Yes, there is ‘flawed thinking’ going on right across the estate agency sector.
It is to do with the price of houses!
Essentially, most estate agents believe that the more house prices rise, the more houses will eventually come onto the market.
The great flaw in this thinking is that it denies logic and flies in the face of economic theory too.
It has to be said that not many estate agents are experienced or qualified economists.
The majority of these individuals just want to sell houses.
They are not thinking of how this might best be achieved except on a per sale basis.
Instead, they have been (and still are), mistakenly postulating that if house prices should somehow keep rising and outperforming most other forms of capital investment, all will be well for those in the business of selling houses! This theory, as we have seen following the financial crash of 2008, has utterly failed to perform as anticipated, resulting in many estate agencies, both small and large loosing their livelihoods.
Nevertheless, and despite all of this, those estate agents still in the game, have doggedly carried on proclaiming that all was well, all was not lost. They tried their best to ensure that anyone wishing to buy had to ‘compete’ for those houses that they themselves were fortunate enough to be instructed to sell. It was more often than not a case of more buyers than usual having to make ’best and final’ offers during many sales negotiations, rather than estate agents simply allowing the market to decide what level the prices might be without further and tortuous negotiations, unhindered by an estate agents’ own view on prices in the marketplace at the time.
This accusation and I put it no less vehemently as making an accusation, suggests that estate agents in general have traditionally always aimed to talk the market up rather than look at the real tends in affordability.
The result of this travesty is what we now see. A yawning gulf between house prices as being those quoted across each region and what buyers in that very region could actually afford.
Once this damaging dilemma has played out, there is only one thing left which can happen – a widespread price adjustment in a downwards direction. The last thing on your average estate agent’s mind.
Of course, those left sitting at their dwindling desks would simply turn around and proclaim that it was the market that turned and that they were now simply doing what they have always done so well – talking the market UP on behalf of their collective clients – the sellers!
It’s a simple strategy designed to tout, not all that subliminally, for each and every sales instruction, no matter how few of these there may be at any one time. It usually works, it has seemed to work in the past.
However, what the market needs now is far more creative thinking. It needs this more than it has ever needed it in the past.
The nub and nugget of this is that the initiative must now be taken whereas before it could easily be skated over. We are at the road junction where those supposed to be dealing with these issues must at long last decide how best to deal with them.
My own dealings with the pricing issue have not been by working as an estate agent, though I have had my moments at providing that service on occasion. Instead, I have been working mostly at the valuation end of the property industry. This is a service which is there to advise property-owning clients how to resolve all the issues professionally and simultaneously, instead of dealing with individual issues like the price of one particular house, or trying to decide that on a singular basis.
What I have come up with through my property work is The House Price Virtuoso Solution.
For all those interested, the main tenets of this are set out at the following link and I unhesitatingly commend it to you to be read with an open mind; and an open heart if you should want to help everyone to resolve this seemingly intractable problem. The price problem (or how to find the true market price), has been a feature of housing markets in all regions of the UK for decades now and it really is time that the whole house-price issue was finally resolved for the sake of everyone’s sanity and even more importantly perhaps, for everyones pockets too.
Please go to the following link to read these new proposals:
The House Price Virtuoso Solution (otherwise known as The Hendry Solution)
How to Improve the Housing Markets in England and Wales.
Governments have come and gone without successfully dealing with this, so lets hope one day all this will change and we can all then move forward and enjoy new and better housing availability, appropriate property pricing and enjoy better standards of construction.
Posted by: Peter Hendry, Housing Valuation Consultant
Author:– The House Price Virtuoso Solution