The old adage that estate agency is a people business is rarely more relevant than right now, when the market is relatively fragile and prices easing back a little.
To be honest if we were told in early 2022 that there would be 14 successive interest rate rises and a lengthy period of high inflation, we’d have snatched at the current housing market where prices are down slightly but hardly in the freefall some expected.
Even so, there’s inevitably a body of vendors hoping the market is not as bad in their area as elsewhere, and are confident their home will buck the trend when it comes to asking prices. Agents need to use all their people skills to get real with these vendors without losing their instruction.
Many agents have had experience of this during past market cycles but even so, it’s worth looking at four ways that I think you can break the bad news to over-optimistic sellers.
1. The Figures
You’ll have access to comparable and micro-local information on the local market street-to-street but it’s worth reminding vendors that Nationwide reported a UK-wide drop in average house prices of 5.3 per cent in the year to August, with Halifax’s data for the same period shows a 4.6 per cent drop.
And remind clients the sheer number of buyers is much lower now than in the recent past - residential sales in July were a whopping 22 per cent below the same month in 2022.
Against that backdrop, an over-ambitious asking price won’t cut the mustard - you know that and it’s vital that sellers do, too.
2. Explain How Buyers Feel
We’re all familiar with the rate rise history of the past 18 months, with the Bank of England’s base rate at 5.25 per cent.
It’s worth gently reminding over-keen vendors that 800,000 homeowners who are on fixed rates now will have their deals expire before Christmas. Some of those will be potential buyers of your client’s home, and they will be faced with hundreds of pounds more per month on a new deal.
New mortgages, especially for first time buyers, will be pricey. The average two-year fixed mortgage rate has jumped from around 2.3 per cent in 2021 to 6.56 per cent today.
So if your vendor’s buyer needs a mortgage, whether as a first time buyer or old hand at the property ladder, they will be paying a lot per month.
3. Use Key Dates
Any chance of a move-in by Christmas has long past if a property is only now going on the market, but many people taking the leap this autumn will have in their mind that they want to be seated in a new home by the end of winter.
Property consultancy TwentyEA says the ‘time to exchange’ is 113 days and the proportion of fall-throughs in the first three months of a deal is around 25 per cent. Many of the reasons for these fall throughs and delays are beyond the control of most individual sellers or their agents, but they make a compelling case for vendors not making things tougher still by asking for too high a price, stalling what might just be a quick sale to a keen buyer.
4. Emphasise The Benefits Of Moderation
It might be worth discretely letting vendors know how much better it looks to be moderate with price too - with some sellers, ‘keeping up appearances’ is vitally important.
So for a start the home will probably sell quicker (possibly with rival buyers) so neighbours will be duly impressed at the speed and value of the property.
This will avoid the slightly embarrassing problem of people having to see their home reduced in price if it’s languished on the market unsold.
There’s also the inflation factor. Selling quickly for a reasonable price saves the property effectively losing value if it remains unsold for several months during a time when inflation is still running at 6.7 per cent according to latest government data.
Now of course many of the best and most experienced agents will be taking this multi-pronged approach already. But I do know that many of the younger ones have been fortunate to work almost entirely during a period of rising prices and hot markets - today’s distinctly cooler market demands a different touch.
The likelihood is that agents’ personal skills will be needed more than ever during the autumn and winter before sales - and possibly prices - pick up again in the spring.
* Phil Spencer is a presenter, author, businessman and property investor. Phil’s consumer advice platform Move iQ, is a website, YouTube channel and podcast. Each preserve and reflect the same impartiality that consumers trust and base their property moving plans. Move iQ Pro, is Phil’s resource to support agents and has recently launched a video marketing product. Contact amanda@moveiQ.co.uk to find out more.