Housing market
- Thread starter matt j
- Start date
Mike Reed
pfm Member
PAT testing is on electrical appliances/extension leads etc. and as of 18 months ago, it didn't form part of letting reg's for new tenants. What IS mandatory, though is a 5 year electrical safely cert. on the whole occupied property. In my case incorporating new C.U.s , sockets and other updating. Copious amounts of unnecessarily arcane and duplicated tick-boxed forms are the consequence.
Seanm
pfm Member
Good, short video explainer on house prices:
https://twitter.com/positivemoneyuk/status/1509454236316225538?s=21&t=XgcMSK5k88_JsN2lp1s1vQ
https://twitter.com/positivemoneyuk/status/1509454236316225538?s=21&t=XgcMSK5k88_JsN2lp1s1vQ
hifinutt
hifinutt
fascinated to read this about overvaluing in a devon estate agent blog
You would have needed to have been living in a cave since the end of Lockdown No.1, not to realise the property market has been on fire in Teignbridge (and the UK as a whole) for the last 18/20 months.
It has been very much a seller’s market, especially in 2021. Yet as we enter the second quarter of 2022, I have noticed a slight rebalancing of the Teignbridge property market, more towards buyers, something that is good news for everyone (sellers and buyers) locally.
In 2020, it took on average 86 days from the average Teignmouth property appearing on the property portals (i.e. Rightmove, Zoopla etc) to the property going sold (STC).
Interesting when compared to the national average of 72 days in 2020. Yet, last year, this was reduced to 51 days in Teignmouth (51 days nationally).
So, what's the issue with the Teignbridge property market being on fire?
Well, that was last year, and things have changed slightly since.
Of the properties for sale in Teignmouth, 23.9% of houses have been on the market for more than 12 weeks.
That doesn't sound a lot, yet that is an eternity in this market!
So, why are there so many properties on the market in Teignbridge still for sale after all this time … it usually comes down to one thing … the practice of 'overvaluing'.
So before I explain what overvaluing is, let me give you some background.
Many agents (not just ourselves), in 2021, were achieving top prices for Teignbridge property with multiple offers becoming the standard. The property they were selling was only available to buy for days before the owner obtained multiple offers that were not only at a satisfactory level, yet more than they ever dreamed likely.
Although this was great news for Teignbridge homeowners, this caused fewer homes to come onto the market in the last six months in Teignbridge, as people were afraid to put their home on the market without having a property to buy.
With fewer properties coming onto the market, some estate agents have become more and more desperate to get a larger slice of this smaller property market. It has seen an unwelcome side of the estate agency profession, the estate agency practice of ‘overvaluing’.
While ‘overvaluing’ is nothing new, the custom has been generally limited to a small number of estate agents. Yet now, it's become more prevalent and creates uncountable distress and pressure for some Teignmouth homeowners.
Many Teignmouth homeowners want to sell quickly to get the property of their dreams. Yet, in many cases, when they do put their property on to the market, they don’t sell quickly enough because of this ‘overvaluing’ (even with the fantastic current property market conditions).
To give you an idea of the issue…
72% of Teignmouth homes put on the market in the last 30 days have not sold.
There are hundreds of Teignbridge families having their dreams dashed by 'overvaluing.'
Therefore, let me look at exactly what overvaluing is, why it’s on the rise and most importantly, the harm overvaluing causes to homeowners like yourself.
You would think the most important thing in estate agency is all about finding the best buyer for your home, at the best price, who can make the move with the least amount of hassle.
To us it is, and to many other local estate agents, it is as well. Yet, to some agents, sales aren’t the essential objective. Instead, it is having a vigorous catalogue of properties to sell to generate more future leads.
Deprived of an endless number of new properties for sale, the enquiries estate agents receive will significantly drop, leaving them high and dry without any buyer (or seller) leads, the lifeblood of estate agents.
Therefore, some estate agents will feed on a homeowner’s appetite to get the highest possible price for their Teignmouth home by giving them an over-inflated suggested asking price to market their property at (i.e. ‘overvaluing’).
If one estate agent can get you an extra £30,000 for your Teignmouth home, you will take it, won’t you?
The suggestion of pushing the asking price of your Teignbridge home for 10%, 15% even 20% could be seen by many as a temptation too good to miss. Yet once you are on the market, the agent is trained to slowly get you to reduce your asking price over a lengthy sole agency agreement.
The problem is that the home of your dreams might have sold by the time you reduced your price in 3 months. Also, Which reports in 2017 and 2019 proved you ended up getting less for your home when it did eventually sell (which means you lose money) and finally, the agents know homeowners perceive it’s a hassle to swap agents (which it isn’t).
But estate agents only get paid when they sell the house; why do they overvalue?
Would it surprise you that some Estate Agency chains pay their staff a commission when they put the property on to the market, not when it sells? So, their team overinflate their suggested asking prices to get that commission.
Research has shown that if the asking price is initially set too high, it will be ignored by people surfing Rightmove and Zoopla.
(Come on, be honest – you have done that yourself haven’t you?)
When the property is eventually reduced because it has the stigma of being on the property market too long (begging the question of potential buyers that there may be a problem with the property itself hence no interest?), often when it does eventually sell, it will sell for less than what it would have done if it were priced correctly from day one (as per the two reports from Which in 2017 and 2019).
Of course, on the other hand, setting the asking price below its market value means potentially leaving money on the table needlessly – hence the need for a good agent.
You would have needed to have been living in a cave since the end of Lockdown No.1, not to realise the property market has been on fire in Teignbridge (and the UK as a whole) for the last 18/20 months.
It has been very much a seller’s market, especially in 2021. Yet as we enter the second quarter of 2022, I have noticed a slight rebalancing of the Teignbridge property market, more towards buyers, something that is good news for everyone (sellers and buyers) locally.
In 2020, it took on average 86 days from the average Teignmouth property appearing on the property portals (i.e. Rightmove, Zoopla etc) to the property going sold (STC).
Interesting when compared to the national average of 72 days in 2020. Yet, last year, this was reduced to 51 days in Teignmouth (51 days nationally).
So, what's the issue with the Teignbridge property market being on fire?
Well, that was last year, and things have changed slightly since.
Of the properties for sale in Teignmouth, 23.9% of houses have been on the market for more than 12 weeks.
That doesn't sound a lot, yet that is an eternity in this market!
So, why are there so many properties on the market in Teignbridge still for sale after all this time … it usually comes down to one thing … the practice of 'overvaluing'.
So before I explain what overvaluing is, let me give you some background.
Many agents (not just ourselves), in 2021, were achieving top prices for Teignbridge property with multiple offers becoming the standard. The property they were selling was only available to buy for days before the owner obtained multiple offers that were not only at a satisfactory level, yet more than they ever dreamed likely.
Although this was great news for Teignbridge homeowners, this caused fewer homes to come onto the market in the last six months in Teignbridge, as people were afraid to put their home on the market without having a property to buy.
With fewer properties coming onto the market, some estate agents have become more and more desperate to get a larger slice of this smaller property market. It has seen an unwelcome side of the estate agency profession, the estate agency practice of ‘overvaluing’.
While ‘overvaluing’ is nothing new, the custom has been generally limited to a small number of estate agents. Yet now, it's become more prevalent and creates uncountable distress and pressure for some Teignmouth homeowners.
Many Teignmouth homeowners want to sell quickly to get the property of their dreams. Yet, in many cases, when they do put their property on to the market, they don’t sell quickly enough because of this ‘overvaluing’ (even with the fantastic current property market conditions).
To give you an idea of the issue…
72% of Teignmouth homes put on the market in the last 30 days have not sold.
There are hundreds of Teignbridge families having their dreams dashed by 'overvaluing.'
Therefore, let me look at exactly what overvaluing is, why it’s on the rise and most importantly, the harm overvaluing causes to homeowners like yourself.
You would think the most important thing in estate agency is all about finding the best buyer for your home, at the best price, who can make the move with the least amount of hassle.
To us it is, and to many other local estate agents, it is as well. Yet, to some agents, sales aren’t the essential objective. Instead, it is having a vigorous catalogue of properties to sell to generate more future leads.
Deprived of an endless number of new properties for sale, the enquiries estate agents receive will significantly drop, leaving them high and dry without any buyer (or seller) leads, the lifeblood of estate agents.
Therefore, some estate agents will feed on a homeowner’s appetite to get the highest possible price for their Teignmouth home by giving them an over-inflated suggested asking price to market their property at (i.e. ‘overvaluing’).
If one estate agent can get you an extra £30,000 for your Teignmouth home, you will take it, won’t you?
The suggestion of pushing the asking price of your Teignbridge home for 10%, 15% even 20% could be seen by many as a temptation too good to miss. Yet once you are on the market, the agent is trained to slowly get you to reduce your asking price over a lengthy sole agency agreement.
The problem is that the home of your dreams might have sold by the time you reduced your price in 3 months. Also, Which reports in 2017 and 2019 proved you ended up getting less for your home when it did eventually sell (which means you lose money) and finally, the agents know homeowners perceive it’s a hassle to swap agents (which it isn’t).
But estate agents only get paid when they sell the house; why do they overvalue?
Would it surprise you that some Estate Agency chains pay their staff a commission when they put the property on to the market, not when it sells? So, their team overinflate their suggested asking prices to get that commission.
Research has shown that if the asking price is initially set too high, it will be ignored by people surfing Rightmove and Zoopla.
(Come on, be honest – you have done that yourself haven’t you?)
When the property is eventually reduced because it has the stigma of being on the property market too long (begging the question of potential buyers that there may be a problem with the property itself hence no interest?), often when it does eventually sell, it will sell for less than what it would have done if it were priced correctly from day one (as per the two reports from Which in 2017 and 2019).
Of course, on the other hand, setting the asking price below its market value means potentially leaving money on the table needlessly – hence the need for a good agent.
JensenHealey
pfm Member
Hmm... not sure I agree with all of that. There has always been an incentive for an agent to value high to encourage the seller to sign up with them. It assumes that individual home buyers and sellers understand what the fair value of a home is. Which I do not believe they can, or at least not well. At least agents are now reporting sq. footage in house details - so you can calculate what rate they are asking for.
Every single property you look at, you think 'that seems a lot'. Yet some get moved - and you cannot find out for ages what it actually went for.. until eventually the data appears on the land registry. Even agents will be behind the curve on that, other than properties that go through their own office.
We home owners will buy and sell only a handful (or less!) of times in our lifetime. An estate agent is involved with properties than that every month, or even faster if they are larger. We individual punters cannot possibly understand what the 'right' price for a house is. Of course, philosophically, there is no 'right' price, because the only price that matters is what actually gets agreed between seller and buyer. Even that does not make it 'right' - it is just what was agreed, no more no less. Other parties obviously did not agree with the eventual price, or would not be able to complete, and dropped out. So the price obtained was the highest price that anyone would pay and complete from the few players in that game.
We have to rely on agents - and we all know what we think of estate agents in general.
Every single property you look at, you think 'that seems a lot'. Yet some get moved - and you cannot find out for ages what it actually went for.. until eventually the data appears on the land registry. Even agents will be behind the curve on that, other than properties that go through their own office.
We home owners will buy and sell only a handful (or less!) of times in our lifetime. An estate agent is involved with properties than that every month, or even faster if they are larger. We individual punters cannot possibly understand what the 'right' price for a house is. Of course, philosophically, there is no 'right' price, because the only price that matters is what actually gets agreed between seller and buyer. Even that does not make it 'right' - it is just what was agreed, no more no less. Other parties obviously did not agree with the eventual price, or would not be able to complete, and dropped out. So the price obtained was the highest price that anyone would pay and complete from the few players in that game.
We have to rely on agents - and we all know what we think of estate agents in general.
Darth Vader
From the Dark Side
Ah! But did they actually 'make' £60K? If you just subtract the original price paid from the sale price then this on its own gives a falsely high 'gain'. Then if the proceeds were put towards another house then that purchase will have additional costs that eat into 'profit' from that sale.
DV
You should be able to remortgage if you have 50% equity; might be a better option than selling, paying costs and CGT to invest where?
Banks seem to be looking for safe lending homes at the moment.
Minio
Kind of Sort of Not really...
No doubt that admin, stamp duty, moving etc will eat into that.
I'm sure they could have made more from it though.
The fact that it went so quickly, and looking around this neighbourhood, (estate agents are desperate for new stock) suggests that it was underpriced for the market.
Mike Reed
pfm Member
Gross or theoretically, no doubt. Minus buying and selling costs, any large works undertaken in the interim and of course, our old friend, CGT; unless it was their primary residence. If they simply moved elsewhere in the area, it'd be a paper gain. What would shock me if this was on Dussindale, though there are some large detached properties there.
Minio
Kind of Sort of Not really...
Well, a price gain of 60k gross my neighbours are happy enough. The house they bought and sold was just another step up the ladder.
Talking of Dussindale, prices actually went down in the late 90's in the days of negative equity. There, second hand prices of year old houses didn't match up to the prices when newly built with a guarantee.
Talking of Dussindale, prices actually went down in the late 90's in the days of negative equity. There, second hand prices of year old houses didn't match up to the prices when newly built with a guarantee.
Mike Reed
pfm Member
Don't you mean early nineties. Minio? there hasn't been a strong neg. equity event since. A minor comparative hiccough after the banking fiasco in '08/'09 but prop'y prices picked up soon after. When I came in early '01 they were still building Dussindale, though much had been completed by then. No idea when the first houses went up though.
I think this area has benefitted by coming from a lower vase than established Thorpe St. Andrew; it was def. 'below the salt' in local opinion when we moved up.
Minio
Kind of Sort of Not really...
Apologies for mixing up two issues. I think you are right in that negative equity was early nineties but the ”Dussindale effect” began around 1996 when the estate began.
That was when if you bought a new house from the builder it would be worth less a year later on the secondhand market for some reason.
Just Google house prices NR7 and a lot of the history of Dussindale original prices come up along with more recent sales at 3 or even 4 times, or more, of the original new build prices.
laughingboy
pfm Member
To resurrect this thread, because house prices seem to haunt politics threads like Godwin's law, a couple of YouTube videos that I found interesting:
Why Are Houses Unaffordable in Britain? (11 mins)
and
The Housing Crisis Is The Everything Crisis (42 mins)
Why Are Houses Unaffordable in Britain? (11 mins)
and
The Housing Crisis Is The Everything Crisis (42 mins)
SteveG
pfm Member
When I bought my house here in the leafy suburbs of Edinburgh 25 years ago it was reasonably affordable to do so for someone like myself at the time (mid to late 20's). In the intervening period though average salaries have perhaps doubled (or a bit less), whereas the value of the house has increased more like 4 or 5 times. That's the heart of the issue. Also I knew some folks back then getting mortgages for 105% of the property value, which I doubt is likely to happen now.
I've got lots of well paid colleagues that are of a similar age to I was when I was bought this house, and while they are still buying new houses (as they get married and plan on having kids) it's well outside Edinburgh where the prices are significantly lower - where as they'd definitely have been able to afford where I live if they'd have been lucky enough to be buying when I did.
I've got lots of well paid colleagues that are of a similar age to I was when I was bought this house, and while they are still buying new houses (as they get married and plan on having kids) it's well outside Edinburgh where the prices are significantly lower - where as they'd definitely have been able to afford where I live if they'd have been lucky enough to be buying when I did.
laughingboy
pfm Member
Yes, it's a sign of policy failure over the last 25 years that people who bought houses at wage-to-house price ratios that were historically normal (average house price at around 4 times the average income) should feel 'lucky'. But that's where we are.
Ponty
pfm Member
You may well find that although the capital multipliers have increased, the actual monthly mortgage payment won’t be much different.
laughingboy
pfm Member
I see your point (repayment capacity is higher at low rates) but isn't one of the lessons of the 2007-8 Financial crisis that banks, following the originate-to-distribute model where they securitised the mortgage to pass on the risk to investors, thought that they could lend risk-free. In reality, they had created a highly unstable system that, when it unwound, could crash not just their banks but the whole system.
And the lesson of the government response to the crisis is that the banks can lend risk-free: in extremis, governments will bail out the banks. So, to my mind, the continuing high price to earnings ratios are a sign that nothing has been fixed.
Ponty
pfm Member
Agreed. When there is no downside risk or real consequence for failure, may as well fill yer boots.