Breaking Property News – 06/10/2023
Daily bite-sized proptech and property news in partnership with Proptech-X.
Cancelling HS2 Northern line means hundreds of homes and land will sit in limbo
After the next UK General election in all probability the incumbent PM will fade out of politics and retreat into a wealthy future of directorships and speaking engagements. But one large legacy will be the stockpile of nearly a thousand properties and vast tracts of land ‘up North’ that the tax payer has bought, in the expectation that HS2 trains would be speeding through the space they occupied.
Some of these properties may be sold or auctioned off, but will of course always be on the ‘route’ should in decades to come a railway come. But the bigger injustice perhaps is the distress caused to those who have had to sell under a compulsory order, who now will see their homes inhabited buy others.
The government has made it clear that no additional payout will be made to anyone who sold their property under the circumstances they had to, and all would have had a fair market sale price, but the scale of lives upturned is pretty large, as it was not just homes, but farms and other businesses that came to an end when the route was given the greenlight.
There are vague noises being made that some of the housing will in the future need to be flattened when localised rail changes have to be made. With perhaps this housing stock being rented out until such a time. But what about the large amount of other housing stock and the land that now has to be managed in some way?
Previous models to deal with this situation have been auctions of large numbers of properties, which often have fallen into the hands of asset management companies who rent or dispose of them. if disposal typically there is an uptick between the auction price and the price obtained when sold off piecemeal over time.
It is all very well for Rishi Sunak to say that making unpopular choices is part of his job, but maybe he should reflect on why in a two horse race everyone backed Liz Truss rather than him. All choices have consequences and maybe the fact he lives in a super wealthy rich bubble with his non-dom wife Akshata Narayana Murtymeans means he has little idea of what the daily grind is for most people in the UK, and especially our friends up North.
Correctly priced housing stock still selling well, but how do agents get vendors to reduce their price?
From all of the stakeholders in the residential property market in the UK, there is one message, on the whole property sold prices are going down. Following two years of rampant housing inflation which varied between 14% to 23% regionally, now completion prices are slightly lower than they were last year.
The big problem for agents is that the asking prices on many properties are still above what the market will take, meaning that many vendors have been on the market for five to seven months with no sale being agreed. In a buoyant and rising market, the listing price of a property asset is not such a crtical thing, as in time the asking price will become more realistic if it starts too high.
In a declining market, with values moving the other way, the gap between reality the biting point where a buyer will be interested to view, offer and buy and that high value just keeps getting wider and wider. The thing then is how to deal with this.
Some agencies, fudge the situation, fail to engage with the vendor who is getting few or no viewings in the hope they will see sense and magically call the agent and reduce the asking price, it does happen but it is hardly a strategy. The best way to get a vendor to reduce their asking price is to fully engage with them. And by far the most succesful route is for an agent to book a time to go and see the vendor in their property.
The reason this works is that before the meeting to discuss the ‘progress’ to date, the vendor will already be thinking it is a price issue, whilst hoping it is not, so when the conversation turns to what price are we likely to acheive in October 2023, it is not a surprise it becomes a discussion. The vendor can decide to keep the same asking price, but at least they know it is wrong and the pressure of not getting viewings is eased.
Now many agents do not want to upset a vendor for fear of losing the instruction, but better to enggae get two instructions a week down in price and sell them so everyone gets what they want, than sit on a ticking timebomb og unsaleable stock that moves from one agency to the next. Because typically if a vendor changes agent the first thing that happens is the price comes down.
When I was in estate agency and the market turned, I would look at the whole register and ask the team what price each of the properties we had on the books were going to sell at. Armed with this we had a template of which properties were on at the right money and which needed attention. We then did two lists, the vendors who needed to reduce who we felt were open to the conversation, and a list of those who were going to just sit on the asking price come what may.
We would then enggae with the vendors who might be ready to reduce their price, having gone through these we started on the harder list, with a more subtle approach, and if some of the stock was just too high we would actually give the vendor the option of ‘resting’ the instruction – code for going elsewhere. Because in a slowing market it is not having stock that is the problem, it is having stock that you are turning over so that you have enough income to make profit.
Great digital tools and software that can help persuade vendors to reduce their price are now available and in a tech-age many vendors armed with this market insight will in some cases cut their price. Now nothing here so far is rocket science and back in the mid 1980’s when I started in agency we were weekly ringing some vendors to talk about the asking price if a propery was sticking, we just used a buff folder which we wrote on the back of with a biro, having used our desk phone to make the call.
Obviously with numerous ways to digitally communicate with vendors agency has come a long way, but you will be amazed the magic of taking the time to personally revist that ‘grumpy’ and viewing starved vendor who needs to reduce but will not reduce their price. If they do everyone becomes a winne
Andrew Stanton Executive Editor – moving property and proptech forward. PropTech-X
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