February 2008

First day marketing changes not required

HOME Information Packs are wreaking complete havoc on our industry — yet we seem to have rolled over and given up the fight.

Make no mistake, these Packs in their current guise will continue to damage the long term prospects and viability of your own estate agencies and, unless we take a stand against the plans to end first day marketing from June 1, we will continue to remain pawns in this Government’s awful game, with no checkmate in sight.

At the moment, there’s nothing to stop us from marketing a property from the moment we have an Energy Performance Certificate in place, as long as we can show we have ordered a HIP.

Virtually everyone, including the Government, agrees that Energy Performance Certificates are a good thing.

What’s to stop us continuing this process after June 1 — as there’s no-one around to police the system and Trading Standards have made it clear they don’t have the resources or the training needed to enforce the rules?

There is no logic whatsoever in delaying the marketing process. Not only might vendors lose out on prospective sales but they will also have to bear the costs of compiling searches which a purchaser’s solicitor or mortgage lender may choose to reject.

The Government still has a huge hurdle to overcome in educating local authorities on how to improve their search procedures to cater for HIPs. After all, that was one of the main reasons for delaying the end to first day marketing by five months.

If we really want to defeat this Government over HIPs — which will inevitably be swept aside by an incoming Conservative Government at the next General Election — we have to stand united.

We’ve pilloried the politicians; we’ve lost the war of words. But actions speak louder than words — and if we all stand up to this ridiculous nonsense, perhaps the Government will finally get the message.

US realtors leaving in droves

IT’S not just here in the UK that we’re seeing the effects of the housing slump on the industry.

The decline in the United States is already taking its toll on the number of realtors leaving the business.

There, the profile of individual agents is somewhat different, with many older women juggling real estate with other part time work.

The average age is said to be 51. There are also people who have started it as a second career later in life and there are many mothers returning to work.

In hard-hit markets such as Florida, California and Georgia, evidence is growing that agents are closing up shop in large numbers.

In Oregon, there has been an 11.5 per cent decline in licensed agents in the past year alone.

I have heard of some realtors putting their fees up from six per cent to 10 per cent in order to survive. And yet their market is nowhere near as overvalued as ours.

Financial management and advisory giant Merrill Lynch has announced that the US is in the first month of a recession — hotly disputed by other analysts.

The National Association of Realtors is far more optimistic, describing it only as a slowdown.

Nonetheless, the fall in activity and prices in the housing market is seen as a key indicator that all is not well on the other side of the pond.

The UK economy follows that of our American cousins and we need to keep a close eye on what is happening over there to gauge the impact it will have on our own livelihoods.

On the other hand, if you have a few bob to spare, you could always pick up a rather nice house in Florida with a pool at a vastly reduced price.

It would be great for those extended holidays that could be looming for a large percentage of the estate agency workforce — both at home and abroad!

Soft slide or crash landing?

IF you have read the headlines recently, you will know the crystal ball gazers are having a whale of a time predicting the fortunes of the housing market for 2008.

Prices up two per cent, say Hamptons International; three per cent down, says John Charcol; no change, say HBOS...

The permutations are endless, with industry commentators talking the market up and analysts talking it down even further, while consumer confidence takes the biggest battering we have seen in a long time.

But these are the inevitable consequences of an over-inflated market and perhaps the fall in prices is long overdue.

There have been so many factors contributing to the overheated market, with lenders relaxing their criteria and the massive increase in buy-to-let investors playing their part.

In addition, income multiples have been overstretched and credit is being squeezed.

The consumer-driven economic boom is slowing down as belief in rising house prices and equity withdrawals evaporates.

All the good money is on there being a serious bust — with economic analysts forecasting a price crash of 10 to 15 per cent during the next year, followed by a more gradual decline in the subsequent three to four years.

The effect is likely to be to take the first-time buyer and buy-to-let investor out of the market until the numbers return to historically more stable and justifiable levels.

The number of transactions during the next few years will also decline correspondingly and, based on past performance, it could be a decade before prices get back to their current levels. However, transaction volumes will most likely recover more rapidly.

So, what impact will it have here on the number of estate agents in the business? Already, we are seeing numbers falling and branches closing. It’s likely to be just the tip of the iceberg.

Yet agencies are continuing with their mad policies of cutting fees — sometimes below one per cent — as they bid to undercut each other and cause an all out price war that benefits no-one.

My recommendation during a downturn is that agencies should aim to put their fees up, grow their market share and increase their volumes as much as possible.

That way, their chances of survival will be far greater.