Eureka – Not a bath but a shower moment! The Heating Analogy
Think of the housing market (local to where you want to buy), as being like the central heating system in your house.
Imagine having a single dial thermostat which controls the inside or ‘desired temperature’ of the house.
There is an inherent latency in the system, meaning that when you turn the thermostat up, it takes quite a while for the house to reach the temperature you have set on the thermostat dial.
There is also a timer which can start the heating each morning, a short while before you want to get up to wash but this requires to be separately programmed and has not yet been set.
Suppose you wish the shower room to be comfortable enough for you to slip out of bed into the shower and not start shivering once you get out of the shower!
In order to achieve the ‘desired temperature’ you turn the heating dial up to about 24 Deg C on the first morning. The boiler kicks-in and starts heating. The radiators start becoming warm, then hotter and hotter. The fuel consumption is going up.
By the time you get out of your shower, the house is really toasty, so you then turn the dial down to the more comfortable temperature of 22 Deg C.
Measuring the amount of fuel used for the whole day (if you could), you realise that you have spent around £7 that day.
Wishing to economise somewhat, since the price of fuel is increasing by the year, you start to experiment!
Supposing you set the thermostat to turn on 15 minutes or so before you get up. You could obviously then try a lower setting to start with, say 21.5 Dec C. Then, this would make things comfortable to begin with. Next morning, the heating comes on before you are up, just as planned and it brings the house up to 21.5 Deg C.
You get up feeling sufficiently warm enough to go and have your shower but just to make sure, before you get in, you turn the dial up to 22 Deg C (an acceptable ambient temperature). It stays there for the rest of the day.
This time, when you measure the amount of fuel used (or cost expended), it’s less. It has cost only £5 that day.
By doing things this way you have achieved a saving of £2 per day without shivering or feeling uncomfortable so that’s a more efficient way of doing things. You’ve saved yourself £2 and saved the planet a little too.
It’s the same with house buying.
If you go rushing in to try and purchase the house you want, having found it using the existing system of vendor-commissioned estate agency, you nearly always find you have to turn the ‘offer price’ UP, well above what might be your comfortable (or the ambient) offer price level – just in order to get the house!
If there was a way of avoiding doing that and instead saving some of the capital you need to spend when buying, who wouldn’t want to go for that?
There could also be an additional saving attainable by selling the house you are moving from at a price more in line with, or relating to, the amount you are about to pay for your next property. The difference between the two prices could then become less.
The way to achieve this would be to engage an agent, not only to help you to find the next house you want but also to simultaneously sell the one you need to part with. What could be better!
The way to achieve this is for all estate agents to move away from using simple seller contracts and start using ‘Moving Contracts’ between themselves and each buyer.
Quite a few of you, reading this, may be wondering how this somewhat quirky analogy fits in with the overall concept of Registered Housing Agencies? The latter concept is what’s fully explained in the following link in case you haven’t read this yet. My heating analogy is simply a way to stimulate some lateral thinking and it is here to encourage you to comment with your own thoughts and views on whether these processes could genuinely improve the housing markets around Britain and if not, why not?
All comments on this are very welcome and would be treated as such in any further discussion.
For more information about how to get the housing markets across all regions of our country working more efficiently and more economically, please see our leading article, The House Price Virtuoso Solution:
Posted by: Peter Hendry, author of:– The House Price Virtuoso Solution.