If you can’t find a new home, it’s time to call the troubleshooters of the property world

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.

USING CONTACTS

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.

QUALITY STOCK

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

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.

PROPERTY MINEFIELD

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.

So, would you like a sports car with your new property, madam?

By Jessie Hewitson

AS THE MARKET GETS TOUGH, AGENTS ARE ENTICING BUYERS WITH GOODIES.

Throwing in a free Mercedes with the sale of a luxury penthouse is nothing new, but it is getting more common. Against the backdrop of a rapidly weakening market, developers are having to work harder than ever to sell – often resorting to incentives that if it took place in the City might raise eyebrows.

At the high end, even Candy & Candy, the developers behind luxury property One Hyde Park, have delayed marketing and selling their latest project, the Grosvenor Waterside.

They had the launch party, but then put the whole thing on hold. The main reason was that they weren’t confident they would achieve the prices they wanted – and didn’t want to be seen reducing prices.

It’s for just this reason that developers are increasingly offering sweeteners to encourage buyers to get out their chequebooks.

Incentives of this kind include booking a celebrity chef to cater the launch party and offering to stock the wine cellars before buyers move in – or throwing in a free Bose home entertainment system or holiday with each sale.

LAVISH LAUNCH

“It used to be much more common in the commercial market, but now it’s happening a lot more in the residential market too,” says buying agent Robert Bailey. “The days are long gone when developers would sell 90 per cent of their properties on the first day and 10 per cent on the second, so now they are having to use every trick in their marketing book.”

It’s not only a question of hooking buyers, either. As Bailey adds, “Developers are having to work harder just to attract estate agents to their launches, too. Unless a developer does something lavish the agents will see the development in their own time, and the property sits around and doesn’t get sold.

“I’ve been to launches where we’ve been given Thomas Pink shirts, iPods and John Lewis vouchers. As for the buyers, I’ve heard of developers throwing in reduced mortgages, holidays and cars to incentivise people to buy.”

A house in Clapham being sold by Savills estate agency is a good example: the developer hired chef Tom Aikens to cook for the launch. Another development Savills is selling in St James’s – for £8.85 million – saw a champagne-fuelled launch party.

“The developers in question, Manhattan, are known for throwing lavish parties, so they always get a good turnout,” says Charles Lloyds, of the Sloane Street office. It seems that it works, too. “The launch for this flat saw 110 agents in attendance,” Lloyds says.

BUBBLES AND NIBBLES

But will it be enough? It seems that even the promise of champagne and Michelin-starred nibbles isn’t always enough to tempt agents to a launch. It’s not yet full-on panic, but it’s not that far off. Developers are leveraged up to the hilt, and have obligations to the banks.

Which means that there are opportunities for brave investors, especially ones who are willing to sink their cash into new-build.

“We are starting to get calls from agents on behalf of developers offering bulk deals,” says Camilla Dell, of Black Brick buying agency. “Developers are needing to ‘de-risk’, and this means selling off-plan in bulk.”

If there’s a car thrown in, who can argue?