Misrepresented market values are not the vendor’s fault

Many people seem to be missing the fundamental point about the need for a significant reform of estate agency.

The reason why new methods of transacting house sales are required in England and Wales is that estate agents have, for a long time, misrepresented market values by over and sometimes under-stating current prices for houses, causing untold damage to the smooth operation of the various housing markets up and down the country.
Successive booms and busts in house prices further exacerbate this.

There is no reason why house prices should need to fluctuate anything like so wildly, even when our economy itself is negotiating a crisis. The damage, in slowing down sales, is done under the auspices of getting the so-called ‘best’ price instead of the market’s equilibrium price. this is now becoming increasingly apparent.

If you examine the situation closely, you will see that houses, being a basic need of society, should tend to command a relatively stable price. This should depend primarily upon current wealth and not on borrowing capabilities.

Relatively stable prices are achieved in many other equally prosperous countries. The sole reason this isn’t possible here is the over-exuberant activity of estate agents, who generally guess what prices to ask and then try and force unwitting buyers into paying these prices by borrowing ever increasing amounts of capital – usually involving finance and mortgage borrowings of course. Many agents even help by arranging for buyers to borrow the money by providing financial advisers for this in-house!
It is time a new, more professional and more reliable method was found for transacting house sales.

Vital market transaction-prices information for doing house valuations is now publicly available. It is now available for buyers to use this themselves if the estate agents can’t (or won’t) do this properly. Both buyers and sellers should be able to do perfectly adequate house valuations for themselves using such information.

If agents don’t, can’t or even simply won’t change their business model I think that our government of the day ought to put in place changes to the way houses are marketed by estate agents.

The latest improvements in transparency within the housing market (as outlined in our front page proposal), would have a considerable stabilising affect on the whole British economy. This has very considerable merit, especially after experiencing the aftermath of the 2008 financial crash and the continuing unsettled economic situation resulting from that.

In my considered view the graph of ‘throughput’ of completed sales over time should remain fairly smooth if the market is working efficiently. This is the acid test to be applied but stability of sales levels is not happening, and has not happened for several decades before now.

My proposal for improving this is to improve the way housing in England and Wales should be marketed. The proposal is based on changing from vendor-centric estate agencies to buyer-oriented ones as described in The House Price Virtuoso Solution. This improvement would not cost much to implement and would bring massive benefits to all local marketplaces, whether in the owner-occupier or the rental sectors.

To read more about The House Price Virtuoso Solution (otherwise known as The Hendry Solution) go to the following link:

Improve The Housing Market.
How to Improve the UK Housing Market.

Posted by: Peter Hendry, Housing Valuation Consultant
Author:– The House Price Virtuoso Solution
Copyright © 2019.

Defining a modern-day estate agent

Can anyone accurately define the present function and purpose of the modern-day estate agent?

Can you go further and define what the precise function and purpose of a modern-day estate agency should be?
We’re also hoping to hear from people who can re-define what they really want from estate agents, including things they could to do better:

Current Definition:
A person (or organisation) that tries to get the best possible price for a house whilst acting on behalf of a property owner, usually rewarding themselves with a percentage of the price they manage to achieve on the legal completion of each sale.

Problems resulting:
This basic remit permits them to do almost anything, even if it happens to be somewhat beyond the law, and/or against the economic trends of the market itself. For example, they may take bids from gazumpers (real or imagined), obtain extra mortgage finance for a buyer as a condition of finding a property at the named price, or just pretend additional offers are being made at any stage when in fact, these are fictitious. They may also fail to take the current poor condition of the property into account and they may even misrepresent the true state of the property market itself, not only to prospective sellers simply in order to gain the initial selling instructions but also ‘guild the lily’ as to the present state of the property market to prospective buyers at the same time!

An analogy intended to help highlights these defects:
If you were to eat or drink more than your body can comfortably handle the result would be, to start putting your own body in peril.

In just the same way, if a house owner (or indeed his agent) should try (through nefarious means) to extract more than the current market value of a property from buyers, he is by doing this, putting the operation of the whole marketplace in peril. He is thereby not acting in his client’s best interests at all! This seems to be what has been happening recently. This behaviour no longer relates to the role for which estate agents were originally conceived.

Alternative and new proposal:
New and improved estate agencies should be set up and named ‘Registered House Agents’ or ‘RHAs’ for clarity.
Their job:
A person (or organisation) whose primary function is to locate and assess suitable properties, establishing their true value in the present market conditions. Their instruction would be to act primarily for the buyer, not only in the capacity of finding and presenting to them the best choices of property to purchase for their specific purposes but also to engineer the best overall sale and purchase package for their client. Once formally instructed to, they would see the agreed package right through to combined legal completions.

Since these more modern agents or ‘RHAs’ knew they would have to demonstrate each client that their’s was the best set of proposals for that client in the present market situation, they would automatically be seen to be earning the level of fee that they would expect to be charging for that service.

This would mean that less external regulation for agents would thus be needed, not more!

My new proposal is to improve the way all housing in England and Wales is marketed and is based on moving away from vendor-centric estate agencies. Instead it would use buyer-oriented ones as is fully described in The House Price Virtuoso Solution. This would not cost very much to implement and would bring massive benefits to all local marketplaces.

To read more about The House Price Virtuoso Solution (otherwise known as The Hendry Solution) please go to the following link:

Improve The Housing Market in England and Wales.
How to Improve the Housing Market in England and Wales.

Posted by: Peter Hendry, Housing Valuation Consultant
Author:– The House Price Virtuoso Solution
Copyright © 2019.