Be Brave Big Boys
Friday 24th January 2025
The big agents pump out PR guff on a regular basis backed by spurious data, and they are simply not to be trusted. As my middle name is David, I like to stand up to them.
A few days ago, I bumped into a friendly independent agent who deals with very high-end transactions in a bespoke fashion.
He asked me what I thought of the market and I told him trading was thin, and that if people really wanted to sell, they had to reset their expectations for the price being 20%, or even 25%, off the peak.
He was falling all over himself to agree. Glad to find someone else who would speak the truth, unlike the big agents with their BS.
The only thing we did not quite agree on was when the last peak came. He said 2012/13 and I felt for my business, it was 2014.
Now let me be brave and cite two examples, close to home, which illustrate the point:
Example 1
I sold a house in 2017 for £3.085m to people who put it into a company, so paying 15% Stamp Duty (just over £450k). They spent some money on it - not much, so were probably ‘all in’ for £3.6m, or so.
The price we achieved for our 2017 seller, who is still a (happy) client in another guise, was excellent. The buyers were fully advised by a buying agent, so we did a particularly good job.
By the 3rd quarter of 2024, times had changed and we sold the very same house for £2.425m – much less, but still the best possible price in the current market. The company owning it had hefty debt and expensive interest, so they needed to ‘get rid’.
If you include the fees they paid at both ends of the trade, those poor people took a bath to the tune of £1.25m in just 7 years. Take the debt out and they had probably lost nearly all their initial cash injection.
Example 2
In 2021 we valued a client’s property at £2m (STC) and genuinely felt, at that time, we could achieve that figure or very close. We don’t do the ‘big boy bullshit’.
Unfortunately, post the world interest rate rises, that client’s debt suddenly became very expensive. As a rental investment in a private name the interest was no longer offsetable in the way one would usually expect in a business venture. Holding the asset became untenable.
The net result is that we sold it in late 2024 for £1.635m, which is 18% less than it might have achieved three years earlier.
The above are two real-world case studies.
Be Brave Big Boys - are you prepared to cite your real-world examples?
Until next time….
PB
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