April 2008

New HIPs burden for agents...

THE squeeze on personal finance is taking its toll on the housing market in more ways than one.

It seems a number of sellers are now defaulting on their deferred payments for Home Information Packs, adding further pressure to estate agents’ cash flow.

When the phased introduction of HIPs began in August last year, it may have seemed a good marketing ploy to offer vendors a three or six month deferred payment period, in some cases interest-free.

But those estate agents who picked up the tab have been left high and dry by homeowners whose properties have failed to sell and who have no additional income to pay off the loan.

We’ve been hearing talk within the industry of up to one in six vendors defaulting on their payments.

Not only are estate agents not getting their money back, they’re now having to stump up for legal action in order to recoup the money owed. That can’t be good for customer relations.

It’s such a new phenomenon that many agents won’t be aware they too could be facing financial risk.

With no respite from the Chancellor’s recent Budget and ever more gloomy economic forecasts on a daily basis, this is just another burden that estate agents could do without.

At Spicerhaart, we charge £99 up front to cover the cost of an Energy Performance Certificate. We don’t obtain the rest of the HIP until a sale is on the cards.

But from June 1, we will all be required by law to have a full HIP in place before a property is marketed. I can’t see that happening, can you?

You may think that £300 or £400 is affordable — but if homeowners are already in debt and selling up to release the cash, they may have run out of goodwill with their own bank.

The last thing the industry needs at this time is to be faced with bad debt. If we continuously experience these problems the only alternative will be to insist on vendors paying up front for the Pack, which is unlikely to be popular and deeply divisive.

Now is the time for estate agents to stick together and find the best way to deal with this threat to our livelihoods. It is in our best interests to ensure we safeguard ourselves.

Why we all have to face reality as far as home prices are concerned

THERE is a great theory in the world of economics — if there is more supply than demand for a product, prices should come down.

So why is there such a reluctance in our own industry to lower house prices to get the market moving again?

While we understand that homeowners are reluctant to lower the price of their property, it is all relevant as, if they are going on to buy another property, that too will also be at a lower price.

We have to help our customers understand that our advice should be taken seriously.

After all, if you want tax advice, you would see an accountant; if your teeth hurt, you would see a dentist.

We are at the coalface of estate agency and if people want to sell their property, they should take our professional advice seriously.

If they do not wish to listen to our guidance, the time must come when we will have to consider how long we can keep their property on our books.

If you have ever calculated how much it costs for every week you have a home for sale, you will know how important it is to shift that property quickly.

The average time it takes to sell is now getting longer and longer — and three months of marketing doesn’t come cheaply.

Over-inflated house prices have led to the situation we are in today and we have to see the shift downwards as a realignment in house prices which is long overdue.

If what is happening means that more young people can get on the housing ladder, it has to be a good thing for the economy and social cohesion. We just have to manage customer expectations in the process.

Double-barrel warning shot to newspapers

I HAVE fired a warning shot across the bows of the newspaper industry in the past over their high cost of advertising, so this time I am going to give it to them with both barrels.

Newspaper advertising, in my opinion, is no longer worth the paper it is printed on.

Every lead is now costing us more and more — with response rates currently the worst they have ever been.

The print media were so slow off the mark when it came to online advertising that the property portals have stolen a march.

And while some of the portals are owned by newspaper groups and doing very well, there are massive disparities across the UK where papers have failed to grasp the significance of the web to their survival.

The time is coming for estate agents to pull out of newspaper advertising — unless papers are prepared to have a pricing model that means they get paid on results, just like Google ads.

Many estate agents already publish their own glossy publications which sit in racks in the doorways of branches. We ourselves produce our own magazines, ‘Living Room’ and ‘fine haart’, giving away hundreds of thousands of copies every month.

It is now only a matter of time before the portals bring out their own magazines and, when they do, local newspapers will have a real fight on their hands.

I don’t want to see the demise of papers in any town — and I recognise the important part they play in our local communities.

But if they can’t get the advertising, they can’t pay their staff, and if they can’t keep up their page numbers, their circulation drops.

Right now they should be working extra hard to please their estate agency clients — and that should mean better deals all round.