What is wrong with this idea?

[ethical PR]

What is the size of the market you have identified of sellers who don’t want to use an estate agent, auction house or Purple Bricks to sell their properties ? @LeasingEval

What type of buyers have you identified that would be willing to spend multiple £20 on the off chance that the properties you list might be of interest?

What budget have you set aside to market your concept and how are you looking to market it?

 

[Financial-Modeller]

Putting a house on the market is expensive. We are talking here about selling properties off the market - the seller hasn't the time, inclination or resources to tart the property up for sale. They just need home report value or below to be shot of the property without incurring the expense.

The buyer gets a property below market value and pays a fee for the priviledge.

The traditional model works because there is no alternative.

Isn't this requirement provided by Property Auctions?

Also, at the risk of over-simplifying, in an earlier post, you mentioned that your ideal vendor wants to achieve a transaction price 20% below market value. What is to stop them using a traditional agent, marketing the property at the net price, grossed up for the agent's commission? (so perhaps 82% of market value)

 

[gpietersz]

I see a steady stream of unresearched ideas, whose owners are determined to prove the idea is good. The simple fact remains that success or failure isn't in the idea, but in the research & the execution.

Me too - although all mine are in certain niches' obviously.

I also see people with a good idea determined to execute it wrong. Over-ambition in the early stages, is the commonest problem, and I think that is a problem here too. Rather than trying to draw people away from Rightmove and Zoopla, set up a specialist estate agency and sell through them. Even better, set up a property finding service.

I wish I could say you could compete with the established websites, but the network effects will keep you out.

 

[LeasingEval]

Isn't this requirement provided by Property Auctions?

Also, at the risk of over-simplifying, in an earlier post, you mentioned that your ideal vendor wants to achieve a transaction price 20% below market value. What is to stop them using a traditional agent, marketing the property at the net price, grossed up for the agent's commission? (so perhaps 82% of market value)

Because if it doesn't work out and they don't get a buyer then then have lost the marketing fee plus setup costs - home report, EPC etc.

 

[LeasingEval]

Isn't this requirement provided by Property Auctions?

Same problem again - the seller has up-front costs and if their reserve isn;t met then they are out of pocket without a sale.

There doesn't seem to be any way to test the market for a property without a large outlay.

 

[gpietersz]

Because if it doesn't work out and they don't get a buyer then then have lost the marketing fee plus setup costs - home report, EPC etc.

Who is going to cover those costs doing things your way?

Why is it better than using a cheap online agent? Why you rather than, for example, this: https://www.griffin-residential.co.uk/gold-plus

 

[billybob99]

The amount of time you've wasted on here, you could have started to validate it - even if we all said this idea is genius - do you have the funds to bring it to market?

 

[mattk]

Because if it doesn't work out and they don't get a buyer then then have lost the marketing fee plus setup costs - home report, EPC etc.

What setup costs though? You seem to be the only person in the English speaking world who pays an estate agent in advance and not on sale. Other than an EPC, which presumably the seller will need on your site as well, I am at a loss as to what upfront costs there are?

 

[LeasingEval]

Why is it better than using a cheap online agent? Why you rather than, for example, this: https://www.griffin-residential.co.uk/gold-plus

On the first page they say this :-
"No upfront payment".
In the FAQ they say this :-
There are no hidden charges. once you've paid your £195 you will have access to everything you need to sell your home with us.

And I've not looked in detail at them yet, but can I make the "no upfront payment" of £195 and then cancel my agreement with them at no cost? It's not clear.

 

[LeasingEval]

What setup costs though? You seem to be the only person in the English speaking world who pays an estate agent in advance and not on sale. Other than an EPC, which presumably the seller will need on your site as well, I am at a loss as to what upfront costs there are?

Ring an estate agent please and ask them if they will list a property on rightmove for you at no cost and allow you to cancel anytime at no cost.

 

[ecommerce84]

Ring an estate agent please and ask them if they will list a property on rightmove for you at no cost and allow you to cancel anytime at no cost.

They’ll list a property for you on Rightmove for no upfront cost.

But it’s likely that if you try and leave during the ‘tie in’ period, it’s likely the contract will allow them to charge you a contribution towards marketing costs to that point.

Once the tie in has expired you are generally free to go.

Edit to add: being ‘free to go’ would depend on the contract signed of course. But based on my parents experience, they signed up with an agent, paid nothing but the EPC, and took the house off the market after around 6 months and weren’t charged a penny.

 

[LeasingEval]

They’ll list a property for you on Rightmove for no upfront cost.

But it’s likely that if you try and leave during the ‘tie in’ period, it’s likely the contract will allow them to charge you a contribution towards marketing costs to that point.

Once the tie in has expired you are generally free to go.

Great - can you send me a link to one that will do this please?

 

[Mr D]

Same problem again - the seller has up-front costs and if their reserve isn;t met then they are out of pocket without a sale.

There doesn't seem to be any way to test the market for a property without a large outlay.

Seems to me you are trying to find a market for your solution.

Rather than seeing a problem and figuring out a solution that can be marketed.

You asked what was wrong with the idea then appear to want to ignore anything anyone suggests that could be wrong with the idea.

 

[Gordon - Commercial Finance]

You’re hell-bent on finding a reason to make this idea work, despite multiple people above saying it won’t, so why bother asking? Everyone’s time is wasted.

 

[LeasingEval]

I am not making this up for fun, I promise.
This idea is based on a genuine situation that I was in - had a property and made a reasonable estimate of its value based on other properties in the area. So contacted a high street esate agent and they marketed it for me. Spent money on home-report, EPC, decorating and after 8 weeks no offers - so I had to pull it from the market and rent it out. So all that money was lost plus a "final fee" was charged by the agent to remove it from the market. Agreed that not all agents will have this final fee, but the high street agents that account for 90% of the propeties listed on right move do have it. I was looking for below market value for the propery in return for a relatively quick sale as every month it was empty was costing me £500. Have since found out that there are specialist property agents who deal with below market value properties and will sell on the details for up to £2k at a time. The property was in a good location but needed a new kitchen and bathroom etc. But still plent of change left over once that has been done.

 

[Mr D]

I am not making this up for fun, I promise.
This idea is based on a genuine situation that I was in - had a property and made a reasonable estimate of its value based on other properties in the area. So contacted a high street esate agent and they marketed it for me. Spent money on home-report, EPC, decorating and after 8 weeks no offers - so I had to pull it from the market and rent it out. So all that money was lost plus a "final fee" was charged by the agent to remove it from the market. Agreed that not all agents will have this final fee, but the high street agents that account for 90% of the propeties listed on right move do have it. I was looking for below market value for the propery in return for a relatively quick sale as every month it was empty was costing me £500. Have since found out that there are specialist property agents who deal with below market value properties and will sell on the details for up to £2k at a time. The property was in a good location but needed a new kitchen and bathroom etc. But still plent of change left over once that has been done.

So you acted as some others have done - though usually much longer than 8 weeks - and then came up with this idea to shift cost from one to the other and reduce the number of buyers looking at a property.

Perhaps next time don't lose money. Stick it out - 8 weeks is nothing.

 

[gpietersz]

In the FAQ they say this :-
There are no hidden charges. once you've paid your £195 you will have access to everything you need to sell your home with us.

And I've not looked in detail at them yet, but can I make the "no upfront payment" of £195 and then cancel my agreement with them at no cost? It's not clear.

I think its fairly clear that that applies to the £195 pay upfront package which is the one they push on the home page.

There are a number of other online estate agents offering either very cheap packages (and if you are discounting a house very steeply it will sell so the risk is minimal) or who offer "on completion" packages, or a mix (small upfront, more on completion).

 

[AllUpHere]

Any house will sell at the right price. For 20 % below (true) market value you can sell anything. End of idea.

 

[fisicx]

So contacted a high street esate agent and they marketed it for me.

You just chose the wrong estate agent. The one local to us promises a buyer within 4 weeks or your money back.

 

[GriffinResidential]

I think its fairly clear that that applies to the £195 pay upfront package which is the one they push on the home page.

There are a number of other online estate agents offering either very cheap packages (and if you are discounting a house very steeply it will sell so the risk is minimal) or who offer "on completion" packages, or a mix (small upfront, more on completion).

I can confirm that this is the case. For our pay on completion packages, no listing fees are due upfront, only upon the completion of sale.

 

[gpietersz]

@AllUpHere I thought the same. I am wondering whether what @LeasingEval really means is more like "20% below what the market value would be if it was done up"

@GriffinResidential You people are on the ball - on here in two and a half hours of someone mentioning you. Assuming you are using some automated monitoring of where you get mentioned, but still a fast human response.

 

[GriffinResidential]

@AllUpHere I thought the same. I am wondering whether what @LeasingEval really means is more like "20% below what the market value would be if it was done up"

@GriffinResidential You people are on the ball - on here in two and a half hours of someone mentioning you. Assuming you are using some automated monitoring of where you get mentioned, but still a fast human response.

We are always on the ball and here to help if anyone needs assistance with selling their house, without paying the extortionate high street fees!

 

[namesweb]

Instead of charging £20 per property if you approached it like a "Jacks Flight Club" model and did either £20 a month with say 20 property credits or something, and genuinely had a swathe of properties at genuinely below market value prices I could see you shifting a few subs.

The reality is though, if you found 20 properties at genuinely (and decently below market value) enough to entice someone to pay £20 a month, I'm surprised you wouldn't be finding the cash to buy them yourself and building a portfolio? The fact is most BMV deals are probably just BS. I'm signed up to plenty of BMV newsletters offering a 2 bed terraced in the nether regions of a small town 50 miles outside of (insert city of your choice to avoid offending anyone from a specific city! ) for £50k saying they're below market value, when the reality is - it's AT market value, but hasn't had any interest because there is probably just no demand and the campaign is designed to drive some sort of hype.

 

[DontAsk]

Great - can you send me a link to one that will do this please?

Almost any EA in the country I would wager. Every EA I have used works this way. No sale,no fee.

I am not making this up for fun, I promise.
This idea is based on a genuine situation that I was in - had a property and made a reasonable estimate of its value based on other properties in the area. So contacted a high street esate agent and they marketed it for me. Spent money on home-report, EPC, decorating and after 8 weeks no offers - so I had to pull it from the market and rent it out. So all that money was lost plus a "final fee" was charged by the agent to remove it from the market.

Link to the agent please.

What's this "home report" thing. Completely unneccessary that's for sure.

EPC is personal to you and lasts for 10? years. It can be used agian so the cost is not lost.

Decorating? That has nothing to do with EA contacts.

"Final fee"? You were had, good and proper.

Agreed that not all agents will have this final fee, but the high street agents that account for 90% of the propeties listed on right move do have it.

Evidence?

I was looking for below market value for the propery in return for a relatively quick sale as every month it was empty was costing me £500.

What price did you actually market it at? The one you wanted or the "market price"? If it was worth the market price then buyers would bite our hand off for a good discount. Again, sounds like you were had by the EA.

 

[Gordon - Commercial Finance]

What's this "home report" thing. Completely unneccessary that's for sure.

Completely necessary in Scotland unfortunately - a legal requirement for putting a house up for sale. Contains an EPC along with a load of ar$3-covering by a surveyor.

Waste of time and money, but “necessary”

 

[Financial-Modeller]

...This idea is based on a genuine situation that I was in - had a property and made a reasonable estimate of its value based on other properties in the area...

There's your problem!

Either, you paid an expert to sell something for 80% of what they valued it at in their professional opinion, and astonishingly, they failed, or you valued your own home at more than buyers did and nobody bought it!


Perhaps partially because:

...The property was in a good location but needed a new kitchen and bathroom etc. ...

 

[Mr D]

There's your problem!

Either, you paid an expert to sell something for 80% of what they valued it at in their professional opinion, and astonishingly, they failed, or you valued your own home at more than buyers did and nobody bought it!


Perhaps partially because:

New kitchen and bathroom would be factored into the price a buyer is willing to pay. And seller should be factoring into price they are wanting...

Saying that, how many people have got multiple estate agents in to give them a quote and chosen the one with the highest price?

 

[DontAsk]

Saying that, how many people have got multiple estate agents in to give them a quote and chosen the one with the highest price?

LOL We chose the one that gave the lower valuation but told them to market it at the higher price. They just seemed much more professional. Worked out well.

 

[BusterBloodvessel]

And the UKBF cycle of “I have an idea but only give me positive reactions to it” continues...

 

[tan_lan]

The most successful companies work hard to reduce friction in the sales process.

You are increasing friction.

 

[LanceUk]

The original post was an idea for a buyer to pay money for a list of houses for around 20% below market valuation. That leads me to think a proper valuation by a charterd surveyour or similar, which will take into account the condition of the building, etc to come up with a proper valuation. Otherwise, I may was well pay for a set of tarot cards to give me a fair price.

As a seller, why would I want to list a property on this service at c. 20% below what I could get with, say being on the conservative side, a 2% fee (usually a lot lower) at no up front fee (unless I break a tie-in clause - which is fair enough)? The only logical reason I can think of is that I am a distressed seller... whether that is because of the property or other debts that will consume the property and I need a darned quick sale darned fast. And you allude to that in one of your latter posts.. Yes, there may be someone who just wants shot of it, but will they really sacrifice 20% of it's real market value to get it off their hands? We aren't taling a few thousand pounds here.

There are already services that purport to provide these listings to buyers for a fee... including reposession and off market properties - so do your research on what they are doing and see how you could better it.. Is it just the price? Fine, a seller needing a quck sale will prefer not to have to pay something if they can get away with it.. and the model where a buyer pays looks already to be around: https://www.google.com/search?client=firefox-b-d&q=distressed+property+for+sale

Also, you will be up against the likes of Property Rescue.. As long as the seller isn't in default, they may use these services to quickly release the property for cash to stave off bankruptcy.. they may pay less than 80% of market value, but the cash is in the account within a week or so from memory (I have no idea of these businesses,but I would imagine they would fall under the same types of ethics as the original payday loans companies).

I would imagine your target market is investors or bargain hunters, because for people buying a home, there is so much more than the fact that they can get the house for a lot below market.. the layout of the house and its scope for being able to facilitate the lifestyle they wish is very important - it's why people often go over their budget into higher risk territory when buying their home.

If you can really get supply where the property is 20% below true market value and not a location average (we are assuming residential, but I guess commercial as well, although that opens up another pandoras box post-COVID), where you are making 20% minus costs for 9/10 of the properties, and say break even on the other 1/10, you will not be short of investors backing you...

On the original idea, as they say in a well known captial raising TV show, "I'm Out"...

 

[Maxwell83]

One (of many) of the big problems is the service is only going to be attractive to the most desperate of sellers, literally bottom of the barrel scraping.

Those same sellers don't have time for the standard buyer who has to go through the standard house buying procedure. They need cash buyers ready to take the property off their hands now - that's the only reason you sell anything for less than its worth: desperation.

There are plenty of places where you can sell a house at an undervalue to cash buyers, quickly. Why on earth use a service that's going to connect you with 'normal' buyers that need mortgages just to save a small fee that you don't have to pay until completion? You may as well just sell it 'normally' at close to market value if you're going to deal with Joe Public and typical transaction timescales.

Utterly bad idea IMHO.