Is it time to crack some eggs?
For us here at Redbrik at least, the property market really is in full swing. There is so much going on across all areas of our business.
House prices are rising and, in some areas we cover, faster than anywhere else in the UK. There are exciting new developments of all shapes and sizes across the region that are being conceived, built and marketed. New industry sectors, such as build-to-rent, are emerging and we are helping to shape the future of Sheffi eld City Centre’s residential plans.
So why would we think it is time to crack some eggs? And no, it is not just because it is Easter (though I will no doubt be indulging in a bit of that too, albeit the chocolate variety!).
Peter Knight, a brilliant and respected property industry analyst, recently highlighted that:
1. Almost half of all properties listed for sale are not sold, i.e. legally completed, within 12 months of first coming to the market.
2. The average time from sale agreed to contracts exchanged is between 14-16 weeks, (less than five per cent of sellers are aware of this and believe it’s much faster).
3. The sale fall through rate typically varies between 20-35 per cent.
4. Tenant referencing is superficial in many respects. The average check is unlikely to uncover a bad tenant.
5. The first 14 days of marketing is the most likely time to secure a buyer or Tenant. However, some properties are overvalued when they fi rst come to the market as certain agents use this tactic to win business despite it not being in their clients’ interest.
In contrast, over the past two years, Redbrik has sold over 72 per cent of the properties we have marketed. Our sale fall through rate has been lower than 20 per cent.
Sales have gone through approximately four weeks quicker than the industry average, and we have achieved an average of 98.9 per cent of the asking price for our homeowners. So, when we have been the instructed selling agent things have largely gone very well for our homeowners. So why in the world would we want to change anything?
In truth, because we can see the same trends in the market, too. Sale chains are collapsing more regularly with buyers pulling out of purchases on what can feel like a whim. There are more significant checks on mortgage applications today, and buyers sometimes think they can trick the system, which in truth they can’t. Some lawyers seem to be adopting a ‘computer says no’ approach, rather than taking a sensible or realistic route to solve a problem.
A few more sellers and Landlords have been brainwashed by fixed, upfront fee based ‘property marketing businesses’ that claim to save their clients’ money but pay little importance to sales negotiation and progression. If just one of these businesses is involved in a sales chain, problems seem to be more regular.
So, what can the industry, and Redbrik, do about it and how can we ensure that we are protecting our customers and get them moving in a timely and stress-free manner?
Peter Knight rightly points out that: “Agents have been poor in highlighting the negatives to potential sellers.” He believes that part of the agent’s role is to talk to sellers about the issues, the positives and the negatives of the moving process. By highlighting what can go wrong, will sellers look more closely at what an agent is supposed to do?
At Redbrik, we feel we have always been honest with our clients and give them a fair and accurate depiction of the market. However, perhaps there is more we could do.
Should Redbrik be radical? Should we crack some eggs and lead from the front to do more to protect the moving process?
One potential idea could be to introduce something like a buyer referencing process including a buyer application fee. If a buyer has some ‘skin in the game’, would they be less likely to walk away from a purchase just days away from the exchange of contracts because they now think the ‘lounge is a bit small’ or they have seen something else?
I’d hope they take the process more seriously and consider if they truly do want to move forward with the purchase. You might argue that we do not want to put any potential buyers off from offering on a home by introducing fees or further referencing. In part, I’d agree, but surely getting the right buyer is preferable to agreeing on a sale to someone that will ultimately walk away further down the line.
Application fees are already taken in new-build sales and (currently) for rental properties, and both sectors traditionally have very low fall-through rates. If buyers are not prepared to pay a fair amount to apply or be fully referenced, are they serious enough?
When it comes to sellers, we are great believers in getting them legally ready to sell as soon as they are on the market. This process ensures that potential legal issues are resolved much earlier in the process and results in fewer transactions falling through. You’d be amazed how many homeowners try to sell without building regulations for example. Getting legally ready is much the same idea as the Home Information Packs, which if they’d been implemented more elegantly, could have worked well for all parties.
For now, we will monitor the situation and continue to provide the unrivalled service we believe Redbrik offers our sellers, buyers, Landlords and Tenants so that they have the best chance of moving home. However, if you have any ideas on how we can further improve the process, we always love to hear them, so please email me at firstname.lastname@example.org with your thoughts.