Over 50 estate agents operate in leafy SW13 and in May last year between them they sold 29 properties.
I was just analysing some data and noticed that in May 2008 according to the Land Registry agents in Barnes managed to sell just 3 (three). Average price – £350k
Last week I sat in the offices of a central London agent waiting to see the boss. As I waited, the familiar bustle of a busy agency surrounded me and it was encouraging to hear the phones ringing and viewings being arranged.
I couldn’t help overhearing one particular conversation between a junior negotiator and one of the older partners. “Mrs so-and-so is thinking of making an offer on the house behind the Park. What should I tell the vendors?” he said. I smiled as I recalled the patience my first boss had when faced with dozens of inane questions when I started out in the business.
Most negotiators learn the ropes from their older colleagues and in an industry that is pretty unregulated, where only 50% are qualified and belong to a recognised trade body this is the way it will always be. Advice and wisdom is passed down and the juniors learn from experience. It’s a kind of battery farming.
What the Sage had to say was remarkable. Checking that no formal offer had been made he suggested that the vendor should be asked what sort of offer might be acceptable if one were forthcoming and an expectation should be given that an offer from Mrs so-and-so was anticipated but at a lower level. The reason, so the partner explained was so that the vendors’ expectations could be ‘managed’ and when a formal offer was received it was likely to exceed their expectations resulting in a higher chance of acceptance.
Now I can’t think of anything illegal that was being done and indeed the agent I’m sure would have put forward an offer if one had been formally made. He is legally obliged to do so. What I object to is that the agents sole motivation seems to have been to get a deal and he was deliberately setting out to set his client up to be minded to take a formal offer when one came. As I say, I’m sure that he was doing nothing wrong but surely his client was expecting him to negotiate with the buyer and not with him.
I suspect that vendors across the land hope that the agent they are paying a substantial fee to are concentrating on “managing the expectations” of buyers. It hadn’t occurred to me but perhaps some agents actually work for themselves and it just happens that incidentally this is to the benefit of the client?
As the market tumbles and sales volumes fall, agents will be finding that unless they do the deals they will be out of a job. No firm can afford to carry people today. Not only was this a pretty shabby lesson for the junior but it warns us all that the desire to do deals to get paid may mean that agents act more like brokers – beating up both parties to reach an agreement rather than working solely for the party who pays his fee. Perhaps it’s not just a case of Caveat Emptor.
As developers suffer from plummeting sales volumes their shares have been dropping in sympathy. Quoted Companies like Bovis, Barretts and Taylor Wimpey are often cited as candidates for take over or worse – for the skip!
For years we have been brought up being told that we’re an island and they aren’t making enough new homes to satisfy the increasing population. On top of that second home owners and the buy-2-let brigade make increasing demands both of new and second hand housing stock so where’s the demand gone?
The simple if unpalatable answer is that the demand is still there but people can’t borrow money to buy what they want. Figures from the Counsel of Mortgage Lenders confirm that in May there were almost exactly half the number of mortgages offered to 1st time buyers as there were in May last year. About 39,000.
So what are the developers to do? One answer proffered by well-meaning politicians is to let councils and housing associations buy up the spare stock. They should be able to borrow to both add to the number of affordable houses and also to help prop up the house builders.
Firstly do you really want the tax payer paying more money into a pit like the £25bn they bailed out Northern Rock and the £50Bn they gave to banks earlier in the year. And for what? Why fake demand and keep house prices artificially high by distorting the market in such a way? I think prices are going to continue to fall and I can’t find anyone who thinks that now is the best time to buy. Most people think that property will be cheaper tomorrow.
Secondly, if you have already bought in a nice close or on a bijou estate do you really want the equivalent of council tenants living next door? Now I think that they should get help and be housed somewhere but I can draw you a diagram of what will happen to the value of the next door houses bought a few months ago and the arrow goes down!
Now is not the time for a bold social experiment unless the Government wants to buy Barrett and build social housing for the masses. As with power stations, prisons and immigration centres. Everyone wants them – just not in my back yard!