Sales skills, and the ability to negotiate in particular, have always been a core ingredient for any estate agent – and it is my feeling that, in the months ahead, an intuitive ability to negotiate between purchasers and vendors will be more in demand than ever.
My thinking is that the introduction of the additional 3% stamp duty charge has already changed the landscape of the housing market.
Certainly we are already hearing anecdotal evidence about how this might play out based purely on those purchasers who were unable to get their completions over the line by the end of play on March 31.
Agents are in unchartered territory. Of course the ability, and requirement, to negotiate has always been present, but with costs ever more stretched for buyers, it has taken on far greater importance.
Some buyers paying the extra 3% will not just be looking for vendors to meet them half way, but they will potentially need the seller to cover all of these costs.
Just hours after the deadline, those completions that didn’t happen saw purchasers urging their agents to contact vendors in order to renegotiate the price based on the added stamp duty costs.
In some cases, of course, an agreement could be reached, but one wonders how amenable vendors will be in the months and years ahead, if purchasers are only willing to put in offers which effectively recoup the full costs of the extra charges.
In a situation like this, the agent might be expected to suggest that vendors wait for those purchasers who perhaps are willing to make a closer offer, but there’s no guarantee that there are many of these individuals in the market.
It’s clear that, especially when selling to an investor or buy-to-let landlord, there is going to be an increased focus on negotiation in order to get sales over the line. And of course it is here that an excellent agent can stand out from the average.
This process is likely to begin at the very outset with a realistic valuation.
No agent needs to be reminded of the problems that lie in store for vendors if they either choose not to accept the agent’s valuation, or are insistent that ‘number 24 went for £330k a couple of months ago, so we want to put it on for £360k’.
In this new climate, agents will have to find a delicate balance when explaining the changes that have taken place, how this might affect the psychology of the buy-to-let landlord or additional property purchaser, and what might need to happen in order to actually sell the property.
In any normal year we would talk about the ups and downs of the housing market regardless of any recent Government intervention, but this year’s market is undoubtedly going to be shaped and changed by ongoing legislative developments.
The Government has run something of a crusade against landlords of late, and it was bound to upset the apple cart in terms of both this group’s appetite to keep purchasing, and their ability to make the sums work.
There is sometimes an assumption that purchasing property is like shooting fish in a barrel, but with changes to tax relief on mortgage interest payments, wear and tear allowance, plus the stricter affordability measures that lenders now have to put in place, there is undoubtedly a much lower margin available on many properties.
I think what we are likely to see is continued interest from large scale landlords in purchasing property– all recent surveys suggest most are in it for the long-term – but the potential for a greater chasm forming between what is acceptable to them, and what is acceptable to the vendor.
You might say, ‘T’was ever thus’, but not in a market where there is such a stamp duty discrepancy between additional owners and those purchasing main residences.
The other point to make is that if your vendor believes it’s a simple case of exchanging landlord for first-time buyer then they might be disappointed.
The costs of purchasing are still incredibly high for first-timers, the appetite to lend at high LTV levels appears to be going down not up, and wage levels remain stagnant.
Sadly that isn’t really a fertile environment to cultivate a major first-time buyer breakthrough.
So with the outlook for agents looking a little trickier than in recent times, it will certainly be the case that a healthy dose of realism for vendors at the very outset, coupled with a strong dollop of those tried and tested negotiation skills, will make all the difference when it comes to getting deals agreed and completed.
*Rob Clifford is CEO of CENTURY 21 UK, part of the SDL Group