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
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