This work is new economics called Market Design, which is a relatively recent area of economics.
It has the potential to utilise established economic theory to rescue the British housing market.
It involves asking the question: ‘What is our goal?’
Its goal is to develop a way to make housing markets throughout the UK more inclusive, so that new buyers can further increase home ownership everywhere, as opposed to large numbers of people continuing to rent whether by choice or otherwise.
The ‘designed’ change would be to make estate agency operations within the housing sector become oriented towards listening to every buyer’s requirement so that those owning property can more easily both buy and sell when moving between two properties, by getting both transactions to happen in a synchronised way.
Instead of agents primarily working to satisfy sellers, as happens now, they would take on a more balanced role, by listening to and acting directly for buyers primarily.
Estate agency, as a service provision, is not a fully functional service any more because if anyone is thinking of buying a property to live in, they currently need to go to many selling agents to try and establish what properties are currently available on the market in the location(s) they prefer and at what asking prices. Selling agents rarely know what real market prices are since it is only the buyers who decide these and traditional estate agents do not act for buyers.
Today’s buyers are understandably wary of estate agents for this reason in particular. Why? Because today’s estate agent doesn’t act in the best interests of buyers. Secondly, they charge high fees to sellers and then usually try to increase the price of houses to cover such fees!!
This makes it harder for buyers to find the best properties for themselves at reasonable prices. Current-day agents therefore actually slow down the turnover of house sales, rather than achieving the opposite.
From a marketing point of view, the new innovation outlined here would involve RHA’s (or Registered House Agents) hosting well publicised online property auctions, where all the buyers interested in each house on offer would bid against one another to secure a property for themselves.
Bidders would have to be legally ready as effectively, they would be exchanging contracts at the fall of the notional hammer, if using equivalent terminology from an auction perspective here.
Prices arrived at would be fair open market prices if arrived at using this method.
RHA’s could easily arrange each bidding session, either through their own offices or even through an existing auctioneer which they may invite to hold auction sales on their behalf.
The incentive for sellers would thus become to present the best maintained and best designed houses at each sale – the very opposite of what currently happens with traditional estate agents when they are instructed to sell a client’s house by auction.
If ‘those in high places’ i.e. The House of Commons should decide to release the existing brakes on house sales as I’ve referred to here, the housing economy would start to flourish rather quickly without the need for more give-away tax reductions in order to achieve it.
For more information about how this improvement could be achieved straightforwardly and without massive new investment, by licensing RHA’s (Registered House Agents), please go to:
The House Price Virtuoso Solution (otherwise known as The Hendry Solution)
Full details of our proposals for properly reforming all housing markets in England and Wales.
The Chancellor has recently stated following Covid19:-
“We’re entering the most severe recession this country has ever seen.”
He also says:-
“We will need ‘dynamic’ marketing for businesses”.
If house buyers were fully advised by agents acting on their behalf, then that would bring a new and ‘dynamic’ aspect to house-buying that has never before seen the light of day and which would be an unique innovation to bring to the housing marketplace.
This is what the housing market requires. It involves injecting new activity across all levels, including allowing buyers to determine the prices to be paid using their actual market bids.
Posted by: Peter Hendry, Housing Valuation Consultant.
Author of:– The House Price Virtuoso Solution