In this weeks Sunday Times Hugh Graham explains about the rise of off-market sales which doubled last year according to Hamptons.
The supply crisis is hitting homes hard. It’s not just a lack of building materials, labour shortages and difficulty sourcing trendy taps and tiles, it is about finding a house in the first place. Such has been the pent-up demand to move house or invest in a second home during the pandemic — encouraged by the stamp duty holiday — that the number of bidding wars is at a record high, pushing the proportion of homes selling for above asking price to a record high.
There is no sign of the heat in the housing market, especially in the most popular postcodes, waning in 2022. The equity analyst Kevin Cammack of Cenkos Securities said last week: “Normal house price economics are out of the windowuntil the supply side improves.”
There were 31 per cent fewer homes available to buy across Britain in December 2021 than in December 2019, and prospective buyer numbers were up by 66 per cent over the same period, according to research from Hamptons estate agency. Estate agents have an average of only 12 homes for sale on their books, a record low, according to the property website Rightmove, and an average of 29 buyers for every property (said the letting agent body Propertymark). So how on earth do you find a house?
The answer is off-market — properties that change hands before they reach the portals. Off-market used to be the domain of the 1 per cent, but in London a fifth of homes were sold that way last year, 9 per cent in Britain, according to Hamptons. To find one you often need the help of a buying agent. There are an estimated 1,500 such agents in the UK. They all have different styles and fees, and are all competing like mad to find houses to show their clients.
The buying agent Henry Pryor claims to “have a rapport with estate agents that other buyers will struggle to compete with and access to properties nobody else does. In today’s market you have to be ready to fight and scratch someone’s eyes out.” For this he charges a £2,400 retainer or 25 per cent of the saving on asking price he secures for clients, or a flat fee of £12,000 up front. He bought £100 million of property last year. He does leaflet drops, uses Facebook and scours parish magazines to track down the perfect home to match a client’s requirements.
Most recently he completed on a house in Fulham, west London, for a hedge-funder and his wife. “We stole it off another buyer who thought they had it for £1.82 million. We nipped in and got it for £1.85 million,” he says. “The people we stole it from rang up and said, ‘We should employ you; we can’t afford to be cross; can you find us another house?’ We just bought them a home.”
Camilla Dell, who runs the buying agency Black Brick in prime central London, has a targeted letter-drop system with in-house mapping technology. As well as a £3,000 retainer, she charges 2.5 per cent of the purchase price or 20 per cent of saving from asking price. “For a client in Dulwich we targeted 20 roads, sent 50 letters, got six responses; my client bought one of those houses,” Dell says.
Garrington Property Finders, founded by Phil Spencer, the presenter of the TV show Location, Location, Location, is the largest independent buying agency in the UK, covering southwest England to Scotland and charging £2,000 plus VAT (expires after nine months) plus 2.5 per cent of purchase price (or bespoke).
“We recently acquired a £2 million coastal property in the South West that hadn’t changed hands for 25 years,” says its chief executive, Jonathan Hopper. “We saw a photographer post some shots on Instagram that he had taken for a local estate agent. We approached the agent before it went to market. They had 37 viewing requests; we were first in the door, made an offer, exchanged in seven days and the vendor cancelled the other viewings because we had a good reputation with the agent. Agents come to us early doors. They know we have serious buyers.”
Most buying agents require a minimum spend of £500,000 to £1 million; you’ll need to spend £2.5 million if you want to be on the books of Jess Simpson. She charges up front a £2,500 retainer plus VAT (valid 12 months), plus 2.5 per cent of purchase price, to find you a place in the home counties, Cotswolds, Wiltshire, Dorset or Somerset. Her USP? “I’m a chartered surveyor. I can value properties from a technical perspective,” she says. “I source properties through a network of solicitors, accountants, farming and riding communities. We keep our ear to the ground at the school gates; we get a lot of info there about who is thinking of moving. We know the local communities and issues. We know if there are plans to build 300 houses outside the village or if that lane is a rat run. Because of the shortage of houses on the market, right now we are offering sellers 12-month completions to give them time to find somewhere else to buy.”
However, in a move to “disrupt” this rather rarefied marketplace, Henry Sherwood, who founded the Buying Agents — whose patch covers central London, Surrey, Berkshire, Oxford and Bristol — has no minimum entry requirement, but will charge a minimum fee of £10,000, or a £500 retaining fee plus VAT (valid for six months), plus 1.5 per cent of purchase price. Prospective buyers benefit from a database of 18,000 contacts, including previous clients, private banks, wealth managers and family offices.
“We approach concierges in buildings and speak with them and find out which agents have gone in to do valuations,” Sherwood says. “There are no bargains in this market. If you are looking for discounted property we are not the firm for you.”
He cites a recent deal in which an American hedge-funder who owned a castle in Cambridgeshire wanted to buy the gatehouse. “But the gatehouse owner refused to sell to him — they had fallen out. So I got a friend of mine to pose as a buyer. He bought it for about £800,000 and on the same day sold it to the American hedge-fund guy. It’s called a simultaneous purchase. It’s perfectly legal.”
Mark Parkinson, a co-founder of Middleton Advisors, whose encyclopaedic knowledge of houses in southern England is second to none, charges a £2,750 retainer plus VAT (no expiry date), plus 2.75 per cent of purchase price. He will draw up a shopping list for each client, then approach the owners to “try to unlock those doors”.
Parkinson says: “It’s amazing how many people will sell if it’s discreet and they don’t have to open up their house to viewings on a Saturday. We don’t put letters in boxes, as they go straight in the bin. Agents know if they ring up the owners for us, there is a 90 per cent chance that our clients will buy it.”
It was how one of Parkinson’s clients recently acquired a £3 million country house with no agents or other buyers involved. “Nobody else saw it. Nobody else had an inkling it was for sale,” Parkinson says. “Had it been in Country Life there would have been a bidding war. Some sellers are not after every last pound and shilling. There is huge value in doing something privately and discreetly.”