offer or not to offer?

meanmachine_2

If you say that a 100 year mortgage exists, then I'll take your word on that.

I should imagine that they might have arisen during the last Japanese property bubble, just like 120% mortgages, guarantor mortgages, negative amortization mortgages, shared equity etc etc are floating around today.

All they do is delay any inevitable correction, and are the most obvious signal we have that a market is skewed out of all recognition, wouldn't you say?

I'm glad your own agencies are doing well, unlike Countryside which seems to be in crisis.

Woby_Tide

How much has japanese property dropped by since 92 out of curiousity with talk of tanking and falling through the floor?

lush_walrus

meanmachine wrote:

If you say that a 100 year mortgage exists, then I'll take your word on that.

I should imagine that they might have arisen during the last Japanese property bubble, just like 120% mortgages, guarantor mortgages, negative amortization mortgages, shared equity etc etc are floating around today.

All they do is delay any inevitable correction, and are the most obvious signal we have that a market is skewed out of all recognition, wouldn't you say?

I'm glad your own agencies are doing well, unlike Countryside which seems to be in crisis.

Thankfully 100 year mortgages don't exist here at all at the moment, the point I am trying to make, is that be cautious of the assumption that as prices are for the majority of people outstripping 4 times wages, there are worse situations that can still happen.

The reason that smaller agencies such as mine are not suffering like countrywide is probably linked to the fact that we are localised rather than national. Whatever the climate, there are always areas that feel any recession less than others and market slow downs happen at totally different rates when ultimately it is only affordability which is effecting housing at the moment. While unemployment is still low in the areas I am in, and ways exist to enable people to afford to pay the prices, people (the vast majority at least) still prefer to buy to renting. Countrywide is a very large machine to support and as they are so spread are very fulnerable to any changes.

Personally, I too really hope that prices come back down to a lower level, high prices are not a good situation for anyone I just want you all to consider all possibilities of change in the economy and consider that banks (which I probably have a larger distaste for than you do EAs!) can pull many different stunts to keep people borrowing and them earning their masses. If banks were ethical, there is no way that all of them would be so relaxed on lending money to those who are self employed without books to support the lending they require. These people are so vulnerable as a result of the lovely banks being so sweet and lending in this way.

meanmachine_2

I think if I've learnt anything from my time on here, it's that not all agents are born equally, and there are good local agents who are sensible when it comes to valuations, and larger chains that have more rigid "targets" which encourage and inflate vendor expectations.

I do accept that this bubble has been created in part by buyers being stupid and paying any old price out of fear that they will be paying even more tomorrow.

But EAs and, of course, banks play on those fears.

meanmachine_2

Woby_Tide wrote:

How much has japanese property dropped by since 92 out of curiousity with talk of tanking and falling through the floor?

Not the best graph, but look at chart one on this link.

http://www.treasury.gov.au/documents/580/HTML/docshell.asp?URL=House_Prices.asp

lush_walrus

meanmachine wrote:

I think if I've learnt anything from my time on here, it's that not all agents are born equally, and there are good local agents who are sensible when it comes to valuations, and larger chains that have more rigid "targets" which encourage and inflate vendor expectations.

I do accept that this bubble has been created in part by buyers being stupid and paying any old price out of fear that they will be paying even more tomorrow.

But EAs and, of course, banks play on those fears.

Honestly, EAs don't gain very much from prices going up. This is a real misconception based on the fact that a lot charge % rates, but ultimately ours for example are set at 1% for sole and 1.5% for multi. I think the most useful advice I can give anyone on here is to always try and negotiate yur fees, if you have a good sellable house in a good road then 99% of the agents will come down n there fees. Basically, for most its better to get a sellable house on your own books than someone elses, and often there are people waiting for popular locations. If however, your house isnt sellable, not many agents will move a bean, as they will be thinking about the costs of having an unsellable property on their books for x amount of time.

Anyway, the point I was going to make is that 1% of a property lets say worth £200,000 works out at a fee of £2,000. Now say the property increases in value by 10 percent, the fee increases by £200. Now to get to the stage where properties increase by 10% in a normal market you are looking at a min of 2 year worth of growth.

If I as an agent, want to increase this growth (to gain my £200) then ultimately I value the houses higher. Brilliant, more fees and the new vendor is likely to go with me as Ive valued it higher than anyone else. But, then it comes to trying to get potential buyers around, now most buyers will go to every EA in the area when seriously looking for property. So they will have already started to work out what they can get for their money. I then present them with the new house I have at an inflated price, what are they going to do? They might go and see it, after all internally it might be fantastic and might therefore be worth the money. Or they might decide that its not worth the effort.

Either way, the potential buyer is no ones fool (and beleive me, buyers as a general rule are definately not stupid people), so after they have been around, they will realise that the property is overpriced, and go off in search of one thats not. Now if this happens 20 plus times, what do you think the vendor is going to think? They will think, that agent has actually valued this wrong, as we are getting lots of people around, all of whom have loved my house but none of them want it, I wonder if the agent valued it wrong after all. Maybe its worth going to another agent, who can do their job properly....And there you have it, rather than gaining £200, you have actually lost yourself £2,000.

All agents know this and as a result, all aim at pricing things realistically. Of course anyone can make a mistake, but no agent (or else no one sensible) would aim to push the market up.

It just isnt in any agents interest, as every house that goes on the market incures costs straight away, the costs of advertising, printing, mail outs etc. So everytime one doesnt sell, you as the agent have paid money up front non chargable to the vendor, who ultimately then walks away to another agent or decides not to move. So most will fight pretty hard to sell that house, and not put obsticals in there own way to loose it.

I hope you see what I am getting at, agents want things sold end of story. The route to getting them sold is to value realistically to make sure that you get the property as apose to another local agent (so under valuing is out too), to have competitive fees and to work very hard to get potential buyers through the door.

The interesting thing you find when you are on the other side are the vendors who choose the price 'they' think their house is worth. For example, one I know despite having 4 local agents around all giving the same valuation within 3000 of each other, decided she knew better and put the property up for sale for £10,000 more than the highest valuation. Now this is madness, and greed at its worst, we personally turned her away when she offered us to sell it, but another agent I knwo took it on, in the hope that after having it up for sale for x amount of time she would see sense and reduce the asking price.

Its now been 8 months, and it is still up for sale, and still at the vendors price. It will stay like that for eternity.