table for Estate agents sponsored by EAT?
Unhappy Chappy: I never disliked you - but I'm starting to enjoy liking you now...! :o) You've got bigger b@lls than the average. I'd LOVE to have been able to 'negotiate' my services with you. I wouldn't be instructed - but believe me, you'd wish to Hell you didn't have your heels dug in!!
ANYWAY - back to the questions. Do I agree with Chris' statement? Yes - and no. You need, however, to look at what he is saying and take that phrase in context. Agents cannot MAKE vendors market properties at £X - so in that respect they do not 'set' prices so are simply marketing outlets. If, however, they took such a meagre stance when it comes to securing a buyer; negotiating the final sale price; dealing with the sale progression etc then as a vendor I would be SERIOUSLY worried for my own sake - and I doubt that the Agent would have a long and successful career in ANY market let alone the one we are currently experiencing.
On to your second point. MY reading of Chris' statement is very different to yours. Okay - the Agent he refers to (my only disagreement is with his use of a Corporate - I find this not necessarily the case... but that is another discussion entirely!) 'charges' a higher Fixed Fee than his %age works out at - but the points he makes are that:
a) the property will not sell for the initial figure in any event, so the vendor has been 'duped' into paying a higher fee %age based on initial price;
and (but not as clearly highlighted)
b) that the vendors who DO sell through that Agent in fact are paying a higher figure in order to 'pay' for what is a higher withdrawal ratio, on the basis that the subject Agent has a DGaF attitude whether a property sells or not!
My last comment relates to your last paragraph. What surprises me is that you state "...i would research all the agents fees and talk to the ones which closest match my requirements..." You research FEES that match your requirements?? Mate - this is NOT one size fits all. Forget Fee - research PERFORMANCE. Take the best and ONLY the best.
It is the ONLY true mark of an Agent - and one which is WELL WORTH the money spent!!
Twenty years ago agents and solicitors used to meet for a pint on a Friday teatime and share ideas, stories and were generally on the same page
Nowadays (not least because of drink drive laws and rightly so) agents do not socialise or network together after work
The competitive nature of the business compared to then is much more agressive, and failure of any initiatives such as house swaps between agents suggests that collaboration even in a positive sense is a non starter - they seem to enjoy not getting on, rather than getting on
Peebee - It may surprise you but I agree with much of chris post as well
Do you agree with his comment "The agent is little more than a marketing company."
I am a seller and I decide what is best for me not the agent !
The agent decides what is best for him/her.
In his post
"What gets my goat also is the corporate agents that are paid to simply list property, irrespective if it sells or not!! They just ask the vendors what they want to list the property for. They also base their fixed fees on the elevated asking prices, so when they eventually sell for 20% less, the agent has made a greater percentage of the selling price. Our percentage fees are better because if the vendor sells for less, we earn less also. That's fair."
Chris merely stated that his fixed fee is less than corporates in his area...he may also offer a flexible payment plan you seem to hate and I advocate!
If i was selling in his area i would research all the agents fees and talk to the ones which closest match my requirements...then I negotiate what and how i want to pay them for marketing my property.....this is called negotiation and is the first negotiation in the house selling transaction for the Vendor!
Aye Pee Bee. Looks like another one here who has been to Damascus and back recently.
Chris: WELL SAID!! One of the most sensible and relevant posts I've read in a long time!
Unhappy... - suggest you read this and hopefully realise for once and all why PERCENTAGE FEES are best for the seller!!
(and don't say I didn't tell you so... ;o) )
Agents will not and should not sit around doing deals with each other, setting prices and carving up areas of the market. This is well dodgy ground and the only winners will be the agents, not the buyers or sellers.
Market forces need to work naturally. The agent is little more than a marketing company. They advise the vendor what the going rate is and what similar properties have sold for and the vendor pretty much decides what they want the house on the market for. Agents will compete for this business and the more agents competing for it in a given area, the higher the asking prices tend to go.
Eventually, a vendor realises after changing agents every 4-months that the market isn't going to pay what they want and they do one of two things. Reduce the price or stay where they are and come off the market.
You can't ask agents get prices down by 5%, 10% or whatever because property will sell to someone willing to pay it. One buyer will pay the asking price and another will want a 20% reduction. In this case, the property is worth the asking price. A good agent will have a good understanding of the market in that area and know what things are selling for. I get sick and fed up of buyers telling me that they know best and that the price is too high, only to sell the same property the next day to someone else at the asking price.
What gets my goat also is the corporate agents that are paid to simply list property, irrespective if it sells or not!! They just ask the vendors what they want to list the property for. They also base their fixed fees on the elevated asking prices, so when they eventually sell for 20% less, the agent has made a greater percentage of the selling price. Our percentage fees are better because if the vendor sells for less, we earn less also. That's fair.
Inflation is running at around 4.5%, so if the banks can keep the market pinned back yet slowly ticking over for a couple of years more, then the economy will hopefully be in a better state, wages might be higher and property affordability will be better too.
From the crash of 1989 to the recovery of 1997 took nearly 8-years. This crash strated in October 2007. It hasn't even been 4-years yet, so this bumpy period has a few more years to go yet.
Rightmove director Miles Shipside said that with seven out of ten properties marketed this year still unsold, sellers in the second half of this year would need to do something different to catch elusive buyers.
So what can EA's do different to et the market moving?
Is the only answer to agree a high value to win the instruction then get vendors to lower there prices over months as FBA suggests?
If so what kind of reduction will get the market moving 5% 10% 20%
There, of course, is a problem another survey suggests a majority of house owners expect prices to rise!
PbroAgent - I just felt my blood boil a little when I read THAT word - fair play to you for giving the jerk a piece of your mind.
Now, that opens a whole new can of worms!
Cheers, I went a bit schitz at some idiot who was boasting about gazundering on a deal last minute. And let my true feelings about gazunderers be known.
I will come back one day, (when I'm bored enough to start a new account), because I quite enjoyed dishing out some practical advice.
Amen to all that Pbro!
Miss your wise postings over on 'the dark side' and am sorry to learn that you are in NE (Negative Equity, not the North East!).
If there is a coming shake-up and shake-out of the EA business, I really hope your realism and wisdom will see you through.
Rant
You know from my posts on HPC (which I was eventually barred from) that I am different from many agents who post on here. I am pro a house price correction, I do think that prices are unsustainable and that the current high values were caused irresponsable lending before the crunch. I further think that the banks are now doing the responsable thing and are being slated for it by all sides and that we should all button down for at least 15% more reduction in prices.
I am not for a crash but I am for increased volumes which will come from more realistic prices. Eventually prices will rise again, but only in line wiith wage inflation (and correctly so). Many of my generation have been sold up the river in recent years and many - including myself - have massive negative equity problems. The government should stop interfering with the property market by introducing ever rediculous shared ownership schemes to pull new buyers into the negative equity trap and should instead focus their efforts on helping those already in trouble which would further stimulate the market and increases sales volumes.
Pbro - Links to comments from two other EAs who make similar points:
http://johncurtis.briefyourmarket.com/Newsletters/The-First-John-Curtis-Newsletter/A-lot-is-reported-about-house-prices-in-the-media-.aspx
http://www.chriswilley.co.uk/news2.aspx?id=10121
@ Jonnie, that would be a cartel not a monopoly but you are right that it would be very badly perceived by the public.
To back up what the others have said, I've just lost a listing to a corporate who gave the vendor "a much better valuation". Ok Mrs Vendor - I'll diarise to call you in 22 weeks then...
@Mike Wilson
Blimey, I sometimes read what you write and cant believe how miserable you are and then read stuff like you post below and cant believe how much I agree with you.
But, and it’s a biggy – if agents did expand their associations (of which there are many and as you suggest they do meet for a pint and a chat) mandate to start fixing prices / valuations / fees and anything like that then there would be fully justified public and media outrage that those swindling, thieving, nasty agents are forging monopolies………………and that’s bad.
Nailing the page rate to the floor with a local paper that’s actually part of the likes of Trinity Mirror or even negotiating as one body with Rightmove is one thing – price fixing is quite different.
………but I like it.
Jonnie
Ah – a quick P.s – these houses stuck for sale doing nothing are over priced, some not by very much but we are in an industry where the skills required to have the credibility and trust from a vendor to follow your advice on reducing price elude most of the industry – happily not all of it but that why many of us are doing well and others not so good.
Ace, we do agree...
For the benefit of Timmy P.
Our problem is that at the point of instruction we can't really tell if the owner is as in my example or the one Ace's.
An asking price is often set by the owner and often goes against the advice of agents. We cannot tell an owner to put his house on the market at a particular price (or less than) or we will not market it. If one agent did this, the next agent would list it, so no matter what, a property will almost always come to market initially at a Vendors expectations and not necessarily the agents expectations.
Maybe if estate agents didn't over value by a 1/3 then these properties would sell.
Its not rocket science, average asking price £240k, average selling price £160K.
Drop your immoral asking prices and sales will pick up.
Fun Boy - Very nice weekend thank you. The rain ruined the golf, but not the beers. I hope you had a good one.
We are talking about different breeds here.
The 'sellers' I am referring to are happy with their current situation, but IF they could get an offer of a massive amount, they will bite your hand off.
They know their house was worth £500k in 2007. They have bought a few cans of Dulux, an ikea kitchen and fitted a pre-packed decking set in the back garden.
Now, they fancy their chances at selling for £565k because of the work they have done. They don't need or sometimes even want to sell. But, if they got an offer that matches their dreams then they will.
If you suggested to this kind of 'vendor' to lower to £575k, they would run a mile, cut their ties and have lost NOTHING - Speculative sellers, not serious. They would probably have the idea to re-try the same game with a different agent in 6 or 12 months.
The seller you are referring to is willing to negotiate and actually looking to make a sale.
The ones I refer to are not, unless they get lucky with their astronomical demand.
Your sellers you give in your example are actually motivated to sell, whereas the ones I refer to are in a completely different place and most certainly account towards the higher numbers of unsold properties that RM reports.
Did you have a good weekend, lots of beer?
To your point? whos time wated? whos money wasted? is this not my time and my money to waste? no matter how it looks to you.
6 weeks ago I took one on I knew was £550k, The owner wanted a marketing fig of £600k, after 4 weeks we reduced to £575k, this weekend an offer £550k... accepted.
Would I have been better to argue their socks off at instruction that their fig was too much, refuse the instruction, let another agent take the case, and watch them do what I just did?
I ask again, would this be better estate agency?
I'm guessing there was a hint of sarcasm in Anna's post - you are a tricky book to read!
With HIPs now removed from the equation. Mr and Mrs Bloggs can put their house on the market for whatever they like - with no risk or commitment.
These findings by RM suggest that there are lots of agents out there who are taking on the listing; simply letting vendors 'test the water'.
Of course, by testing the water I actually mean (some) vendors are taking a punt at selling for much more than their house is worth. Are they stupid? No, they might get lucky - who knows. But there are some questions marks surrounding the agents that take these properties on.
Why agree to a price you know you are not going to get and spend all that time and money on marketing?
The moment you suggest that the price (you as the agent) AGREED to market with will not be met, the sellers get out.
Waste of everyone's time.
Why don't estate agents band together and form little local associations? An informal grouping where the bosses of each agency could have a natter?
Where I used to live one of the local agents began to dominate the advertising in the local press. Some enterprising individual from one of the other agencies formed a separate association and they started up a rival free property paper.
If you had such a grouping surely you could all sing from the same hymn sheet. Okay, you are all going to compete for instructions - but if this was set against articles in the local property rag that read 'Local estate agents' association says vendors's expectations unrealistic' etc. you could collectively begin to reign in the insane view of the market most vendors have.
And 'Local estate agents' association says lower prices benefit most people' - with an explanation that if you sell for less, you'll buy for less. The only people who lose when prices fall are those at the top of chains. Stuff them - their 'equity' is unearned anyway.
What would it take - a few phone calls and a meeting in the back room of the local pub once every couple of months.
and its all the Estate Agents fault .........................................................
course it is, they get paid to put them on the market and never sell them, not interested in sales really.
Plenty of buyers waiting in the wings. As soon as vendors exception change and they realise that it is not a law of nature to sell a house for at least what you paid for it in 2007 (maybe plus £50k) then sales will happen.
So, let me get this right.
Asking prices have been inexplicably rising (outside London postcodes).
+
The "spring bounce" never appeared.
=
Lots of houses left unsold.
Is "equity poor" the new "negative equity".
Sounds like it to me.