Category: (2)

So you’ve heard mixed things… They seem to have a few boards up but apparently they’re making huge losses and they have a few unhappy customers. What should you do?

Reviews from specialist estate agent sites such as AllAgents gives people thinking of using a low value or ‘online’ agent a useful and realistic insight into what they’re really likely to experience. You can read some of these reviews here.

The recent BBC Watchdog report on TV hasn’t helped the likes of PurpleBricks either. Dishonesty was a prominent theme. Again, this can be viewed here.

Real, local and established companies such as Mount & Minster are also online estate agents; they market properties on websites such as Rightmove. Almost all estate agents do. Therefore, these ‘online’ agents cannot claim that their unique characteristic is that they’re online. In truth, the only thing that makes them unique is that they’re cheap and low value. Perhaps these low fees are the result of firms such as PurpleBricks making huge losses of £26m, putting homeowners who pay for their services up-front at risk of losing their money.

Exceptional agents SELL houses by using traditional and proven personal skills to get thousands more for your property. This huge increase in the price achieved for your home far exceeds the difference in fees between a low value agent and a pro-active, traditional agent. What’s more, if you choose an award-winning agent such as Mount & Minster, the whole experience is more likely to be streamlined and stress-free. Service has a value.

What’s more, a real estate agent will successfully sell nearly all the properties they bring to market. Recent research and statistics show that the low value agents actually only sell around half their properties which is extremely worrying for those who use these low value companies, particularly when you consider that homeowners are expected to pay the majority of low value agent’s fees up-front, regardless as to whether your home actually sells or not. A report from a leading financial consultancy calculated that PurpleBricks, for example, only sell 51.6% of all the properties they market. In contrast, Mount & Minster sell around 98%.

In short, a real and traditional estate agent is incentivised to sell, sell, sell. Paying a flat fee is not a good incentive to achieve the best price. Giving a low value agent your money up-front is not an incentive at all!

Good traditional agents don’t rely solely on popping photos of properties on the internet and crossing their fingers. The low value agent’s only way of getting interest in a property is by hoping someone sees it online and gets in contact to view. A traditional agent, on the other hand, will engage with buyers and encourage them to consider a wider radius of locations and explain the benefits of different areas and the alternative property values. A computer screen or website cannot do this. If a buyer only clicks detached properties 5 miles of Sleaford, they will never see your impressive and potentially suitable detached home 6 miles away. A traditional estate agent, however, will proactively discuss your property with active buyers in your area, regardless as to where or what it is.

People buy from people. Communication and negotiation are key. Part of the reason low value agents achieve lower prices is because they don’t want (or need) to get involved with negotiations. Why would they, they’ve already got your money! They encourage the lowest level of communication possible. Next time you see a PurpleBricks sale board, see if you can spot a telephone number…

An exceptional estate agent will go out their way to do everything themselves and help you avoid the stress that could be associated with moving home. A firm such as Mount & Minster will do all the viewings themselves as part of their standard service and fee. It also allows us to achieve higher values as we can pick-up on their comments and body language through extensive experience which allows us to assess how far we can push the negotiation process later-on. Low value agents will charge you extra for viewings and would rather you did all the work as it means little to them to achieve that higher price. By the time you take into account all the ‘add-ons’ that low value against charge, you’re looking at the same price of a real estate agent anyway. In which case, why would you bother with the added risk and stress?

Speaking of risk, house sellers using low value agents such as PurpleBricks are starting to realise that, due to the lack of proactive service and sales-progression (and the worst conveyancers in the industry!), a large proportion of sales fall through unnecessarily. This means that, if you’ve made an offer on another property, you are deemed to be high risk because there’s a very good chance that your choice in agent will increase the chances of the chain collapsing. Therefore, the vendor of the property you want to buy from can either dismiss you as too high risk, or alternatively offset this risk by accepting a higher offer from you. This means paying £10k to £20k more for the house you’re buying. Assuming you’re ‘saving’ say £1,000 in estate agency fees, that means you’re suffering an £9k to £19k net LOSS after completing on the sale of your house and the purchase of your new one. Cheap, it would appear, is not the same as best value.

Mount & Minster’s clients are savvy, successful and intelligent people who recognise that their home is probably their most valuable asset, that selling a property is a financial transaction and who, at the end of the transaction, want to be in as best a financial position as possible. What’s more, they actually want to complete on the sale and their ongoing purchase. If they can do all this and receive an award-winning service and go from start to finish stress-free, all the better. Mount & Minster are good value. Cheap is better suited elsewhere. For the more savvy homeowner, you know where we are!

For a FREE consultation or valuation, click here.

 

This disclaimer informs readers that the content, views, thoughts, and opinions expressed in the text belong solely to the author, and are not necessarily shared by those firms mentioned within it. By referencing reports by companies such as Jefferies and providing links to third party websites such as AllAgents and YouTube, the author is not endorsing the public information that these companies provide the general public, but merely draw their attention to it.

Buy-to-let has long been considered a strategic and profitable move onto the property ladder, but with changes to UK legislation, are we going to see the phenomenon die out or is it still possible to reduce the tax paid on rental income and turn a healthy profit from your buy-to-let property?

Tax relief has been phased in since 2017 and will be at a flat rate of 20% and fully in place by 2020. Landlords who only pay a basic tax rate will see no change, however high income landlords will be in a more vulnerable position to loose out more.

The Nationwide Building Society published estimated figures of how a typical landlord’s profits might be hit. Someone with a £150,000 buy-to-let mortgage on a property worth £200,000, with a monthly rent of £800, would currently have a net profit of around £2,160 a year. When the new legislation is in full effect, the net profit would plunge to £960.

So, what can a landlord do to ensure profits remain stable?

INCREASE RENT – It is possible to increase rent on your property to off set the tax relief loss. However by doing this you do run the risk of loosing tenants and thus having a vacant property.

SWITCH MORTGAGES – It could be possible to switch your mortgage, for example move from a 2.99% mortgage to a 2% mortgage. By switching to a cheaper mortgage you could boost the profit and off set any tax relief losses.

UTILISE YOUR SAVINGS – Some building societies offer a mortgage which utilises your savings to cut your bills. Essentially you will not be earning on your savings but utilise the money to shrink the amount of interest you pay on your mortgage. However when utilising these deals be savvy as many examples show that some mortgage rates commence at 2.99% for the first two years but then jumps up to 5.29%.

BECOME A LIMITED COMPANY – If you purchase a property through a limited company instead of your own name you will not be effected by the new legislation. Companies are charged 20% (falling to 17 percent in 2020) corporation tax instead of the 40% higher rate tax rate taxpayers are currently liable for. Administration fees do apply when setting up a company, however these are swiftly outweighed by the longer term profit opportunity.

SO, FIGHT OR FLIGHT?

Before considering cashing in and selling up your buy-to-let properties consider the long term ambition of your property. For example, if you strongly rely on a reliable rental income then it could be more beneficial to take one of the above measures and make the best of the new rules. However, if you bought your property cheaply and have the opportunity to make a healthy profit on its sale, now would be the time.

Most importantly is to seek advice from the professionals. Mount & Minster specialise in property portfolio management and are ready to advice you, contact us today on either Grantham: 01476 515329 or Lincoln: 01522 716204.