Sam Cooke

It’s not as good as doing it properly

We’ve not had significant numbers of new builds in and near Cambridge for decades, so part exchange has been a rare option, then when the thousands of new Trumpington properties first came they were all selling so well that builders had no need to offer such incentives.

 

But times are changing, interest rates have risen and buy-to-let has been made less appealing for small landlords with tax changes. Most critically the number of new builds has rocketed and so buyers have more choice and builders are increasingly turning to part exchange to boost sales.

 

Just like with a car, PXing your house is appealingly simple. It takes away the uncertainties of having a chain and means you just sign a piece of paper and turn up for the keys when the new house is finished. This, of course, doesn’t come for free. It costs builders thousands in stamp duty and estate agent fees and just as importantly they are taking a risk in doing PX as your house may not sell quickly or for what they think it will. Ideally they’d build in a margin of tens of thousands to cover all that but, just like cars, they know that most owners won’t take that low an offer. This means they build all the costs into the profit margin on the new build. What you’ll never know when you PX is what sort of discount you might have got if you didn’t. If you walk through their door ready to go you’re loads more appealing than someone with a PX so that tens-of-thousands risk the builders take with them could easily come as a discount on the price for you. Maybe even more. But do you care? So long as you’re happy with what you get for your house and what you’re paying for the new one, part exchange can make life much easier and that’s worth something.

 

PX is quite an extreme move for builders and they usually only offer it as a last resort. What they often offer instead is something they appealingly call an ‘Assisted Move’. With this the builder doesn’t buy your house but they agree to reserve the new build for you if they can take charge of your sale. This has two benefits to you – they pay the estate agency fees and because the new build is reserved to you there is no risk of losing it. It has big benefits for the builder over PX – they don’t have to pay the stamp duty and other costs of buying your house and they don’t have the risk of losing money on the resale price. It seems like a good compromise. But our experience is that it’s the absolute worst of both worlds.

 

I’ll elaborate.

 

National house builders don’t understand local second-hand markets. They don’t have the time to look in detail at each PX property so they appoint a national intermediary to do it for them. But these intermediaries aren’t able to understand the intricacies of local markets any better than builders. They often charge estate agents a fee, meaning they just appoint those prepared to pay for business rather than making a judgment on who would be best placed to sell a property. Worse still, they often instruct three agents at once, which is the kiss of death in Cambridge. Nothing looks worse than a property that’s so difficult to sell that it needs 3 agents. The theory is that these intermediaries take away some of the work from a seller, but in reality what they take away is all of the control.

 

When we work with our clients it’s a collaborative effort. We agree the best photos, agree the marketing campaign, agree when and how to do the viewings. We take great care to optimise everything. We analyse buyers to decide if they’re any good, analyse their offer to see if we think we can do better by waiting. We don’t rush to take the first offer just to get the file off our desk. We discuss everything with the owner to do the best possible job.

 

Intermediaries generally don’t discuss, they dictate. The price, the launch date, which agents they use. It’s their way or the highway. We’ve even had them cancel promising viewings to accept an offer lower than the asking price. No amount of frustrated discussion would convince them to wait one more day. They didn’t care about getting another £10,000 they just wanted it done.

 

My advice therefore is that when a builder is trying to convince you to sign on the dotted line you either go for a full part exchange, knowing you probably aren’t getting a great deal but accepting that it’s worth it for the ease. Or that you go away, sell your house properly and then make them an offer. I am certain that assisted moves usually end up costing the house seller more money than they save in estate agency fees. By a long way.

Sam Cooke

It’s been rubbish

An estate agent's photoshop, yesterday

The summer weather, I mean.

 

In particular those with school-age children will know. Pretty much from the day they broke up until the day they went back it was cold, rainy and sad. We had a decent June and early July but the whole of August was disappointing. Luckily I went on a sunny holiday to a house in the Andalusian mountains that we borrowed off a friend in exchange for promising to keep half an eye on their daughter during her 3 year art degree at ARU. Nice deal for us I’d say. I think they’re over-estimating how much supervision a 20 year old student will want. It was great. 10 days of perfect sunshine, the only variable was where between 32 and 36 degrees the temperature would be by 2pm. An ideal holiday climate for sure, but actually I think I’d soon get bored of that sort of weather day in day out, I really like the changing of the seasons.

 

As does the housing market. #cleversegue

 

It follows exactly the same straightforward pattern each year, but, snubbing Vivaldi and pizzerias everywhere, it follows three seasons rather than four, basically in line with our holiday periods. December is always quieter and we panic that the market will never come back, but by late-January we’re run off our feet and wishing we’d relaxed and enjoyed the quieter time. Good Friday weekend, which customers often think will be busy, is really quiet for viewings, then as soon as the Easter break is over it gets hectic again. Same again from August into September. The best analysis I can give is that this is driven by simple distraction – there’s too much happening during holiday periods many people to think about moving.

 

There’s an accepted wisdom that spring is the best time to sell a house and that’s sort of true – the post-Easter surge is usually the surgiest of the surges, but actually that can be bad as well as good. A surge in buyers is good, but a surge in sellers means more competition. If you’re buying on then more houses for sale is good, as you have more choice once you’re sold, but if you are just selling then it actually can make sense to market your house at a quieter time when there is little else available. Buyers do get a bit distracted over the holidays but not completely, they do keep looking, and if your house is the only one of its type for sale they’ll buy it. Anecdotally I’d say the ratio of active buyers to active sellers is pretty consistent through the year.

 

Some agents have an obsession with houses being photographed with blue skies, to the point that they add in perfect blue skies on otherwise dull, or even rainy pictures. It’s just not necessary. A good photo on a grey day is miles better than a botched photoshop that leaves buyers wondering what else the agent is faking.

 

That said, for certain types of house it is worth waiting until the better weather comes round. If you’re in a picture-perfect cottage down a winding country lane next to the village duck pond, it could be worth hanging on, but with period terrace with an open fireplace in the city centre the winter is just as good as the summer, or any other time.

 

Truth is, there are just so many variables that it’s impossible to be sure of the optimum time to sell, so our advice is to just do it when you feel ready. Don’t rush it or hold off because you think the market will improve or worsen, do what suits you and your timescales.

Sam Cooke

It’s falling

Animated logo

If you pay any attention to the local housing market (and I reckon you do) you’ve more than likely noticed that stuff isn’t selling like it was a couple of years ago.

 

Where once I could guarantee a For Sale board round here wouldn’t last two weeks it’s now not unusual to see more price reductions in Rightmove’s daily emails than new listings. Prices are clearly on the slide. It’s impossible to argue otherwise.

 

But prices aren’t actually on the slide.

 

Except they are.

 

But they aren’t.

 

(They are).

 

I’ll explain.

 

When estate agents value a property we look at various things to gauge where we think the price should sit, the most important one being comparable evidence. We look at what similar properties have been selling at recently and how they compare to the subject property. If one a bit smaller sold at £380,000 and one a bit bigger at £420,000 then it’s pretty straight forward to work out that £400,000 will probably be about right. Easy peasy lemon squeezy. But what if the last two sold nine months ago? What then? Well that’s pimps too, the market’s been going up around 8% or so for the last 7 years, so you add a bit for that elapsed 9 months, maybe 6%, and ask £425,000. Lovely job.

 

And for the last six-and-a-half years that’s worked a treat.

 

But now it doesn’t.

 

If something was £400,000 nine months ago and you ask £425,000 now it’s highly likely you won’t sell it. Until you reduce the price to £400,000.

But when you do it will fly out. It might even sneak up to £410,000 in the process.

 

Reduce the price £25,000 and the house will sell. So prices have dropped then?

 

Yep. ASKING prices have indeed dropped. But actual prices, selling prices, probably haven’t. You see, that house never really was £425,000, it was always £400,000, we just got it wrong by assuming a rise that wasn’t there. It’s taken us a few months to accept it fully, but now we do and everything’s back on track again.

 

At the time I write this, of the 10 most recent properties we’ve agreed sales on, 7 were at the asking price and 3 were a bit over, just like the old days. Of those 7 three had been reduced in price but all three were older listings, from before we’d fully grasped this brave new post-referendum, post-stamp-duty-hike world. To put it bluntly, those listings that were overpriced at the off. I don’t necessarily make any apologies for that, we always do our best to get things right and we were simply applying the same formula that had worked brilliantly since before Kate and Wills got married.

 

They were happier times, weren’t they? The early 2010s. A lovely royal wedding. People running and jumping and throwing stuff in London. A French bike race starting in Cambridge. Life was splendid. And now what? A level housing market. That’s no good at all, is it? Unless you’re a buyer…

Sam Cooke

It’s not the be all and end all

Rightmove is great. It’s the best website. It really is. The best. (That impression works better in real life than on paper, it’s supposed to be that Wotsit-coloured chap from America with the odd handshake).

 

Every agent puts their houses on Rightmove in perfect detail for all to see, it even emails you instantly when something new comes up that suits your criteria. I’ll regularly get a phone call from an excited house-hunter within minutes of sending a property over to Rightmove wanting to book a viewing. It doesn’t have a monopoly in the property searching stakes, but last time I saw stats it was over twice as busy as its nearest rival Zoopla, so it’s a massively important part of what we do as estate agents and we have to look at how Rightmove works when we choose how to market our properties.

 

For example, we used to put houses on the market at £499,950, because that looks cheaper than £500,000. We don’t do that now because if someone chooses £500,000 – £600,000 in the drop-down menus on Rightmove then a house at £499,950 doesn’t show up, whereas at £500,000 exactly it shows up in both searches up to £500,000 and searches £500,000 and over. I suspect we weren’t fooling anyone at £499,950, but you get the point.

 

A few years back Rightmove started adding a small, but critical bit of information to every property listing. Tucked-away in small type, it went unnoticed for a little while but once people started spotting it the way in which they judge properties changed forever:
Added on Rightmove.

 

It simply shows the date a property was first put on the site. That’s all. And never before has so much been read into such a small piece of information by so many.

 

Knowing that something has been on for a couple of months is enough to terrify the nervous buyer. “Everything in Cambridge sells fast, so what’s wrong with this one? It must be rubbish, I’m not even going to see it.” Is what I imagine they say to themselves. Even if they can’t see what’s wrong with it, they’re convinced there must be something, something obvious to other people that isn’t to them. The problem is that there is often a very genuine reason why something appears to have been for sale for a while. For example a property that shows as being added 3 months ago might have been initially sold quickly, but then the buyer got eaten by a crocodile whilst fishing in Thriplow and so it went back on the market. So initially it sold in 2 weeks and in reality has only been back on the market 1 weeks, but that blasted date says it’s been for sale for 3 months and that is powerful enough that many buyers won’t even ring to talk about it. Or maybe will ring, but won’t believe the whole crocodile story when I tell them it, after all estate agents mainly lie about most things as I’m sure you know.

 

Because of this mentality, agents quickly work out little side-steps to reset the date. Changing the price by £5 used to do the trick, but they closed that loophole so now you need to change it by at least 2.5%. We then started taking it off the market for a couple of days then putting it back on, which worked for a bit, but then Rightmove changed it so something had to be off for 14 days before it would show as new. A few weeks ago they changed it again so it has to be off for more like 3 months. As quickly as we come up with workarounds, they shut them down. The one I currently use probably won’t last much longer…

 

And what for? To give potential buyers an insight to how popular something is? So what? Why does it matter? How is that information actually useful? Why would someone want something more just because other people want it to? But that’s how our minds work, if other people want something it must be great, if they don’t it must be awful, even if you don’t know why. I’m sure Gola made perfectly good tracksuit trousers in the 90s, but you wouldn’t have caught me wearing them. I bet there’s a name for it in psychology.

 

Does it sound like I’m whinging a bit? I’m not actually, this is never a whingey column, it’s informational. I’m telling you all this to help you, because some of the best purchases are the ones that have been for sale for a while, ones that are the unfortunate victim of Added on Rightmove. If you can overlook that date and judge a property purely on its merits you might just get a better deal than if you get into a bidding war on the house everyone wants just because Rightmove says it was added two days ago. So get the Tippex out, cover up that bit of your screen where the date appears, have faith in your own judgement and you just might snag a bargain by avoiding the competition.

 

It’s my top tip for Spring 2017.

 

That and to not go fishing in Thriplow until you’ve at least exchanged contracts.

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