Monday, August 1, 2011

Estate Agents? Dishonest? Now There's A Surprise!

By Russell Quirk


There are over one million residential properties currently for sale in the UK. The average estate agent has 74 on its books says Rightmove, greater than at any time since the top property website was founded in 1999. Its latest June House Price Index is candid. Asking prices have risen for six months in a row. But transactional volumes are barely half what they were in 2007. Tight mortgage lending, plentiful choice of homes on the market and resourceful, cautious buyers combine to encourage Rightmove to call the ongoing rise in asking prices a 'romp away from reality'. So why the romp?

Of course it's the fault of estate agents - it's up to them to value houses correctly, but there are, unfortunately, so many who get it wrong. Because the property industry has no requirement for qualifications or any kind of trading license, it's not surprising that there can be a lack of training and a total dearth of local market knowledge. Of course some estate agents will become hopelessly overoptimistic when it comes to assessing people's homes: we're forever hearing stories about the larger agencies overvaluing on purpose by perhaps as much as 10% of the real value, just to gain the instruction from the potential vendor purely on the basis of hope alone. And of course it's no surprise that three to four weeks later those optimistic vendors will start receiving calls on a regular basis, asking them to reduce their price. But there's another - much bigger reason for properties remaining unsold: you.

You? Yes, you're far too precious about your property and totally unrealistic about its value. When an agent steps over your threshold he'll have to share your enthusiasm for the ceiling fan in the conservatory and the cavity wall insulation that makes your property far superior (and infinitely more valuable) than the house two doors down which is still on the market after six months. It used to be just fishermen telling stories about the one that got away. Now you're more likely to hear that kind of story from an estate agent speaking less about fish and more about sales. Those sales don't happen because 1) it's a rubbish market, 2) it's a rubbish estate agent and 3) mortgage lenders are rubbish since it's impossible to get a mortgage by hook, crook or any other means. But the real truth of the matter is that if estate agents were prepared to tell lenders about the true value of their property, and if vendors were prepared to listen to what estate agents said, three things would happen: buyer expectations and asking prices would start to match ... buyers who actually want to buy would buy from sellers who actually want to sell ... and the market would soon start to sort itself out of its "preciousness".

In the meantime, though, estate agents will keep on telling you what you want to hear instead of the truth, because that's something they're too scared to tell you.

And so, as Rightmove says, we're all stuck in limbo - a limbo that shows no sign of unromping.




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