Who was kidding who?

This week saw fun and games in the world of property portals, as the new kid on the block OnThe Market (OTM) found itself being faced with legal action by a group or over 40 separate estate agents. To be technically and legally accurate, the action is actually being taken against Agents’ Mutual, the parent company of OTM and the aforementioned 40 odd property professionals are combining ire and kitties to fund the litigation. If you remember, OTM was set up to challenge the The Don himself, Rightmove by another group of heavy hitters including Savills and Knight Frank who got the hump over having to pay large fees to the astonishingly successful king of property portals. No one is knocking the rationale of reducing the monopoly, but where the reasoning fell short was that the OTM gang fully expected all of us mere mortals to join them in protest over the stranglehold of Rightmove. It didn’t happen and whilst OTM now have 7000 subscribers, which is not to be sneezed at, it is still a wasp sting on the bottom of an elephant. Where the real problem lies and what has got various parties demanding retribution/blood is how they have arrived at these figures.

When launched, OTM told its new members that their subscription fees would be always be equal to or even lower than future joiners. This raises two questions: 1. What business would be stupid enough to offer such a deal as without a crystal ball who knows what the future will hold and what market forces will be at play? and 2. What business would be stupid enough to believe this promise-from a group of estate agents of all people….? Now it is the turn of the subscribers to OTM to get the hump as the results of their joining are not what they had hoped or been told (again who believes that a group of estate agents are telling the truth, the whole truth and nothing but the truth..?) This failure to deliver what was promised coupled with the fact that many left Rightmove to join OTM and are tied into a 5-year contract, (yes you did read that correctly), is what has-yes, you’ve guessed it-given them the hump. Incidentally, Rightmove continues to go from strength to strength.

The reason OTM got to the 7000 figure is that they have virtually been giving away their product. We should know, as even in the lowly foothills of the property world that is the NP4 postcode, we got it for peanuts after holding out. Would we leave Rightmove? Now who is being stupid? If we did, we would be closing the door in a month.  Whether we are happy with the fees charged is irrelevant; we could not operate without it and they know that. They have rightly made themselves indispensable. I am sure that these nice chaps will sort it all out…

Finding a way around things has just presented itself in the buy-to-let market which Chancellor Gideon had tried to stifle with the extra stamp duty thresholds. What he forgot to cover was commercial property; pubs, offices, shops, bars, even petrol stations. All of these are showing increasing rental returns, with far less legislation than a buy-to-let flat or house. Of course, in the future, if the owner wants to increase the capital value, they could always turn them into, yes, you are ahead of me on this one, residential flats or houses that would be ideal for the buy-to-let market. What about the stamp duty levels for the new buyers? Trust me, when a vendor has made a very healthy profit on their investment, they will be only too happy to factor in the new stamp duty as a discount for the buyer. Remember, they, the seller did not pay it in the first place when they bought the property.

So, one has to ask, did the resident of No 11 get it wrong without thinking and rush it through, or did he actually do an awful lot of cerebral gymnastics, because the people buying this type of commercial property are not your typical buy-to-let investors but extremely wealthy individuals or corporate bodies with bags of cash to spend and a lot of tax to write off. Now who is kidding who?

Fiddling the figures…

This week, the press has featured a number of articles detailing a practice that has aggrieved Cheshire & Co (and has subsequently been mentioned in this forum), for several years. The key phrase, is ‘portal juggling’. No, not what you do with the pneumatic Tracey from HR after three Stingers, (incidentally, the favourite tipple of Frank Sinatra and Cary Grant) too many at the annual conference, but the age old habitude of fiddling the figures. In the world of estate agency, this principally refers to Rightmove, although other property portals are available and open to similar abuse. What does this mean in layman’s terms? It involves estate agents taking their existing properties and removing them from their chosen property portal, then immediately relisting them, thus creating the illusion that they are listing far more properties than they actually are, with the associated fallacious impression of the number of properties that have been sold. Hence the headlines, “We list more properties than anyone else”, or “Number one for sales in the area”. It can be done very easily; I spent two hours yesterday on a portal and by changing dates and post codes, I eventually came up with a chart that could be published to the masses, that showed that I was Number 1 in the area. The recent articles focused primarily on London (don’t they all), but agents in the NP postcode are not immune to such behaviour and the accompanying bragging rights. Without coming over as excessively holier than thou, it is something that can have serious ramifications.

In London, the National Trading Standards ‘Estate Agency Team’ (no, me neither), are now getting involved and the one thing that no business wants is Trading Standards crawling around their office, because if they cannot find evidence of portal juggling, they will make it their mission to find evidence of some other activity that carries a penalty. Data collection company Propcision centred their search activities around the development at Battersea Power Station and established that one property had been relisted 35 times in a 6 month period. This meant that it ‘appeared’ that 368 proprieties  had been sold on the development rather than the slightly less jaw-dropping 35. Michelle Ricci, the founder of Propcision had been in contact with both the agent concerned and the developer and has been left disappointed but not surprised that neither party has made any attempt to speak with her. It will come as no shock that although Rightmove and Zoopla have systems in place to “monitor” these situations, there does not appear to be any penalties, nor dare I say it, any great urgency to do anything about it.

What is the effect of such portal juggling, aside from agents in certain postcodes using their portal figures as a means of beating their chest and adopting various other Neolithic tendencies? When a surveyor carries out a mortgage valuation, one of the key, if not the key pieces of data that he/she uses to arrive at the valuation is the number of comparable properties sold and at what price. If they are struggling to agree that a property values up, then comparable evidence of-using the Battersea example-367 (as opposed to 34), other properties makes their decision a lot easier and gives them far more comfort. In turn, this creates a false impression of a rising market, which makes property purchase far more difficult. At some stage, the roundabout does have to stop, as indicated by reports this week that London property prices have finally stalled. If the initial asking price was already inflated due to unchecked, unqualified and misleading data, then at some point the whole thing will implode. Will the practice continue if unchecked and unchallenged by any authority? Will estate agents discover a moral marrow that prevents them from indulging in such activities? Highly unlikely, but stranger things can happen. Who would have bet a week ago on the Conservatives becoming the Official Opposition in Scotland; in the process deposing Nicola, ‘I’m not actually an MP, but I’m Scottish and we have North Sea Oil, so there’ Sturgeon?

It isn’t ‘do as I say…

…it is ‘do as I f%^*&ing tell you’. As offered as a piece of advice by my father on many occasions. As regular blog readers will confirm, my patience has been frequently tested over the years, as a cast list-on a par with that of Ben Hur-of vendors, landlords and purchasers has sought my professional opinion, discarded it in it entirety because they/their mate down the pub/pet hamster knows better and then blamed me for the subsequent cock up.

On Thursday, I received a substantial dose of my own medicine. Having dragged myself to the doctor’s, as I could not walk, let alone do my usual 10k morning jaunt followed by swimming 4 times around the boating lake-naked-ladies 0630, but no flash photography please, it frightens the ducks…I was diagnosed with gout-possibly the worst case ever seen in South Wales. I was given 12 tablets by the doctor and was told to follow the instructions that included going home and very specifically lying down and elevating my foot for the following 48 hours. Fast forward to Saturday where in the intervening time I had blatantly ignored medical advice and was now considering amputation as a viable option to dull the pain. Having dialed the out of hours helpline and told the very attentive person at the other end of my tale of perilous privation and agony, I was politely asked whether I had followed the doctor’s advised treatment programme and had kept my foot elevated. Er…. that would be a no. I was then not quite so politely asked what I had expected to happen if I chose not to follow the professional’s-whose opinion I had sought-advice. You got me there. For those of my fan club rearranging their plans to man a mercy mission rota at Cheshire Towers, you may stand down, as having done what I was originally supposed to do, the pain has eased and I may make it through the weekend.

The relevance to estate agency? Well not just to estate agency, but to any profession where the advice and guidance is sought of those who have chosen to be an adherent of the said profession. And then, as I did with the professional recommendation of the doctor, discarded and ignored. Prior to my own personal installment of Emergency Ward 10 (Question for the pub bores amongst you: What was the name of the fictional hospital where the series was  set? Correct answers get the prize of toweling me down after my morning aquatics), I had the novel experience of a vendor telling me that she wanted, “accurate and subjective feedback from viewings”. Okey dokey I thought, there’s going to be trouble at t’mill. And there was. The viewers thought that, ‘the kitchen was very dated’, ‘the separate bathroom and loo were very 1950’s’ (the period in which the house was built and such design features were in fashion), ‘plenty of potential’, ‘great rear garden’ and finally, ‘not worth the money’. As requested, I dutifully reported these back verbatim. Two days later I received a rather emotionally wrought email from the vendor, accusing me of many things, including being disrespectful to the memory of her late mother who had been very happy in the property since she moved there in 1958 (see earlier points referring to the kitchen decor and bathroom arrangements). The real zinger was that I needed to change my attitude…. Having read and reread the email whilst taking deep breaths and thinking happy thoughts (Svetlana and a friend in a jacuzzi with a bottle of Dom Perignon usually does the trick), I manfully picked up the telephone to call the lady with the intention of having a suitably frank discussion along the theme of WTF? Dear Readers, Svetlana and Tatiana did their thing and GC didn’t make a complete idiot of himself; as one would hope of someone who has been a professional in the property world since the time when there were only 4 TV channels. I acquiesced to the vendor that she was right and could we start again? The customer is always right, even if they are spectacularly and breathtakingly wrong. They aren’t. The vendor then offered her apologies and said that when she first had the house valued, her mother had only recently passed away and that maybe she was not in the best place emotionally to hear some seemingly harsh truths and was not ready to accept professional advice and opinion. Myself, on the other hand had no such excuse when treating the doctor and his advice and opinion with a disregard befitting a teenager; because teenagers know everything don’t they?  A life lesson for us all this week and let me tell you, gout is more painful than having your nether regions waxed.  Bet you didn’t think that I would be able to make the comparison did you? Budgie smugglers are unforgiving, particularly if a bit of pond weed ends up where it wasn’t intended….