Whatever the outcome of Brexit, there is little doubt that the current political uncertainty is contributing towards a subdued property market. I believe that, once we move beyond this period of transition, activity will pick up. But what if it doesn’t? What are you doing to Brexit-proof your business?
The latest RICS UK Residential Market Survey has shown a continued weakening in national new buyer demand, citing a mixture of affordability constraints, a lack of stock, economic uncertainty and interest rate rises.
RICS says that new buyer demand was down by 11% in September on the same month last year and, at the same time, new sales instructions have also deteriorated, leaving average stock levels on estate agents’ books close to record low level. These properties are also taking longer to shift, with the time taken to complete a sale from initial listing, increasing to approximately 19 weeks.
If this stalemate continues and transaction activity does not significantly pick up, it will become more important for you to maximise the value you can achieve from every case.
One way of doing this is to partner with a surveyor who you trust and want to work with. A referral relationship with a surveyor could provide you with additional income for passing on client leads and may generate leads for your business.
On top of this, partnering with a surveyor could also improve your conversions by ensuring that inaccurate valuations do not stand the way of your cases proceeding.
At Arnold & Baldwin we are open to establishing strong working relationships with brokers so that we can have open lines of communication throughout the process. So, for example, I might receive a call from a broker who is considering an application to a particular lender on a property in a high-rise block to ask whether it’s the sort of property they would be happy lending on.
Or, brokers can contact us if they have received a valuation from another surveyor they think is incorrect. In these instances, we will carry out a desktop valuation and if we think it is unjust, we can provide some comparables that a broker can use to contest the valuation. If a surveyor is presented with three robust comparables that they did not have sight of initially, they are allowed to change their opinion and valuation. Often, however, it is the case that brokers get frustrated and contest valuations with comparable properties that are not actually comparable. This compounds the frustrations further, but with a reasoned rationale you may have a more fruitful outcome.
I have a recent example where a sale was agreed on a unique period property in Epsom for £750,000. The lender carried out an AVM which valued the property at £700,000. As a result of this AVM the buyer got cold feet and pulled out of the deal, then two days later the property was sold to a cash buyer for £765,000. A computer tried to work out the value and got it wrong as it couldn’t factor in the unique charm and character. The lender lost the opportunity to advance £500,000 and the broker was not a happy chap, whereas he may have been able to challenge the AVM and proceed with the case if he were able to consult with a surveyor.
Nobody knows what the outcome of Brexit will be, but you can prepare for most eventualities by ensuring that your business is more efficient and robust. Partnering with a surveyor could help you to do this by delivering extra income and helping to maximise your conversions.