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House supply halved? Not from where we're sitting

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As a member of the National Association of Estate Agents (NAEA) and as a Chartered Surveyor I am disappointed in the recent report by the NAEA. They have reported that the supply of housing has halved over the last ten years despite the facts being very different. Unfortunately the actual report shows that it is the number of properties on each individual agent's books that have halved over the last ten years.

These are two very different stories and bring into focus one of the forgotten aspects of high street estate agency. It is so profitable that there are now more estate agents than ever before selling the same (actually less) number of homes that there were in 2005. Supply of homes to the market remains elatively stable but the number of agents has increased. This leads to the average number of homes per agent to decrease dramatically.

Home transactions per year since 2005:

Residential sale transactions

According to the Office of National Statistics there are now more people employed in estate agency than in the following professions:

  • Teachers
  • Military
  • Nurses
  • Firemen
  • Police

In fact there are more estate agents than policemen, nurses and firemen put together.

When the National Association of Estate Agents comes out with statements that simply reflects the growing number of estate agents but it is pitched as changes to housing supply our eyes are raised. As we can see from the chart above the number of transactions is on the rise and nearly at the levels of 2005. Transactions of course don’t mean the same as houses on the market but they are closely correlated.

Housing supply is not keeping up with growing demand but it certainly hasn’t been halved in ten years. All that has happened is more and more agents have entered the market. Why? Because traditional high street estate agency is extremely profitable. House price rises just increase the fees paid to estate agents because they link their commission to your house price.

As the gentlemen from Freakonomics explain, that link does not mean they have your best interests at heart. All it means is that they want to sell your house. At any price.

The online estate agent model is all about stripping out the nonsense that estate agents add in to the process. You pay for all the homes they don’t sell. You pay for their branded cars, their free water, their million pound refurbished offices and you pay for the huge bonuses they give to their junior negotiators who earn £14,000 a year before bonuses.

With an online agent you don’t pay for anything you don’t need, we allow technology to do all the really basic but time consuming parts of the process and then provide added value at the important stages:

Marketing:

With advice on marketing, how to position your property on the market and then help with what to say on viewings, the key features of your property and how they will appeal to your buyers.

Negotiations:

An important part of the process! Making sure that you get the very best price for your property. We outperform the high street on percentage of asking price being hit. We average 99% compared to the High Street and their 96%. Want to know why? Watch that Freakonomics video again. All they want is the sale, not necessarily the best price. Never underestimate the power of incentives.

Sales Progression/Chain Management:

After an offer is accepted comes the important bit: the sales progression. If you are involved in a chain with a number of properties it can be a very frustrating and time consuming process. This is where our experience in getting sales over the line is absolutely vital. Spotting potential hurdles before we get to them and managing expectations up and down the chain.

Will's Words:

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