The Pros & Cons of Estate Agents

It’s become everybody’s favourite pastime in recent years, dragging Estate Agents through the mud, criticising the service they provide and (in some cases) questioning their professionalism. The tabloid press have had a field day and in many surveys, Estate Agents now figure as one of the most hated professions in the country.

In some cases of course, the criticism has been justified but in many cases it has been a case of journalists and armchair commentators simply jumping on the bandwagon. Estate Agents are an easy target of course, a high proportion of the population are home-owners and the house buying process is a very slow, stressful process. With Estate Agents being right in the firing line during what often takes several months from sale to completion, somebody was always going to get the blame.

The latest trend is to dismiss estate agents as being surplus to requirements and encourage vendors to sell their property privately. “Save thousands” are the headlines. I recently read a review of an Estate Agent: the vendor explained how they had been forced to shell out thousands of pounds for the agent to simply “upload the pictures to the web”. It was all very hysterical.

Good Estate Agents
Many Estate Agents deserve a better reputation.

My Estate Agency recently completed a house sale for which we received a fee of £1500. The work involved in earning that fee included the following:
1. Two hours research before travelling to the house to carry out the valuation which took up a further 2 hours including travel time.
2. Letters and contracts sent to the vendor before going on sale. Then another 2.5 hour visit to the property to take photos, draw floorplans and collect data for the Energy Survey. A full days work ensued to process all of the photos, create brochures submit the Energy Survey and upload all of the details to our own website and the other web portals.
3. Sending the brochures to a professional printers and paying the cost of.
5. Advertising the property in the local press with a half page splash (£380 per page)
4. Dozens of phone calls to arrange the 15 viewing appointments it took to sell the property. We accompanied all of the appointments ourselves at approximately 1.5 man hours per appointment.
5. Negotiating on the 3 offers that were received and achieving a SOLD price that the vendor was happy with.
6. Sending out letters and Memorandums of Sale to solicitors and other parties.
7. Returning to the property 3 further times to let in a Mortgage Valuer, a Surveyor and the buyer again so that they could “show their Mum”.
8. Many further phone calls chasing up solicitors and Mortgage advisors when things seemed to be grinding to a halt.
9. Renegotiating on price when the Mortgage Valuer undervalued the property due to the current state of the market.
10. Releasing keys on the day of completion and finally sending our invoice.

This story had a happy ending with a sale being achieved for the vendor and us receiving our fee. Many houses in the current climate do not end up selling and we receive no fee whatsoever despite carrying out most of the work described above. We have office rent to pay, wages for staff, car and petrol costs, telephone expenses, business rates, £1000 per month fee to Rightmove, £300 per month to PrimeLocation, newspaper advertising, web development costs, purchase of For Sale boards, fees to erect For Sale boards, the list is endless.

If you want to sell your house there is a lot that an Estate Agent can do for you and the costs involved are fairly modest (usually 1-1.5% of the sale figure) By comparison in the USA the figure is more like 5-6% of the sale figure of the property (where strangely Estate Agents have a much better reputation). The service that you receive if you choose the right Estate Agent will be good and help to sell your house at full market value in the minimum amount of time possible.

Don’t believe everything you read in the newspapers………………….

House Prices in Coventry

Where now for house prices in the Coventry Area?

Trying to predict where prices will go next is every-one’s favourite party trick. Most people have an opinion but is there any way of really knowing what the future holds?

In reality the big question is “Do we buy now or wait a bit longer?” The best time to buy anything is at the bottom of the market and property is no different. Trying to forecast the bottom of the market is a mug’s game though so the real question ought to be “Is this the right time for YOU to purchase?” Your own circumstances are more important than predicting which way a line on a graph is going to head for next! If you can comfortably afford the repayments and the house you are buying is suited to your needs then now is always a good time to buy property.

Try to look at it from a long term perspective. Over a period of many years houses and other types of real estate are always a safe form of investment, they have traditionally increased in value in real terms at a greater rate than household income and many other types of investment. So even if you were to purchase a house tomorrow and the initial trend was a fall in value, over the long-haul you’ll be in safe hands. It’s not such a popular term nowadays but the saying still goes, “Safe as Houses”.

Previous Price Trends in the Coventry Area

House Price Graph

The one thing we can talk about for certain is where prices have been in the past. If you bought a property in Coventry in the last few years you may be rather confused as to what its worth now. House price trends reported in the national news have very little relationship to localised property prices in the Coventry and Warwickshire Areas.

At the time of writing (April 11) prices in Coventry are now level with where they were back in September 2004. By stark contrast property prices in prime London have doubled in the same period. Take the price index for Merthyr Tydfil and you’ll find an equally disproportionate change. In other words, listening to national house price trends is an utter nonsense. They don’t mean anything to anybody.

My own prediction for the Coventry Area is for prices to hold steady for the next 18 months and then to begin a slow and steady recovery. The number of house sales will start to increase again this year as vendors (and Estate Agents) become more realistic with their expectations and price their properties accordingly.

If you have a different opinion please feel free to comment:

 

Big Valuers & Big House Prices

House For Sale
Selling Your House - But Is The Price Right?

Among us Estate Agents, there’s one topic of conversation that really gets our feathers ruffled and makes our blood boil. No it’s nothing to do with our fees or our For Sale boards or even our poularity ratings (or lack of) in the latest poll of polls.

 

Money Talks

It’s to do with Valuations and Appraisal of properties in the local area. Over-valuing is the oldest trick in the book and yet time after time unscrupulous agents try it and get away with it much to the expense of their would-be clients. The single biggest mistake a vendor can make when choosing their Estate Agent is to plump for the “Big Gun” who pulls an enormous figure out of their hat during the appraisal. Its not difficult to reel off lots of zeros, in fact it takes no skill at all; the only art involved is making the over-hyped valuation sound convincing.

The saddest part of the story is that vendors who start out with the best of intentions can quickly be duped by large numbers and the promise of a fortune. After all, when you’re talking property prices these are life changing figures for most people. A higher sale price could mean buying a much bigger property, extra cash in the bank or even a whole new lifestyle. But getting caught up in the excitement of a big figure value is the first big no-no when inviting Estate Agents to your property with a view to selling. Don’t be the next victim of your local pie-in-the-sky Estate Agent.

Big Shot Estate Agents
Big Shot Estates

Of course, most vendors are sensible, level headed people and some will see straight through these tactics. But for many people the biggest worry (understandably) is that their home could be sold for less than market value. They worry that the asking price could be too low, not too high.  Experienced property professionals will tell you that this is very unlikely to happen. A modestly priced property in Coventry or any other part of the country will attract lots of interest from educated buyers that are on the hunt for a bargain. Lots of interested buyers means lots of offers, bidding wars and ultimately a higher selling price.  By contrast, an inflated asking price means few or no viewings, no offers and no sale.

In years gone by the one saving grace was that house prices were always rising. Those properties that went on sale at over the odds would sit around for a few months but eventually  the market would catch back up and they would become saleable. Vendors would purposely “wait to get the best price”. But in a falling or stagnant market this is no longer the case. The “best price” now goes to those homes that sell instantly. Those that stay on sale for any period of time simply become stale and unwanted.

 

Big Shot Estate Agents

But We Can Reduce The Price Later If Need Be?

Any Estate Agent worth their salt will tell you that the greatest interest for properties comes during those first few magic weeks on sale. This is the honeymoon period when buyers clamour to book viewings and make offers. They know that the best bargains and the best properties always sell quickly and they do not want to miss out.  Once this magic period has passed by there is no going back, you cannot recreate that initial surge of interest no matter what. When told that a particular property has had its price reduced, most buyers will respond with “Really, what’s wrong with it then?” They are instantly suspicious. They also smell blood; if the price has come down already how much more might they be able to get it reduced by. In a falling market reducing the price now to what it should have been six months ago is simply closing the stable door after the horse has already bolted. The boat has been missed.

But Surely Estate Agents Don’t Want Overpriced Homes On Their Books

In today’s internet based market it costs very little for an Agent to market a property once the initial costs of take-on are covered. Once they’ve hammered that £10 For Sale board into the front flower bed of your house they will be happy to leave it there indefinately. Why wouldn’t they be, every day dozens of cars and pedestrians will go by and see their “billboard” mounted outside your front door. It’s free advertising and it also gives the impression that they are big players in the local market. Potential vendors often look around to see which agents are marketing similar properties so the more they have on their books, the more valuations they will pick up.

In Conclusion

Before you invite any Estate Agents around to value your home, make sure you have done your own research on prices first. Don’t pay too much attention to asking prices, its SOLD prices that count. There are many websites that offer this information for free www.nethouseprice.com is a good one to try.  If one (or more) of the agents pulls out a huge figure that sounds high, be cautious and ask them to back it up with evidence of RECENT SOLD prices in your local area. Before choosing which agent to use, ask them what their REAL Unique Selling Points are. You may just find that for once they are lost for words.

THE END OF GARDEN GRABBING

GOOD NEWS FOR GARDENERS, BAD NEWS FOR DEVELOPERS

There will be a mixed reaction to last week’s announcement that the practice of “Garden Grabbing” is to be stopped under new government proposals. For many, selling off a large area of garden to developers has proved to be a “nice little earner” with the phenomenon increasing dramatically in recent years. According to the Communities and Local Government Department, the number of houses being built on gardens rose from one in 10 to a quarter of new properties between 1997 and 2008. Town halls have struggled to stop the trend as gardens have been classified as “previously residential land”, making them brownfield sites in the same category as derelict factories and old railway sidings.

For those that were lucky enough to have a large garden or plot of land, the enticement of hard cash in exchange for a cabbage patch proved too tempting to resist in many cases. Simply having the planning permission granted would push the value of their property up so many house owners drew up plans, gained the required approvals and then sold up. They didn’t even have the inconvenience of getting the builders in.

Of course for every winner there were several losers, and these would often come in the form of neighbours whose properties were blighted by the developments. When your next door neighbours garden sprouts a row of terraced houses you’re not likely to be best pleased.

Other notable losers included the local wildlife. Falling numbers of inner city birds such as the song thrush and the house sparrow have been made worse by the development of their habitats. And who could argue that the quality of life of living in the city won’t be affected by smaller and smaller green spaces to the point where all that is left is made of concrete.

On the other side of the coin, there is the shortage of housing in the UK and especially the availability of “affordable housing”. The new rules, if they are brought in will stop the go-ahead of many legitimate projects that would have provided new homes for a housing market already in short supply. Given the choice, developers will often choose garden sites over other brownfield land (such as derelict industrial sites) due to the lower costs involved as there is normally little or no clean-up operation required first. So costs of development will probably now increase applying further upward pressure to long term house prices.

Time will tell what the true impact will be. The only thing we know for sure is that this brings a new, more literal meaning to the phrase, “Not in my back yard!”

George Hartshorn MNAEA is Head of Sales for Elizabeth Davenport Estate Agents.