THE news this week that Garrington – the property search firm owned by Phil Spencer of television’s Location, Location, Location fame – has gone into administration, might lead some to believe that the age of the buying agent is at an end. But that couldn’t be further from the truth. While the glory days of motoring around the country in a sports car looking at fabulous farmhouses might be a distant memory, those who have to move house, for family or job reasons, are more willing than ever to spend money to find that elusive new home. In this market, buying agents are coming into their own.
Camilla Dell of London-based property agent Black Brick Property Solutions says that her company has seen a 47 per cent rise in new potential client enquiries, and a 40 per cent leap in clients, compared to this time last year. Another, Middleton Properties, which specializes in country properties, says that it has already taken on almost half as many clients in 2009 as it had in the whole of last year.
Buying agents do two things. Firstly, they help you find a property. Their contacts often mean that they are able to find out about properties that are not on the open market. They will also use their connections in the property industry and with previous clients and vendors to hunt out good properties that are not even for sale, to see if they can encourage a sale. Secondly, when they have found a property, they will use their skills and knowledge to negotiate you the best price. For these services, agents typically charge around 1 per cent of the eventual purchase price of a property. They are, in short, the troubleshooters of the property world.
The primary reason that buying agents are in demand right now is a lack of quality housing stock. “The only things on the market are ultra-distressed properties, or things that are left over from last year that still haven’t sold, which may be overpriced and not great – the good stuff is off the market,” says buying agent Simon Barnes. “You may have to dig a little deeper, but properties are there to be found and sales are happening.” Barnes gives the example of a £7m house in Notting Hill that was being sold for lifestyle reasons, but the owners wanted to keep the sale quiet because they didn’t want others to know that they were selling. The buyer, too, was keen to keep the sale private because he felt that splashing that sort of cash in the current market looked extravagant. Barnes put them together, negotiated a price, and the deal was done.
PROPERTY SEARCHING: BUYING AGENTS’ TIPS
- Most importantly, before even beginning the property search process, have your financing prepared and you solicitor primed. Those who can move fastest get the best deals in this kind of market, meaning that cash buyers are naturally at a huge advantage.
- Avoid new build developments at all cost – these are perhaps the biggest no-no in a falling market. People who put deposits down or even exchanged at the peak of the market last year are getting their fingers burnt now as the projects come to completion. Banks are re-valuing properties significantly below the agreed purchase price, leaving buyers contractually committed and financially stranded.
- Don’t carry on sitting on the fence expecting prices to fall further. Vendors are now pricing houses much more realistically, so the big drops in the market are behind us. Buying a home is about good sense rather than pure deal-breaking – if you see something you like, get moving.
- Understanding the market is extremely important, though traditional methods – for instance using the land registry as a guide to what has recently sold in an area – have become irrelevant. You can end up overpaying too, particularly on homes put up for sale last year that have still not sold, so be wary and do your research.
- For sellers, be realistic about pricing, and realistic about the buyer. Look for proof that the buyer has their finances in place, and make sure you know what percentage of their offer is mortgage and what is equity – be sure that they can proceed quickly.
Mark Parkinson of Middleton Advisors explains another reason why a buying agent can be handy: they can make sure you are the first to view a property. Buyers, he says, “recognise that it’s a tight market place where getting to the house first, and potentially being the only person to see a house, is of paramount importance.” As long as the transaction is discrete and the price offered is fair, then Parkinson says that a surprising number of owners are open to this.
When you have found the property you want, getting a good price is always tricky. At the moment, it can be a minefield. For a start, as Simon Barnes says: “Now it is very difficult to determine the value of a property without impartial advice, and it’s important to remember that the estate agent acts on behalf of the seller and will only have their requirements in mind.” Because of this, a lot of buyers are simply assuming that properties are all massively overpriced and they can go in low and get a bargain. Not so. “At the moment, people are defaulting to 30 per cent below the asking price,” Dell says, “but the penny has dropped and vendors are already offering more realistic prices so you have to be careful about jumping in too low.” Making an offer that a vendor considers insulting is a sure-fire way to ensure that he will decide not to do business with you. Getting a buyer with knowledge of the market to help you can be handy. “A buying agent will look at who the vendor is, why they’re selling, what offers they’ve previously had, and identify whether the price is realistic,” Dell says. Indeed, this is becoming the focus of the selling process. “For the first time ever, we are being retained simply to negotiate a property that clients have already identified for themselves,” she adds. Now that the property boom is over, the buying agent is no longer a glamorous luxury. In this market, they are becoming a necessity.