More estate agencies will close as transactions stay at drought levels, Winkworth has told its shareholders – whilst also revealing that it has had approaches from 35 agents this year which want to sell up.
The firm is predicting just 575,000 housing transactions this year.
Reporting on its results for the first six months of this year, CEO Dominic Agace said that the downturn would lead to consolidation and benefit Winkworth.
He said: “UK residential transactions fell in the first half of 2011 on mixed sentiment towards the housing market but are still set to match 2010 levels for the year as a whole, with the prime central London market outperforming national trends.
“The market share gains that Winkworth has made in prime areas have offset a reduction in overall transaction numbers and supported commission income.
“Low volumes are expected to continue, particularly outside of London, and we expect this to lead to further branch closures by over-extended competitors, offering managers or owners of existing, successful businesses the opportunity to join Winkworth, allowing them to make progress in a flat volume market and position themselves as market leaders in the next upturn.”
The interim results report says: “We have seen a trebling in the number of existing businesses approaching us to convert, with a total of 25 applicants in H1 2011 compared to eight in H1 2010, as these seek to use our systems and network to grow their market share and attain sustainable profitability in a low-volume market place.”
Winkworth increased its revenues by 6.5% compared to the first six months of last year, up from £1.68m to £1.79m, while pre-tax profits crept up from £563,345 to £564,846 – this year’s figures boosted by record rental income, while sales volumes fell by 8.5%.
Winkworth also opened five new offices in the first half of this year.
Simon Agace, non-executive chairman, spoke in the report about the loss of ‘many’ deals because of conservative valuations.
He said: “A vendor will often be taken aback by the conservative valuation placed on his or her property by a mortgage surveyor, concerned by the risk of litigation that became a reality following over-enthusiastic valuations in prior boom years.
“The over-reaction to this in central London has caused the loss of many sales, not necessarily because buyers are disputing valuations, but because they are being influenced more by valuation agents than by underlying market conditions.”
He added: “We start the second half of this year with the expectation of adding further franchises as small, well-run, niche companies are attracted by the strength of the brand which is so important in this type of market.
“We are confident that Winkworth will grow throughout the rest of the year and into 2012, benefitting from the difficult economic conditions which currently beset the market.”
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Comments
Above a certain level the more instructions one has, apart from the practical and physical, MORE TIME (labour) is involved in servicing the total - especially sorting the wheat fro the chaff - therefore as night follows day, higher costs..
Hi Peebee,
Thanks for your response - have been out at a clients all day....
You said "The volume of transactions dictates a lot less than you think, actually. Basic input:output. The banks have a finite amount of money to lend. Call it a quota - that's what it was in the 70's"
It appears from the CML website, that banks don't have a finite amount of money to lend (or quota), inasmuch as there is no set limit, the restriction is simply related to perceived risk by the bank and their ability to borrow in the markets.
Gross mortgage lending in 2002 was £220 bn.
Gross mortgage lending in 2007 was £362bn
Gross mortgage lending in 2010 was £136bn
Lower values in 2002 resulted in higher lending and therefore volume of sales than 2010 - that lending is directly related to your fees. Hence your fees (not necessarily profit) should have been higher in 2002 than 2010.
You are right that costs have inflated since 2002, taking a chunk out of profits. Everyone has suffered the increase in fuel.
The point I'm trying to make is that volume is directly correlated to a buoyant market. I am not saying that a 40% drop would create volume - some people simply wouldn't sell, and volume would only be there if people were upsizing in quantity (if not in nequity), or forced to sell (repossessions - not currently an issue).
You said "You are an accountant. Quick question...actually, no - TWO quick questions:
1. How much have YOUR running costs risen in nine years?
2. How do YOUR FEES compare with those charged in 2002? "
Our running costs have risen the same as everyone elses.
Our fees have risen with inflation, so ~ 2.5% per year.
I am fortunate to be in a reasonably stable economic sector. We obviously didn't have the heydey that some estate agents had during the good times....we are also not experiencing the same difficulties as many estate agents are at the moment.
I guess that is simply the nature of our different professions.
Have a good weekend.
Unhappy Chappy: Does an Agent order a 'new' board for every instruction? No - not as such. A new correx board should last 12-24 months unless someone snaffles it for a snow-shovel; the post for bonny night; or decided to melt it in-situ for a laugh...
HOWEVER, every time you order a board to be erected, you pay a fee to the suppliers for that service. You want a 'Sold', Under Offer' or other slip attached; you pay them a fee. You want the board removed; you pay them a fee (unless it is included in the 'erection' fee of course...). The local cheeky chappies play silly buggers with it as per the above examples... you pay again!
Dunno what today's costs are - but in the mid-90s I was paying roughly forty quid a property.
As far as the rest of 'marketing costs go - sorry that is a trade secret. I COULD tell you - but I'd have to drown you veeeeery slowly afterwards... ;o)
Look - any other business wouldn't give you the time of day if you tried to intrude so deeply into their workings - so why should you think that Estate Agents will?
If anyone wants to comment I'll leave them to it. Anyway - every Agent will have differing values. Depends what they dio for their money; how well they have negotiated deals on marketing material etc.
Why, it will even depend on the brand of coffee they use! ;op
My experiences are out of date, however I feel safe to say - it'll be a few hundred knicker per pop - sale or no!!
Hi Peebee -
Sorry for the delay in reply been very busy!
Ok lets look at costs from a vendors poiint of view - per single new instuction!
Do EA's buy a new board for every new instuction- No
Do the pay Rightmove (another other tools) per property they list - No
Do they employ a more per instruction - No
Does the rent go up - No
More computers - No
More Cameras - No
Why more tea and coffee? - do they make a cuppa every time they take an instuction
Please tell me what are the EXTRA costs to the next agent i list my property with.
Much. much clearer now FBA,
cheers!
noybuyingyet: "If I understand you correctly, you are saying there is a fixed annual value for the nations property (in your example, £1 billion). If that is what you are saying, it is plainly not correct. Economics 101 failed (unless I have misunderstood your answer!"
Hmm - so I failed Ecomomics 1 did i? Ahh, well - I got over my 'O'-Level maths fail pretty well back in the 70s, and have done okay without it - so I guess this latest hiccup won't set me back too much either...
HOWEVER - you state "In a buoyant market, the same house could be sold 2 or more times in a year, therefore it is the volume of transactions that dictates what the 'pot' will be." That's interesting. No-one said that the market was going to become "buoyant" all of a sudden...
The volume of transactions dictates a lot less than you think, actually. Basic input:output. The banks have a finite amount of money to lend. Call it a quota - that's what it was in the 70's. You went to see the Building Society Manager to beg for a house loan. IF your face fit, then you were on the list. IF the month's quota had not already been allocated, THEN you were offered your loan.
IF you are selling to then buy, you will be redeeming your existing mortgage in order to take out a new one, or topping up the existing if it is portable. That being the case, then it is only the top-up which affects the quota in your view of the system. Sorry - WRONG... what about the mortgage that is needed from the quota for your buyer?
The money is only there to be spent ONCE, my friend!
"I imagine most estate agents would confirm that they were making more money in say 2002 in a market with high transaction levels and lower prices than they are at the moment." There are a number of reasons why Agents would be "making more money" nine years ago than today - MOST of them down to the huge increases in costs rather as opposed to Fees generated. In 2002, petrol was around 78 pence per litre. That puts MY spend up fifty quid A WEEK on that one item only. Gas; electric - all rocketed in the years from 02 to now. How much do you reckon an Agent's office, open nine, ten more hours per day six days a week is paying for their utility bills? How much of that would they have paid LESS in 2002? Quick answer - without the use of Econmics101 - A BLOODY BIG CHUNK.
You are an accountant. Quick question...actually, no - TWO quick questions:
1. How much have YOUR running costs risen in nine years?
2. How do YOUR FEES compare with those charged in 2002?
I look forward to your responses... ;o)
Hi PbroAgent
Thanks for your response - you make some good points and make them clearly.
You are right to highlight the impact of those who bought in the bubble and their inability to sell - unless forced to by the banks, but no one wants to see people being turfed out.
I did at one point think we would see a dramatic fall in real prices, and I still don't know what effect the euro crisis will have on interest rates being charged by lenders, which increasingly is decoupling from the BOE base rate.
Aside from the possible impacts of the euro crisis, because I simply don't know what that means for us when it all falls apart, I think I agree with you, that we will see a slow fall in prices.
You are also right about inflation....the goverment has correctly identified that it is easier to allow savers to lose out rather than seeing the carnage of people being kicked out on to the streets....although that may end up happening anyway!!
So many unknowns in this economic climate!!
Hope you manage okay through the current downturn!
@Notbuyingyet
The problem is that too many people bought into the bubble and many of those bought in too late (that is why it was a bubble). Many of those buyers who bought in with little or no deposit are now facing negative equity as it is, not to mention what would happen should prices fall by 40%.
Ultimately this would "lock in" people to their homes and whilst there no doubt would be a lot more buyers, there would also be a lot fewer sellers. Using the laws of supply and demand, this would clearly push prices back up again (and rather more quickly too i might suggest).
The other issue is lending, having been burnt once, banks are less likely to be burnt again. I'd imagine that if prices did fall by 40% banks would be so over exposed to all the NE and bad debt that the wheels would sieze again (which was exactly what cause the credit crunch when the US housing market crashed in the first place) and there would be carnage on the street.
Unfortunately the least worst solution appears to be for the government to put policies in place for prices to slowly fall and eventually stabilise, whilst also inflating the debt away in a controlled manor. Not good for peoples' savings, but good for over indebted homeowners.
As you can see it is a multi-faceted problem with no easy fixes.
Man is happy only as he finds work worth doing -- and
does it well.
E. Merrill Root (1895-1973)
When a work lifts your spirits and inspires bold and
noble thoughts in you, do not look for any other standard
to judge by: the work is good, the product of a master
craftsman.
La Bruyere
"Character cannot be developed in peace and quiet. Only
through experiences of trial and suffering can the soul be
strengthened, vision be cleared, ambition insured and
success achieved."
Helen Keller
Hi Peebee,
Thanks for your reply.
I can only work with the figures I read - I think it was RICS, and I think it was a nationwide average - may be higher in your neck of the woods though.....
If I understand you correctly, you are saying there is a fixed annual value for the nations property (in your example, £1 billion). If that is what you are saying, it is plainly not correct. Economics 101 failed (unless I have misunderstood your answer!!:-))
In a buoyant market, the same house could be sold 2 or more times in a year, therefore it is the volume of transactions that dictates what the 'pot' will be.
I imagine most estate agents would confirm that they were making more money in say 2002 in a market with high transaction levels and lower prices than they are at the moment.
Variable costs may as you rightly point out be linked to properties listed, rather than sold, however, agai, in a bouyant market, the vast majority of properties listed end up being sold, hence a further saving over todays market where variable costs are incurred often with no sale.
As an accountant, I have dealt with a number of clients over the past year that have managed to fix their rent and in the odd case reduce their rent, however, they tend to be inflation linked,like house prices and therefore your fees, so can't really grumble on that front:-)
Unhappy Chappy. "Marketing costs - it does not cost 64% more to Market another 64 more properties. Be honest what are the extra costs here"
Sorry - but YES IT DOES! MARKETING costs as opposed to "costs" You order 100 boards % £30 quid a pop you pay £3000. Order 164 - you pay £4920.
The rent doesn't go up because you are busier. I believe THAT is the ONLY cost that would be reasonably static. More properties - especially increases in the realms that we are talking (40% and above...) means more staff; more equipment (therefore more electricity...) - even more tea and coffee!
If you believe for ONE SECOND that the board cost covers it, Unhappy - then you are not the person I thought you to be...
As for it being an art/science/trick-of-the-light - well - you may have your thoughts and I have mine. Lets put it this way. When you are selling a widget, you are selling to someone who knows:
WHAT they want
WHEN they want it
HOW MUCH they will pay.
When you are selling a property, you are selling to someone who knows:
The similarity ends at the word SOMEONE!
Hope this clarifies matters. Ask any Estate Agent for confirmation.
Ray Evans: Mate - I thought you would want to be Air Vice Marshall, directing things back at the airfield! ;o)
notbuyingyet: "Is it not the situation at the moment that the 'average' estate agent makes ~ 5 sales a month..." which 'average' are you quoting? RICS - if so it is FAR from 'average' I think you will find...
"Surely the market would get a massive kickstart at those prices and volumes would be back up to normal levels, which I'm guessing used to be ~ 15 per month or more?" Back to Economics 101: If there is, say, a billion quid up for grabs and you want to split it into £250k bundles, then you get 4000 bundles - yes? If you want to split it into £150k bundles, then you get 6666 full bundles and a hundred grands worth of loose change - correct again? Point is - there is ONLY a billion. You can't create more bundles WITHOUT reducing the content of the bundles further.
In the meantime, Agents' VARIABLE costs will rise in direct proportion to the number of additional properties LISTED - not SOLD! Something else to factor - "FIXED" costs (with the exception of rent when you might get three or if you are real lucky five year fixed...) are never 'fixed' for more than a year - and, of course, they NEVER go down.
Ahhh... IF ONLY it were as straightforward as your perfect world scenario... ;o)
Fee -
Sound followed by "fie, fo, fum", and uttered by vendor when paying commission.
XX
thats was me, sorry
Wardy,
To help you, I found out about Frogs clearing level for you.
A "clearing level" is calculated by one who compiles and analyses voluminous data of problematical accuracy from sources of dubious veracity and derives therefrom a numerical quantification of unquestionable necessity, analogous to a nebelous and euphemistic concept representational of value commensurate with ambient configurations of the open market and promulgates thereby a precise written declamation which delineates his observation, deliberations and conclusions all done while he feighns absolute ignorance of the avericious machinations of Buyers, Sellers, Brokers and Lenders, compensated only by that penurious stipend known as the professional fee.
Then guesses the value.
Thanks Pee Bee, we never cross swords, only opinions, and only on EA matters.
Peebee -i appreciate the thought process you have been through and do consider your opinions and experience valid. however I dispute your conclusion
Let's take them one at a time.
Marketing costs - it does not cost 64% more to Market another 64 more properties. Be honest what are the extra costs here.
An art hmmmn interesting only because one perceives it to be so. Is selling widgets an art too. : )
Peebee -i appreciate the thought process you have been through and do consider your opinions and experience valid. however I dispute your conclusion
Let's take them one at a time.
Marketing costs - it does not cost 64% more to Market another 64 more properties. Be honest what are the extra costs here.
An art hmmmn interesting only because one perceives it to be so. Is selling widgets an art too. : )
Pee Bee
1. With free choice, I doubt it but hard to comment. I've never attended one.
2. I doubt he would be but if so I'd negotiate. Failing that recommendation by friends/relatives. Failing that there was a real sort I dealt with a while back. Short skirt and low cut top if you please. Maybe I'd give her a nudge.
3. Prices are falling and this one in particular by about 25% since 2006. If I hadn't bought it now then that process would likely have continued until somebody else got tempted. At this level it ticked my boxes but who knows how low would be neccessary to tick somebody elses? Valuer was happy with the price agreed.
4. I wouldn't be happy but I'd take it on the chin. If nobody wants it for what I just paid then so be it. Hopefully I wont have to sell it today.
The plan is to live there for 4 years or so and pay off the mortgage while finance is cheap. In my back of fag packet calcs price falls are offset by cheap borrowing, no rent payable and potential price falls on the family home further down the track. Also a couple of tins of magnolia and those twigs.
@PeeBee
Can I be 'tail gun Charlie'? ;>)
Un -nappie chappie- You could never run an EA and close just because Cebeebis came on the TV everyday.
Hi Peebee,
If I may make a genuine comment on your calculations. I have no experience of estate agency other than when I bought and sold my house (which was a positive experience as far as the estate agent went, not with regard to the seller's solicitor however!!!), so I may be missing some costs.....
Is it not the situation at the moment that the 'average' estate agent makes ~ 5 sales a month, which compared to the heyday is rather paultry.
So if the 'average' price is say £250,000 at 1.5% commission, income would be £18.750 per month.
If prices dropped 40%, so that the average was now £150,000, @1.5% = £2,250/sale. You would now need to sell just over 8 properties per month to match 'todays' turnover.
Surely the market would get a massive kickstart at those prices and volumes would be back up to normal levels, which I'm guessing used to be ~ 15 per month or more?
So all the agents that are currently struggling to cover their fixed costs e.g. rent, subscriptions, salaries etc would now be able to do that and pocket a tidy amount themselves?
As I said, I don't know the ins and outs of estate agency, so I may have missed something obvious........
FTO Opinion:
Hmmm... interesting...
1. Strange answer - not what I asked. If you had a free choice; if you didn't NEED to, would you auction and why/why not?
2. What if the 'decent bloke' was half a percent higher than the pack? I'll come back to FBA in a minute...
3. WHY do you suspect less? Did you pay too much? Did the property get downvalued but you carried on regardless?
4. Would you be happy with that loss? What would you do to reduce it or even turn the loss into a break-even - or dare I say it - profit?
Look forward to the answers.
NOW - back to Fun Boy. Here's my dilemma. Me and 'him' (I'm fairly sure I've got that one right...) have some history. I don't 'get' a lot of his fun. He doesn't agree with a lot of what I say. I've previously accused him in not so many words of being a boom-time success merchant. I've had a go at him for his attitude with certain posters - both HPCers and Agents.
There isn't a lot of love in the room, if you follow my drift... kinda like Maverick and Iceman in Top Gun.
But would I want him as my wingman?
Yes, I think I would. I reckon he knows his stuff. I would fly with him; Jonnie; wardy; Ace; Country Lass... Hell - the list is long and distinguished, to continue on the Top Gun theme.
HOWEVER... I'd want a remote-control button for his ejector seat in case he went renegade on me...!! ;o)
@ FBA
The fool?
Unhappy Chappy: The post was mainly for the majority of militant HPCers who blight this site. rant, Sibley's... etc are another breed - or hide their true selves well - and their intelligent banter allows some insight to their thought processes. The others.... best I say nothing.
Why I included you was simply that the idea of Agents NOT charging
a) what they are worth, and
b) what they NEED in order to trade profitably
is a recipe for disaster. One that does not benefit ANYONE including the vendors.
You say "...more houses will sell and estate agents will make more revenue than when they are selling very few" Hmmm - would they? Lets look at 'today' and 'twelfth of never' - the day when prices fall the mythical 41% 'overpricing' chasm that HPCers love to quote Rightmove for...:
Today: Agent selling 100 units per year; average £230000; average Fee 1.5%. Fee Income - £345,000.
Scene 2. Agent selling 164 units per year; average £140000; average Fee 1.5%. Fee Income - £344400.
= VIRTUALLY SAME income.
HOWEVER... Agent needs to sell 64 MORE units to make same income. That is 64% more marketing costs.
SO - Agent needs to sell another 21.5% more property simply to cover costs.
SO - costs rise again - by a further 7%.
SO - Agent then needs to increase sales to compensate... and so it goes on.
There is, however, a problem as soon as you reach the first 'SO'. Going back to Economics 101 as our HPCers like to refer - there is a finite amount of money out there. The total value of 100 units @ £230000 is equal to 164 units @ £140000 (give or take a few quid...). You ADD another 35 units into the equation - there isn't the money available to finance the purchases!
Therefore, Agents will be WORSE OFF. Same income: MORE COSTS.
Where we DO agree, mon ami - is that Agents who overvalue to get the instruction want put against the wall. Agents who charge a 'flat fee' (I assume you mean a Fixed Price...) either have no confidence in their own abilities or simply HAVE no abilities to negotiate the best price for their client (which is the whole reason that the client instructs them in the first place, is it not...?); and NSNF is a curse on the industry.
You want Agents' Fees to be 'scientific'. Why? There is NO SCIENCE in selling property - it is an art. Good art sells for its' worth - and is appreciated by those who invest in it.
Bad art is just bad art.
FTO Opinion?
If... (I love if) you got into a fight with a gang of hoodie muggers in the street, who would you rather be walking with as your companion, Mr Bean or Ricky Hatton?
If you suddenly collapsed in the street with chest pains who would you want running you to the hospital, a just arrived in the UK foreign mini cab driver without a sat nav or an NHS ambulance with ells on?
If you wanted to sell your property would you select an estate agent who would stutter, fold on negotiations and agree wholeheartedly with the opinion of a luke warm potential buyer on his low offer on your house and lose you money or would you prefer to engage an agent who would negotiate firmly, not suffer fools gladly, and get you the best price?
Guess which one I am?
ANd if you wanted TOO much for your dez rez.. hey!
It would be mutual, I wouldn't want your instruction.
@PeeBee
1. I guess that I would if I had to.
2. Assuming all the fees were in the same ballpark I'd probably choose one of the guys that I've recently dealt with. Not involved in my recent purchase but was a decent bloke. Note that any agents I encountered with an attitude like Fun Boy would most definitely not be my marketing agent.
3. I suspect less than I just paid. Say 5 maybe 10 grand. This one was a bit like a long drawn out Dutch auction. I jumped in at this point but if I hadn't, who knows when somebody else might have?
(having said that if I stick some twigs in a vase the value will obviously increase by £20k minimum)
4. Roughly a loss of 7 to 12 grand. Ish. Maybe.
(unless I get those twigs)
@Agent still
Well send them your P60, bank statments, have the credit checks done etc. etc. like I did and you'll probably get knocked back. So I guess the offer I had is worth a little more than yours.
Note : overvalution by the vendor that is!
Peebee -
"You always claim that when house prices drop through the floor Agents will make MORE money because they will SELL more" No i claim that when affordabilty of housing is improved (however that is achieved) more houses will sell and estate agents will make more revenue than when they are selling very few
I also say that overvaluing to gain instructions on a no sale no fee flat fee % rate is old fashioned, unscientific and causing more EA's to go to the wall
Hi Yorkshire - I think you sum it up nicely, there are still many vendors unwilling or unable to adjust to the current market. So FBA I would not be investing in a start up EA in such a climate and for that reason im OUT! :0)
p.s Richard - Thank you for you rintelligent input
I've just had a chat with my mortgage advisor as we're both bored because the phone isn't ringing, she popped some figures into her PC and hey presto I am in receipt of a mortgage offer (subject to a few further checks and finding a property) for £1million!!! I've only earnt about 15k this year. Ok I was not that accurate with the info we put in but proves they aint worth the papaer they're written on
SO... FTO Opinion:
I'd like to put something to you. Let's play 'What If...?'. Suppose we change your name again - second time in a day. FTS Opinion. You become First Time SELLER.
1. Will you use an auction to sell? WHY?
2. If NO - HOW would you choose the marketing Agent?
3. How much would you expect to SELL your property for today? (I trust you to be totally honest...)
4. How much PROFIT/LOSS will that mean to you based on your purchase price?
Look forward to the answers...
Oh my Lord!
Chas: what a plonker.. The Frog, and even bigger one, FTB Opinion, yet bigger.
Chas, I dont mind it 'up me' one little bit. Im a fun person, it makes me laugh. But HPC'ers do not make me laugh, they make me cringe. Your comments are of no use to anyone, not even yourself.
The Frog: I made no comment whatsoever about your reference to "market clearing price" That was Wardy who pinged you on that. Why would I want t make comment on your ill informed use of terminology? You are using an American term, we dont use it here, let me translate it for you, it is that in English means "Comparable price today, not the future" Twat!
And no, you are not smart enough now to be an estate agent and you never will be. I will explain to you once more. You have obviously got no idea of the complexities involved in running a busy estate agency office. If you wanted to test your theory, put your money where your mouth is, and become one you would find 3 things. 1. It would cost you over £100k to start your business, 2. If you started such a business you would find banging on to your potential clients about having lower asking prices would win you no business. 3. How hard it is to be an estate agent and how stupid, ignorant and ill informed your opinion was, this you would reflect on after you had gone bust. There are hundreds of things would need to be on top of, day to day, week in week out, month in month out, never ending. And you do not have the foggiest ideas of what those things might be. You talk utter rubbish.
FTB Opinion.. No you didn't.
HPC'ers belong on a different site, not here.
It doesn't offend me, just makes me laugh that you come here spouting opinion that has no meaning. I will sometimes drop a line back to you, but more often I just ignore you, thus making my use of this site less and less.
Well done
Guys, if the bank want to call it a mortgage offer subject to X, Y, Z then I'm happy to go with their terminology.
@FTB Opinion
That confirmation letter would have been your mortgage offer not your initial AIP or what ever it was dressed up as.
Only when a big letter with a bucket load of Ts&Cs, attached to the paperwork which will allow you solicitor to draw down on real funds, is actually sent to your solicitor, do you actually have a mortgage offer.
Before then you only have a glorified agreement in principle - the agreement that in principle they will lend you the money based on a.....(yes you guessed it) satisfactory survey.
FTB Opinion,
so what you had is an AIP. That was not a mortgage offer.
@Ray
The lender had all information (P60's, bank statements, work refs, credit checks etc. etc.) other than the property address. Definitely an offer subject to survey. I'm only calling it what the lender does.
Once the offer was accepted on a Tuesday, we gave the address, survey done on the Friday, offer confirmed the following Friday.
@PeeBee
Good point. Old habits die hard. While I'm at it I'll give that opinion a run out.
I think that my experience echos many of the FTB's/HPC's/whatever who post here. I'd been looking all year. Dorset. Have seen only 2 places in that time which I considered decent value. The first was early doors, I had no finance in place so didn't offer, it sold within a month. The second I just bought. Repo. Previously owned by an investor-type.
FTB Opinion.
I think you have had an 'offer in principle' which is not an offer at all really, it is kind of advisory and subject to all references on you being confirmed AND subject to the lenders survey valuation?
FTB Opinion: "It was an offer subject to satisfactory valuation. The survey got done and the offer got confirmed. Job done."
So - that would mean your name should be FTO Opinion then - First Time OWNER??
yes pee bee it might surprise me and sell and it might not sell and cost me, thats the game we play. Quite pleased with the 1.5, as average fees in our area have dropped to closer to 1%. - Yes bear that in mind general public, our fees have gone down significantly, a house worth 300k would once have earnt me £4500, now that house is probably worth 250 and the average fee is £2500. Interstingly 2 agents in my patch have closed recently, the most expensive agent who charge 1.75-2.5% and the cheapest who charged 0.66%. I would love to drive fees back up, but when agents have few listings to chase after the fees get hit too.
@wardy
If I had the paperwork to hand I'd quote it for you. It was an offer subject to satisfactory valuation. The survey got done and the offer got confirmed. Job done.
SO...
the yorkshire agent says :"Anyhow fee wise, 1.5%, the same as in 09 (and yes I sold it then)"
Hmmm... let's analyse this a bit. You have 2 years of increases in costs; and now will most likely earn LESS for doing a job that will entail MORE work and MORE expenditure than it did in 2009.
SO... HPCers (and Unhappy Chappy...) - doesn't exactly make economic sense - does it? Wonder why Agents do it? Well, so do THEY, sometimes!
You lot always bang on about economics. You always claim that when house prices drop through the floor Agents will make MORE money because they will SELL more...
Even with my Maths 'O'-Level failure I can work out the flaws in that argument.
I'd like to see any of you lot do the same - and take the cr@p that comes with the job as well!
Actually - no, I wouldn't. You wouldn't know where to start...
the yorkshire agent: "Like most agents i'll put it on and have to work hard getting the price down over the next 6-12 months - this property though proves exactly why the market is stagnant."
Actually, no it doesn't - YET! Who knows - it might just surprise you, mate...
Let's reconvene in 12 months - then we can debate and decide, eh?
Of course - if you DO sell it in the meantime - I WANT TO KNOW!! ;o)
@ FTB Opinion
NO YOU DIDN'T
@PeeBee
You can. You can have an offer subject to survey. I had one.
Brit1234: "I wish the estate agents understood there are loads of buyers waiting on the side lines with deposits and mortgage offers."
WHEN will you get THIS into your skull...
YOU CAN NOT - REPEAT, NOT - HAVE A "MORTGAGE OFFER" WITHOUT A SURVEY BEING CARRIED OUT ON A PROPERTY!!
Beggars belief...
"1 of you non estate agent HPC "know it all" self opinionated, one sided, self promoting, egotistical and poorly informed twats"
Jesus, you don't even know what a 'market clearing price' is and you call us poorly informed. You are not educated enough to know just how little you know.
"stump up your £100k and be an estate agent, show us all how you really run an EA business."
We are smart enough not to open one now, the industry is hell bend on destroying itself.
5 years time when most of you are bust will be the right time.
ha ha ha have a listen to Fun Bi Agent. He doesn't like it up him...........or does he?
morning Pee Bee & unhappy chappy,
I was trying to use the property as an example to those not in the industry how valuing a property can be somewhat difficult, yes the comps were used as a yardstick and weighed up against the current demand/market etc etc, basically despite my 20yrs or so in the industry and the 000's of houses i've valued, I've got no idea what it might sell for and niether has anyone else!! The vendor did appreciate my honesty at least. I would not like to put it on the market and sell it overnight for the lowest price so its only right that it gets tested at the higher price. Anyhow fee wise, 1.5%, the same as in 09 (and yes I sold it then)
Have i got the listing??................................................................................................YES!!, but then quite predictably only if i try it at the other agents £325k. Like most agents i'll put it on and have to work hard getting the price down over the next 6-12 months - this property though proves exactly why the market is stagnant.
Chris, nice effort in trying to explain to some of these berks what goes on but I fear it may fall on deaf ears. Many agents on here have felt they have to justify themselves and what they do and unfortunately these debates are now getting boring.
We have to remember who we are debating with. Mostly members of a website forum that advocate a huge crash. These people DO NOT represent the normal house buying public. We are never going to see eye to eye and the fact remains that it is our job to sell houses for the highest price and they will always hate us for that.
Take Brit for example. He thinks a AIP that he got 6 months ago is a mortgage offer and ergo so has every other first time buyer. I have tried explaining the challenges we have with underwriters before now but it was pointless.
It may surprise many of the HPC members, the conversations many of us are having with our vendors about price. My job has become one of disappointing vendors about the price of their homes on a daily basis. It’s not nice.
So to all the agents who take their time to reply, with knowledge and day to day experience of the market, lenders and buyers I suggest we save our breath.
Just 1, only 1, thats all I would like to see...
1 of you non estate agent HPC "know it all" self opinionated, one sided, self promoting, egotistical and poorly informed twats to stump up your £100k and be an estate agent, show us all how you really run an EA business.
I can tell each and every on of you, the key to success will not be you ranting on about "lower asking prices"
Idiots
From what I read here, not one of you has the foggiest idea.
Pure nonsense
"If they priced realistically their commission fees would increase and they wouldn't go bust. "
This is the hardest part of estate agency! As has already been mentioned in this thread, the estate agent needs to know what something is worth based on similar properties selling recently in that area. Then he/ she needs to get this across to the vendor tactfully so that the vendor doesn't disengage with the agent and walk them to the door. The agent needs to stay in the game and then sell the services of the agency so that when the vendor decides to use that agency, the agent can suggest an asking price that is close to the true value of the property. If he or she can pull this off, that agency will list properties they can sell. After 18-years in the industry, I can generally pull this off, but sometimes vendor greed is way to high and I have to walk away!
Like yesterday in fact when I valued a detached bungalow on an acre of land to be worth around £400k to £430k. The vendor wanted to use us and gave me first chance to list it to ourselves, but only if I agreed to list it at £600k !!!!!!!!
I declined the offer and wished her all the very best. (A slightly smaller bungalow two doors along with a half acre plot sold last year for £310k, so I felt I was being fair.
Any agent listing it will waste their time & money and if they can't get the vendor to lower her price within the next 3 or 4-months, they will use up thier contract period and lose the instruction to another agent or take it off the market completely!!
The estate agent valuer is quite possibly the most important employee in any estate agency. Get this bit right, the business will have plenty of stock at sensible prices. These properties will sell and sold boards with happy vendors drives more business their way. The rubbish estate agents that over-value and rely on price reductions have a much lower chance of success.
These will probably be the estate agents courting Winkworths as they can't make it on their own! Birds of a feather and all that. :-)
@ Its not hard chaps
OK, Hampshire. 4 bed detached, 1 acre of grounds, river frontage, grade 1 or 2 listed, requiring no work, thatched roof would be nice. £150k, you find it, I'll buy it.
Get valuing. Good luck.
I wish the estate agents understood there are loads of buyers waiting on the side lines with deposits and mortgage offers. If they priced realistically their commission fees would increase and they wouldn't go bust.
Is it true estate agents nowadays have the skills to sell in rising markets rather than now a falling one?
Unhappy - Re-Arrange "Cap the fits if it wear"
As I did not use your name you feel you are guilty as charged, anyway Cebeebies is on frig off and watch something you can work out!
Benefits office is open again in the morning.
Glad you were offended, worth the post.
No wonder EA's are not trusted.
In that case the answer is yes. I'll take a real buyer over an imaginary one every time.
@Would B Buyer.
My post was nothing to do with 'if the market says...'
Read my original posts again. I was asking if the EA's true opinion as to the 'value' of a property was one figure but because he had potentilal purchasers who WANTED it at a lower figure (could afford?) would he advise a lower figure that matched to achieve a quick sale?
End.
Yorkshire Agent -
I have a couple of questions re your valuation
1. What reseach of this property did you do to reach your valution.
2. Did you get the instruction?
Oh and Good luck
Richard - I do not hate Estate agents at all I wish them all good luck. I dont see much hatred i can see a lot of frustrtaions from potential first time buyers, (note i am not one) however, i did find your post very childish.
3. Anon Coward - haha that made me smile
@ Ray Evans. If the market says the house is worth £100k, which is based on what buyers are prepared to pay, how do you come up with £125k? Most of the reasons why sales volumes are so low is precisely because vendors, encouraged by agents, are holding out for unrealistic prices.
@Ray
But you'll be missing out on my circle of happiness, come on over, you know it makes sense..............
@Its not hard chaps.
Thank you for your reply but my final words to you on this particular matter are: I am glad I am not one of your potential clients ;>)
@Ray Evans
In my true opinion it's worth what someone will pay for it. For that to happen the buyer needs to exist rather than be a figmant of the vendors imagination.
No need to appologise. My job is to sell houses for the best price I can. I do that by targeting the local population of buyers. I have to. Buyers are thin on the ground so if there are say 5 local buyers after said 3 bed semi, I need to make sure that mine rather than my competitors clients get that sale.
I will make valuations based on that pool of buyers and be quite upfront about it. "Look, I know you payed £X way back whenever but in todays market buyers are only willing to offer £Y for this type of property etc. etc. but don't worry, your next place might be cheaper than you think.......etc. etc."
If they are not happy with that and want to hold out for more then somebody else can have the listing. It's no sweat off my sack.
@Its not hard chaps.
You said "...You then target your valuations with these people in mind"
How much in mind? Never mind a true opinion for the client, just get a quick sale?
Please read my post. Maybe I have not made myself clear eneough and should have added "in your true opinion" on one that would be say £125,000.
If I have misinterpreted your intentions and I hope I have, I apologise
the yorkshire agent - hello again, mon ami! ;o)
Okay - I'm REALLY gonna try not to get up your pipe again, Sir/Madam/Prefer-not-to-disclose...
Here's my take on the scenario:
You say "the last similar one on the development sold in 2009 for £240k after an original asking price of £300k... told the vendor theirs is probably worth £225k (its not quite as good as the one in 2009)". I have a question. WHY should the condition of a property sold two years ago influence TODAYS price? That house is gone. Sold. Not available. Someone bought it. You snooze; you lose.
Surely your aim is to achieve EQUAL TO, or BETTER than the 09 figure? ALL that the public can now find on t'interweb for a comp is the Sold price.
That is THEIR yardstick - shouldn't it also be YOURS??
Another thing I have to ask (and of course you wouldn't expect any less of me! ;o) ) - I assume that you sold the 09 property, as you know much about it. How do your Sale Fees compare NOW to those charged THEN?
Look forward to debating this further...
@Anon
Stuff London. Come down to Hampshire and I'll hook you up.
Bairstow Eves (Kingsley branch) Northampton closed just a few weeks ago.
By the way if you want to look at your local EAs financials there available free on: www.levelbusiness.com
@FBA
I understand the process perfectly well it is you that seems to miss the fundamental point, because you are unable to take an objective view of this. The banks have to assess the risk to themselves because it is not the vendors or EA's money at risk here.
We would like to buy and have been looking for some time. We live in Outer London and I am not exaggerating when I say that asking prices are higher than they ever were before. Very little, of course, is selling. We have stopped looking for now because the economic climate in uncertain and vendors want more than they ever wanted before. On top of that, we just feel that,between the EAs and vendors, they trying to squeeze the last penny out of us and it makes it hard to do business because of the distrust this creates. It is not helped to see on Zoopla that the asking prices are on a totally different planet to what sold prices in better times than now are. We are renting and have money in the bank and we are ready to buy but only when we are happy that vendors and EAs want to deal honestly with us and not try to just get rich at our expense.
@Ray Evans
Why would it be say £125k? If buyers in the local area will only pay £100k for a 3 bed semi then by definition that is what it is worth. Of course I'm gonna value it with the buyer in mind. I can't sell it to somebody who doesn't exist.
I take instruction from vendors who want to sell rather than deluded idiots. They're happy and I'm happy. Everyone is a winner. Buyer, seller, EA, solicitor, surveyor........ It's a circle of happiness.
@Its not hard chaps
"..... You get a list together of the potential buyers sniffing around your patch (fnar fnar) and what they want......You then target your valuations with these people in mind...."..
So, in you view if you have a buyer that 'wants' a 3 bed semi for £100,000 you think that figure should be given as a "valuation" to the unsuspecting client on one that would be say £125,000, because of a quick sale to that buyer? That is what you are suggesting!
You get a list together of the potential buyers sniffing around your patch (fnar fnar) and what they want. You then target your valuations with these people in mind. It's no good valuing for a mythical 2007-style buyer who no longer exists.
We're selling loads but you have to be hard with your vendors. Who wants to take on deluded rubbish that'll never sell?
@agent still
It doesn't sound very expert to take on a listing that has no chance of selling. More like throwing your time and money down the drain.
There are tons of potential buyers like me, deposits burning a hole in our pockets, waiting patiently for a reasonable asking price to come along.
I thought the EA's job was to match buyers with sellers. That clearly isn't happening. You guys need to get better.
There is a huge disconnect between what agents are and what the general public think/ want us to be.
We are NOT considered to be professionals.
None of us.
The general public view us as a (un?)necessary evil.
That is why some of the non-agency comments her can be so vitriolic.
Sometimes I feel like Jack Nicholson in "A Few Good Men".
Me: You want answers?
Owner: I want the truth!
Me: You can't handle the truth! Son, we live in a world that has walls. And those walls have to be sold by men with mobile phones. Who's gonna do it? You? Your solicitor? I have a greater responsibility than you can possibly fathom. You weep for Rightmove and you curse Findaproperty. You have that luxury. You have the luxury of not knowing what I know: that the NAEAs death, while tragic, probably saved sales. And my existence, while grotesque and incomprehensible to you, saves sales...You don't want the truth. Because deep down, in places you don't talk about at parties, you want me selling property. You need me selling property.
We use words like valuation, contract, sole agency... we use these words as the backbone to a life spent defending something. You use 'em as a punchline. I have neither the time nor the inclination to explain myself to a man who rises and sleeps under the blanket of the very freedom I provide, then questions the manner in which I provide it! I'd rather you just said thank you and went on your way. Otherwise, I suggest you pick up phone and stand a post. Either way, I don't give a damn what you think you're entitled to!
Owner: Did you order the exchange?
Me: (quietly) I did the job you sent me to do.
Owner: Did you order the exchange?
Me: You're goddamn right I did!!
ftb opinion - you don't seem to understand the comments being made by the industry experts here - agents do normally value realistically, vendors don't accept that realistic value and ask them or another agent to try a higher price - the property then sticks on the market until it eventually gets reduced or withdrawn.
How puzzling many comments are on this blog, why is so much hate poured on people losing their jobs, their business and investment?
Could it be these sad people have never done anything for themselves and live of the state on benefits, contributing nothing to society?
Just go plague another site, CBeebies perhaps? Being helpful here’s the link www.bbc.co.uk/cbeebies
So agents would rather go bust than value realistically? What a strange bunch.
thanks yorkshire - you're talking good sense.
rantnrave - transactions are down indeed, this september every bit as quiet as september 08. oh dear, winkworths are spot on.
Transactions down again according to today's Land Reg release:
http://www1.landregistry.gov.uk/upload/documents/HPI_Report_Aug_11_ta6ds1.pdf
an example for anyone out there who knows nothing about valuation and estate agency; went to a property this week, the last similar one on the development sold in 2009 for £240k after an original asking price of £300k. (one sold in 2004 for £295,000) I told the vendor theirs is probably worth £225k (its not quite as good as the one in 2009). However the development in question is fairly unique - being the only one of its kind in the town centre - somebody might, just might, pay top price to be there so I told them it could be worth trying for a few weeks at £275k. Have i over valued it?
Truth is that question can only be answered after about 4-6 weeks of marketing.
oh incidently they had 2 other valuations one said £325k, the other said £250k.
*Ahem*
@The Frog.
Do you ever actually READ anything properly before making comments - I think not.
However, an observaton about all this over valuing and under valuing etc.
.It is impossible to give a “fixed figure” valuation and those that do so are fooling themselves and their clients.
One can only give an opinion within a bracket, e.g. £150,000 to £165,000. The asking figure is then in the hands of the vendor, the actual “value” (sale figure) depends upon the circumstances of the vendor and the purchaser and is agreed between them, if applicable with the help of the agent. If a moneylender is involved on either side, if their opinion is a deal breaker this figure may have to be adjusted by mutual consent or just not proceed further.
Poorly informed people should stop blaming the EA all the time
The estate agent at the end of my road closes everyday at about 6. Is that this guy means?
With the above in mind, WILL MPL INTERIORS PLEASE STOP SENDING ME THEIR SODDING EMAILS !!!!
Thank-you.
What is wrong with you Unhappy? Do you have no idea of the concepts of how various segments of the property industry work and how they link together to make 'the whole process' work?
If a surveyor is doing a mortgage val the property has had its 3EA vals, gone on the market with one of them, been advertised at 'a price', has attracted a buyer, the buyer has agreed to buy and the vendor has agreed to sell.... at a figure agreed by all (seller, buyer, estate agent).
How is that overpriced? The market found its level.
I don't know of any EA recently that has not lost sales due to surveyors 'comments' on an agreed price.
So: one persons opinion trumps 3 peoples opinion, ... result... agreed deal off.... AND... Buyer paid £500+ for the surveyor to scupper his deal.
Do surveyors care? not on your nelly buddy. On to the next survey for anothe £500 (and another down value)
If 99% of agents think prices are too high, then the remaining 1% all seem to post on this site...
What a great Winkworth Advert.
****NEWS FLASH****
In efforts to offer diversification of services to potential customers to negate potential lower income levels for franchisees (and, of course, the Agace family), Winkworth franchisees are going to offer 'ICE CREAM' as a new product during this warm spell. They will offer cones, wafers and 99's. The only problem they foresee is that no-one at Winkworth seems to able to put an accurate value on the ice cream.
It seems overly optimistic vendors and desperate estate agents are not a recipe for quick sales.
So these EA's blame surveyors and/or banks for the lack of sales....we are not in a boom the market has changed!
The Frog - I think 99% of agents agree that prices are too high, but 99% of vendors think their property is worth more than it is - apparently everyone's house is the best on the street! Virtually without fail for your typical 'I'd like to move but don't have to vendor' they will get 3 vals - 2 agents will say the right price and the 3rd agent will bid for the business by giving a high val hoping for blue moons and flying pigs (but probably tie them in to a long contract and after 6 months or so the house will be reduced to the right price) Normally the vendors always pick the highest price.
If agent A tells the vendor the truth about the valuation they will immediately disregard his or her advice as insulting in most instances
Agent B will come along and talk nonsense and give a high val, but most clients will like this advice and go with them - agent B will then work very hard to reduce the price and retain the client so that they will get the sale in the end
The client will not go back to agent A under any circumstances because they decided that they were rude at their first encounter, even though they proved to be right
Over valuations win instructions - sorry boys and girls - a fact of life......
Not one I subscribe to .... but it happens - and nowadays the surveyors are so scared of being sued that they shoot the transaction in the knee caps anyway
Happy days!!!!! Not
'market clearing level'?
Frog, are you now inventing phrases in a bid to make yourself sound slightly more knowledgeable than you actually are?
What Paul and Ray don’t realise is that valuations are collapsing as a market clearing price is substantially lower than the current asking prices.
Quite simply, if asking prices were closer to the market clearing level then there WOULD be 3 completions sold within the local area within the last 3 months.
Unfortunately, like most EA’s Ray and Paul simply cannot see the wood from the tree’s as they cast around for any, literally any reason or person to blame, rather than acknowledge that prices are far too high and as the article says, so many EAs will go bust rather than acknowledge this simple true.
Nice one Ray - could not agree more.
Had one in the other day and he is no longer able to value high end properties but has to revert to his manager who is in the south west and has no idea of local values here in the south east.
He then said he has to provide 3 comps close to the target property actually sold within the last 2 to 3 months and this is just not possible in many areas.
With transactions falling apart is it any surprise with surveyors unable or frightened to value relistically.
"He said: “A vendor will often be taken aback by the conservative valuation placed on his or her property by a mortgage surveyor, concerned by the risk of litigation that became a reality following over-enthusiastic valuations in prior boom years."
So, these 'professionals' are not really giving a true current "valuaton" then - only covering heir own backsides?