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Tuesday, September 22, 2015

Should I trust my estate agent?

I'm selling one of my properties

I am in the process of selling one of my properties.  It is one that I originally acquired because it was a bargain and I was going to do it up and sell.  I never would have brought it to rent out, (ground floor apartments unless they have a great and secure garden are always a difficult let). 

However, circumstances changed; I ended up spending several happy years living there myself.  I have recently discussed my estate agent dilemma.

Becoming an accidental landlord has dangers

After a half-hearted attempt to let it out & my experiences of a tenant from hell reinforcing my own letting advice that you need to carefully select your letting property specifically for your desired tenants and letting market. 

I don't subscribe to the view (unless you are London) that any accidental landlord can let out successfully any property irrespective of it's location, look and facilities - those days have gone.  There is too much competition and the wrong property will just end up attracting the wrong tenants.  A landlord (as I did) will then suffer the painful consequences.

I have now come to the realisation that it is time to move on and I have bigger and more important fish to fry than having to manage an ill-suited parade of tenants, and all the hassles that come with them, just to pull in a meagre £500 a month.  Time to sell!

Don't trust over optimistic valuations

Having a figure in my own mind of what the property was worth I approached a local estate agent and was amazed when they came back with an asking price of £125,000 some £15,000- 20,000 more than my best guesstimate.

It's always flattering and a pleasant surprise when your property is valued higher than you expected.  However, too good to be true, normally is.  There is a raft of free property information from places such as the land registry that will give you comparable selling prices.  It really isn't difficult to value a property. The RICS rules on valuing look at the Open Market Value of a property ( assumes what a property is worth is what on any given day given a willing seller and willing buyer would do a deal on).  I have been out of the local Nottingham market for several years and this is what you are relying on, your agent to know and be able to be aware of local movements, demands and nuances.  However, when the valuation is undertaken by a wet behind the ears rookie I'm guessing you should have doubts about their accuracy.  Having taken their initial guidance on the price, the property has had a few offers and a little bit of interest, but none close to the original asking price - despite a small price reduction.

Landlords in a fortunate position not having to sell

I'm in the fortunate position, like a lot of landlords, that I don't have to sell.  In fact I like the fact that my repayment mortgage means that my mortgage debt is coming down by approximately £3,000 a year, meaning that when I do sell there will be more spare cash in the pot for me.  What is a minor annoyance is my utility bill with the Carphone Warehouse. I'm paying a ridiculous amount each month whilst not using any gas or electricity.  If I had more time I would have sorted it out but as usual I'm focused on the essentials of keeping and developing my other businesses as well as managing the re-development of my penthouse apartment acquisition.

Should I trust my estate agent to get it right?

Having taken the advice of this estate agent and 5 months into the process not had any offers close to the original asking price should I trust them? Clearly, their judgement was not great.  I have not been unhappy with their service and they appear competent in most other areas, but like a lot of landlords and small businessmen I'm left with the feeling that I would have handled the sale differently and to be frank, better.

Having contacted the agent last week to discuss the sale options I floated one idea to slash the price of my apartment. So rather than operating their dutch auction, we try to generate a vulture scenario, where we flush out the bargain hunters looking for a Below Market Value bargain (or so they think). 

They were wary of this scenario, in that if you don't get near your asking price, then you have 'shot your marketing bolt' and it become more difficult to raise the price back up to the original asking price without swapping agents (I suspect this is what they are most worried about).

Talking of estate agents I recently bumped into one of the regulars at my local, Damian, who has written a humorous and informative book on his experiences on being estate agent which ironically is called Trust Me I'm An Estate Agent. Perhaps I should read it?

So what would other landlords do in my situation?  Stick with my current agent and see it through?  Go for a fire sale of the investment property and hope to drum up some serious interest, or just move to another estate agent and start the process over again. 

Let me know.

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1 comment:

Anonymous said...

A few years ago, my father died, leaving two adjacent properties in the East of England. My sister took control, as Mom was in a nursing home with Alzheimers, and we needed the money for her care.

The houses were put into the care of a large estate agent in the local town, and after nearly 12 months, we realised they were playing games. They insisted the price was reduced and we realised they had buyers in mind, but was waiting for the price to come down to a stupid level.

So my son in law, and his friend, dressed like a big businessman and driving his Jag, travelled to the agents and forcefully demanded the keys for viewing. They viewed the properties and admitted they were deteriorating. My S-I-L is a builder and his mate an architect. When they went back with the keys, the white faced agent asked if they were property developers, which they refused to answer.

Within a week, the houses were sold at the price we asked for, as the word got round. As such, I never trust housing agents one bit, and will question everything they ask and say.