The chief executive of Andrews has urged his sellers to try a price reduction, ahead of his firm’s open house weekends this month.
On his firm’s website, Michael Robson admits that the initial asking price may have been too high.
He says: “A good estate agent will always aim to get the best possible price for your property, and as such, the price that a property comes on to the market for is typically slightly high.
“As the seller, you can retain the initiative with your first price reduction. Having tested the market with a slightly inflated price, you can get it just right with that first price reduction. We’re encouraging a number of our sellers to try this approach.”
Robson, who oversees the 80-strong sales and lettings branch network across the South of England, also tells sellers to try to get the price right first time.
He warns: “In a financially-sensitive market like the one that we are in currently, it’s critical to get the price right, as the higher you put the property on the market for, the less chance you may have of selling it.”
He goes on to note that “sellers need to be realistic in their prices and look at comparisons in their local market and what properties similar to them exchanged for (as opposed to what they were marketed for), and price within 5% of that amount”.
With the National Housing Federation this week warning that home ownership could slump, Robson says: “A healthy property market is not a luxury, but an absolute necessity.”
The blog is on https://www.andrewsonline.co.uk/about-andrews/chief-executives-blog
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Comments
By from me, my stock is over-priced!
Erm no thanks Andrew.
Prices and valuations are subjective. A property is only what someone else feels it's worth. A good agent will always provide comparables and agree a marketing timescale to obtain the "best" possible price in a time scales that suits the vendors individual needs.
The only way to ascertain the actual price within a market place is when the sale is undertaken on exchange of contracts.
I really do not understand what some people think that Andrews have done incorrectly in respect to best marketing practice apart from being a recognised brand name and by being honest and transparent in their dealings.
Ahndrews are not alone on Price.......Sequence do exactly the same, keep it up.....its great for us indy's
This is terrible news. Please keep overpricing, Andrews. It's working so well for us at the moment, can't say how we use it but we are getting some really good mileage out of it, and the over pricing by other agents.
@CoTW
I was going to argue the first point with you......but then I read your last two - which confirmed that you haven't the slightest understanding of statistics. So I think I'd be wasting my time....
@Neo72
Claiming that there is no housing shortage based on a simple blunt average of population growth divided by mean household size is an utterly spurious argument to make.
It takes no account of factors such as....
- The increase in single person households
- The influx of adult immigrants without children
- The increase in life expectancy
etc....
Andrews has gone and done a Ratner. Who would buy from them now afollowing this admission of over-pricing?
One thing's for sure however: Fun Boy Agent will become a KP.
@George,
best part of your post is the first 3 words.
Try saying them to yourself over and over (about ten times)
Then pass this advice on to your head office. In a couple of weeks you might get promoted to 'area manager' then in 8 weeks, you might sadly get made redundant. Go on! give it a try.
@ FunBA
I don't think it will drive customers (vendors) away, on the contrary it will result in more intersted buyers and succesful sales. Fun Boy Agent will become a KP.
@CoTW
Rather then cherry picking reports that suit your argument, lets look at some (official) figures shall we? Your misunderstanding of causation leads me to believe I'd better keep it simple so here goes:
Since 2001 - the UK population has increased by 3.1 million.
Average household size in 2001 was 2.3 (although probably risen since then due mainly to hmm...high housing costs).
Therefore 1.35 million homes required (less if household size has risen).
And how many homes built - 1.87 million (see the link I posted earlier).
Even allowing for 50K demolitions a year (mid point of estimates), that's still a nice balance of supply and demand.
Now I'm not saying there's not a structural shortgage - there may well have been in 2001. But the only thing to have changed since then is the availability of credit, not the supply/demand balance and that is what caused prices to double during that time. Now of course the credit taps have been turned off (much to the dismay of many EAs).
And ironically, the supply/demand balance has probably shifted in favour of demand outweighing supply in recent years, even though prices have been dropping over the same period :-D
*** NEWS FLASH ***
Andrews Managers thinking of career changes!
Looking for fool proof ways to earn money driving their customers away?
Managers will become Taxi Drivers.
(2nd time, I know)
Now hang on there a minute, FBA. You can't go saying things like that because I'll have to agree with you...
RnR,
So if the housing shortage was responsible, you'd imagine that house prices would have taken off in areas of high demand, whilst areas of low demand stayed cheaper.
OK then.....
Proof that was indeed the case can be found here.
http://www.hometrack.co.uk/documents/Steve_Wilcox/cantbuycanrent.pdf
House price to income ratio heat map on page 5.
A study from 2007 showing variances in house price to income ranged from 2:1 in parts of Northern England all the way up to 9:1 in parts of London.
As you say, if credit were responsible, with national credit reach from the banks that simply wouldn't be the case.
Prices would have risen equally everywhere.
They didn't. So it must have been the shortage.
The main story is an issue regarding a large corporate agency with large overheads dealing with lower transaction volumes than their business model needs to sustain their business.
They need cashflow, so they need sales, so they need their clients to chip in some equity to keep them afloat.
They win business by overvaluing and their costs go up.
They sell very little because the prices are too high!
Why should they be rewarded by their clients for poor advice?
Their Vendors should end their contracts with Andrews on mass as a result of these tactics and use local agents who will give correct advise at the outset.
As I said in a previous post "what burke at head office thought this up"
scandalous
Concerned of Tunbridge wells is quite wrong. Mortgages are pretty damn easy to get hold of, I have an offer myself and many friends and colleagues could also get the money together to fund a purchase.
So why don't they? Because, as Mr Andrews is suggesting, property currently represents appalling value for money. People were happy to over-pay during the boom safe in the knowledge that a bigger fool would come along to bail them out. It simply makes no sense to buy an over-priced house in a falling market.
That is a fantastic find Neo!
I'd imagine that if the shortage of houses situation was responsible for the boom in prices, then prices would have taken off in certain areas where supply was more of an issue than in others.
Nowhere escaped the price rises though. There are slight variations betweeen regions for sure. The more likely explanation for the rises is that lenders with a national reach extended the credit available to buy a house.
@Neo72
186K houses built in the peak of the boom.
Well then, only 70,000 a year less than were needed.
Thanks for confirming my point.
@ rantnrave
186K homes were built each year over that period (http://www.communities.gov.uk/housing/housingresearch/housingstatistics/housingstatisticsby/housebuilding/livetables/) but keep it to yourself - we don't want people realising the emperor actually is stark naked..
@CoTW
"Not advocating price falls, which as we have all seen in 2008, will do the opposite, resulting in further lending contraction and even fewer mortgages being made available."
You're confusing cause and effect - it was the contraction in lending that set off the falls, not the other way around.
RnR
That bbc article is woefully inaccurate. Terrible journalism.
The housing shortage was already approaching a million houses by 2010, and worsening at the rate of 150,000 houses a year.
This report by PWC in 2009 confirms what we in the industry have known for some time.
http://www.tcpa.org.uk/data/files/housingreport.pdf
Of course since then the rates of both population growth and household formation have accelerated, with population growing by 408,000 in 2009, and 470,000 in 2010, and new additional household formation in 2009 in excess of 250,000 per year, and 2010 more like 270,000.
While, as you quote, last year just over 100,000 houses were built.
The fact is that we never once in all the boom years managed to build enough houses to keep up with housing need. And we are currently failing to even build half as many houses as we need to keep up with need.
There are many absurd housing myths propagated by the hpc-ers, but I really hadn't pegged you as desperate enough to become a housing shortage denier.
Come on RnR, you can do better than that, surely?
From a previous post.........
The cost of everything single thing that constitutes a residential property is rising quickly and that will be reflected more in the price of new builds fairly soon - next year? Second hand property will then stabilse and then slowly rise in line. Those that can afford to buy will buy, those that cannot will not.
That is my view and it is just as valid as that of the hysterical HPCers. .
I Am Calling On All The Vendors Of This Great Country To Reduce Their Asking Prices By 25% Now. Amen.
There is not a problem with mortgages, this is a smoke screen. People with a deposit, average salary and good credit rating can get a mortgage. When people refer to mortgage rationing in fact they are really calling for a return to irresponsible lending to prop up artificially high prices.
The elephant in the room is too high asking prices. Very few people can afford to buy at these levels. By dropping the asking prices you increase the amount of people who can buy thus transaction will increase. After all the demand is there.
Keeping pirces at their current levels has so far required:
* A devaluation of the Pound leading to significant imported inflation
* Over 300,000 households relying on the government's Support for Mortgage Interest scheme to stay in houses they can no longer afford
* Numerous High Street Banks to be rescued by the taxpayer
* Prudent savers to forego substantial lost interest
* Obscene amounts of money being spent on housing benefit...
More loose lending is going to compound all these problems. When you are in hole, it's generally a good idea to stop digging.
The fallacy that house prices are all down to low supply has been exposed as mostly myth by this BBC article:
http://www.bbc.co.uk/news/business-14715173
(do the maths - 1.5 million new households created in ten years require 150,000 new houses to be built each year. Apparently the lowest figure achieved in the last decade was in 2010, when 134,000 homes were built, or 90% of the amount needed that year. Presumably the target was more thean surpassed in the other years then...)
And for those who didn't notice that house prices tripled in a decade, here's an article from the formerly pro house price inflation Daily Mail that warns of a 50% dip to come.
http://www.dailymail.co.uk/money/news/article-2031172/MONDAY-VIEW-Why-Britain-heading-property-crisis.html
I also notice that some of the most vocal comments calling for people to be allowed to commit to ruinous amounts of debt are from those who don't have to take it on but would most benefit if others did so. Personally, I find that morally repugnant.
CofTW - no amount of lobbying is going to get lending levels or ratios to the ubsurd levels they where at in 2007. The rules have changed im afraid.
In a week where Oxford Economics have confirmed the housing shortage is reaching a crisis point, and where a professor at the London School of Economics has been quoted as saying that supply is the main issue behind rising prices in the UK, it is quite bizarre that once again a property professional is making a desperate plea for price adjustments to stimulate volume.
The fact is that dropping prices WILL NOT get the market moving. It may let some of you steal some business from others, but TOTAL market volumes will barely move.
The problem is now, and always has been, mortgage rationing.
Banks are only lending enough money each month to satisfy around 35% of the volume levels from 2006/2007, because that's all the money they have to lend.
If prices fall another 10% on average, volumes will increase to 38.5% of 2007 levels. If they fall 20% from here, you're talking 42% of 2007 levels.
If this industry wants to survive in a form anything like it was prior to the credit crunch, you all need to be lobbying as hard and as wide as you can to get mortgage lending back to historical levels of 100,000 mortgages plus a month.
Not advocating price falls, which as we have all seen in 2008, will do the opposite, resulting in further lending contraction and even fewer mortgages being made available. And fewer property sales completing.
Over-pricing? Surely not?
You see this over valuing all over the place.
70% of rightmove properties over the past 12 months haven't sold .
I'm trying to buy at the moment, put my house on at a sensible figure and had offers within 48 hours, all the houses i'm looking at buying are between 70 and 90k to high. (one has been on the market 3 of the last 5 years) - three agents they have had and still no sale. incredible?!?!?!??!?
Paul - Why do you offer to try it at a higher price if it results in all the aggravation?
@Paul
Your experience has been par for the course over many years - it is nothing new.
Soon as you say you can try a higher figure to a prospective vendor greed enters their heads and up goes the price. This is swiftly followed by 'how much will you charge me'? And 'does that include VAT'? The problem then is to get a fair offering price and a decent fee to cover all the marketing costs wasted when the price is too high. Then off they go after a few weeks to another agent with an immediate price reduction. Hey presto they sel it. Go back to the vendor and they then accuse you of telling them to market at this higher price.
Had one recently wanted to market with another without giving me notice and when I pointed out the contract they started getting pissy so I gave them rhyme and verse on contract.
Getting the price right FIRST time is crucial. Not after a while. This practice is not really acting for their client but a result of instruction winning tactics which puts prices too high to win business.