Despite the recent hot weather, there is little doubt in my mind that Winter is coming – both literally and metaphorically in respect of the property market. That is of course IF you see a reduction in house prices (at least in the short term) and sales volumes as a bad thing, which of course isn’t necessarily the case.
Now I don’t normally go in for predictions myself. To put this piece into perspective, in all honesty my economic and political predictions are generally wrong (as my offspring frequently delight in telling me!) and so you may want to bear that in mind when reading this piece!
So what is likely to happen to the property market and how should estate agents respond?
Well when I say “will happen”, I believe the market is already showing signs of activity reduction and a reduction in house prices. In the last few weeks I have experienced three fall throughs – every one as a result of the buyer pulling out and all for different and apparently legitimate reasons. That fact in itself, three fall throughs over a very short period of time, is a very significant statistic for a small estate agency like mine and a sign that confidence is not what it was even a few short months ago.
But something even more interesting happened; I subsequently reagreed sales on all three (yes, I know that contradicts my ‘lack of buyer confidence’ contention) – ALL three at less than the original sales price. Of course, I had to renegotiate other connected house sales up and done the various chains and fortunately they are still intact as I write this article, though we will see what happens in the months ahead.
I’ve also noticed a significant reduction in market appraisal appointments and viewing volumes, as well as an overall sense of caution in the minds of prospective buyers who simply don’t appear to have the sense of urgency they did have. It appears that I am not the only estate agent who is experiencing this. In conversation and on the various agent forums that I frequent, the story appears to be similar. Here’s an example from one thread…
“It is certainly tough all around at the moment. I haven’t had a sale yet in July. I have dependent offers and most of mine aren’t getting viewings consistently either.”
Many of the agents I provide consultancy services for report the same.
I fully appreciate that subjective experience is not actual evidence but there are other signs that market conditions are changing. A recent article in EYE quoted the survey results from the Council for Licensed Conveyancers…
“Analysis of the third quarterly CLC Confidence Tracker shows that 65% feel confident in the stability of the current market. It is down from 72% when the same question was asked three months ago.
“Buyers’ confidence has suffered a similar dip, down from 46% to 38%, according to the 158 respondents, although the largest proportion (45%) said clients were neutral. ”
Recently, Rightmove reported an increase in price reductions and halved house price forecasts.
Perhaps Winter has already arrived! It appears that my “prediction” is much more akin to confirmation of what is already happening.
So, what to do?
Those of us that have been selling property for many years have seen many different housing markets and many different approaches from many agents. I genuinely see so much opportunity for the forward-thinking estate agent who is prepared to face up to these changing market conditions. Here’s what I would suggest…
Be Positively Honest
When attending a market appraisal, don’t confuse having a positive approach in handing a potential house sale with misleading information about how great the market is. Honest information on very recent local house prices and market conditions will definitely win through in the longer term.
Specific examples of your relevant experiences are very powerful. Tell a story – your story. Yes, you may well lose a few instructions to agents chasing market share by over valuing but if your analysis is correct, you’ve actually gained the benefit of avoiding the costs and time wasting involved with a listing that was never going to sell. Personally, I would never offer to “value” a property. Only the market can decide the value… not neighbours who tell sellers what they think about their wonderful neighbourhood, not family members who think that their daughters house has an amazing kitchen that cost £30,000 and therefore the house MUST be worth that much more, not the sellers themselves (despite having the BIGGEST plot on the estate!) and NOT the agent… it’s the market stupid!
Invest In Training and Marketing
That’s the RIGHT training and marketing. If previous experiences of economic uncertainty or even downturns are anything to go by, the first cuts to costs are normally in training and marketing – particularly for bigger firms. This is often followed by reductions in staff numbers.
I would suggest taking the opposite approach. I appreciate it’s counter-intuitive but done correctly, it is an approach that can yield significant advantages, particularly for the smaller agent. Note that I emphasise the RIGHT training and marketing. Attending every coaching/training session available, even the free ones, will be a waste of your valuable time. Select the one’s that suit your particular needs and I would suggest a focus on improving your strengths.
Don’t fall into the trap of think that 40 years of experience is enough to see you through or that you already know what to do. Knowing isn’t enough and a refresher course on the latest negotiating techniques will re-energise you to actually DO something. Take action.
It’s been an accepted mantra that 50% of marketing works and 50% doesn’t. The problem is WHICH 50%?
I would contend that in today’s digital world that is far less true that it used to be, though not entirely without foundation. Analyse where your leads come from and focus on them – increase your investment in them. As for content, well it’s up to you but I would suggest that it needs to support my third and final suggestion…
Build Trust
There is no doubt that overall trust in our profession is perceived to be low – a perception reinforced by various media outlets including last week’s Panorama TV programme. However, trust remains your most valuable currency in my view. So, in addition to trustworthy marketing messages what else can you do?
Well the answer in my view is simple though not necessarily easy. It comes down to honest and consistent contact with your buyers and sellers. The more personal the better. Ideally face to face, if not by telephone and if necessary by email or other digital channels. Providing customers with ‘bad news’ in a prompt and efficient manner will always increase trust, even if (and probably because) they don’t want to hear it.
So there we are. Overall, I predict a reduction in listing and sales volumes as well as house prices over the next 12 months with an increase in the percentage of sales fall throughs. No doubt the statistics provided by my fellow EYE contributor Chris Watkin will prove me right or wrong. Either way, I’d be interested to hear your thoughts on my suggested tactics to improve how the market will impact your business.
