City Centre Flat developments knowingly Oversold
Discussion
I am glad that someone has aired this topic. I find the world of property unbelievable. My understanding, which may not be entirely accurate, is as follows:
Someone decides to put their house up for sale and calls an industry expert, their local estate agency. A few days later an early twenties bloke turns up in a cheap suit with a short & fat tie and uses his extensive experience to value the property. As far as I am aware there is not professional qualification system for estate agents. His verdict is great news for the seller: the house is worth loads of cash! He goes on to say that buyers expect a 10-20% discount on advertised prices, so they agree to advertise at the inflated price.
Right Move collect this data and release it to the press. The press say that house prices in that area are up 10-20%. Buyers arrive and are told that the prices are as advertised and discount is rare, the national figures support it. Suddenly prices are up. When times are good the mortgage broker is set to to well off the deal too so the sale goes through. When times are bad, the sales fall through or huge discounts are forced but the industry does not quote the land registry actual sale prices and maintains that (advertised) prices are still rising.
Considering that houses are the most expensive thing that most people ever buy I find it shocking that the prices can be forced up by one, largely unregulated, industry who act for both the seller and the buyer.
New builds are just a shining example of this.
Suddenly the banks / building societies are acting and a conscious for the industry and are not permitting inflated price sales to go through and the world is in shock...
Someone decides to put their house up for sale and calls an industry expert, their local estate agency. A few days later an early twenties bloke turns up in a cheap suit with a short & fat tie and uses his extensive experience to value the property. As far as I am aware there is not professional qualification system for estate agents. His verdict is great news for the seller: the house is worth loads of cash! He goes on to say that buyers expect a 10-20% discount on advertised prices, so they agree to advertise at the inflated price.
Right Move collect this data and release it to the press. The press say that house prices in that area are up 10-20%. Buyers arrive and are told that the prices are as advertised and discount is rare, the national figures support it. Suddenly prices are up. When times are good the mortgage broker is set to to well off the deal too so the sale goes through. When times are bad, the sales fall through or huge discounts are forced but the industry does not quote the land registry actual sale prices and maintains that (advertised) prices are still rising.
Considering that houses are the most expensive thing that most people ever buy I find it shocking that the prices can be forced up by one, largely unregulated, industry who act for both the seller and the buyer.
New builds are just a shining example of this.
Suddenly the banks / building societies are acting and a conscious for the industry and are not permitting inflated price sales to go through and the world is in shock...
anonymous said:
[redacted]
Thanks Sherlock. When you go out to buy a packet of crisps do you base your decison on,a) What you paid last time, or
b) What your mate paid last time, or
c) What the other customer you ask in the shop says he paid last time, or
d) Engage in a detailed study of the value to you of the packet of crisps taking into account the availablilty of alternative food sources and the possible attractiveness of a snack with a crunch as an enhancing factor and any preference which you may have for the taste of salt and potato as opposed to the chocolate and buiscuit products available further down the aisle. All of this has to be weighed against the viability of growing your own potatoes, making your own salt and acquiring cooking utensils to achieve the necessary conversion process. And even after all that it is IMO still useful to know how much such things usually sell for.
Interesting.
Let me expand the detail slightly.
My concern is the position of the lender, who charged substantial fees, the estate agent who sold the property who charged substantial fees, the dealer who introduced my client who charges substantial fees, the valuer who valued the property and charged substantial fees and the property developer who made massive profits.
All by overpricing to a level where SIX YEARS LATER the property is worth 75% less.
Please bear in mind in addition my client INVESTED PERSONALLY £35000 in cash in each property. All of which he has lost. His pension fund.
I believe this is fundamentally unfair and therefore unsustainable under common law.
All of these fees were paid by my client, who lost absolutely everything.
If the Valuer, Estate agent, Solicitor and Dealer have absolutely NO RESPONSIBILITY for the loss sustained why on earth do we require Valuations, Legal Transfers, Mortgages secured by Deed and all the other charges.
If a Valuation can fall without any liability to the valuer by 75% in a period of over 6 years where on average property values rose by in excess of 50% surely there MUST be some comeback on the valuer. If this is correct there is no sense in valuations for a borrower other than to give a professional fees. The service has no real value to the client.
If we are saying its all my clients fault, which entirely accept is a possible view, then why continue with a system which offers no protection whatsoever in the event of a dramatic fall in values well in excess of 50%?
These are huge falls. and seemingly one man's risk.
Is this not like having insurance which is invalidated in the event of a claim?
Furthermore what on earth were the FSA (again charging massive fees) actually doing to supervise any of this? Or the RICS or The Law Society.
Whilst I understand the caveat emptor answers I find the particulars of this case too serious to be left at this point.
I really think there is an issus or issues to be tested and I am very interested in the opinions of others.
Let me expand the detail slightly.
My concern is the position of the lender, who charged substantial fees, the estate agent who sold the property who charged substantial fees, the dealer who introduced my client who charges substantial fees, the valuer who valued the property and charged substantial fees and the property developer who made massive profits.
All by overpricing to a level where SIX YEARS LATER the property is worth 75% less.
Please bear in mind in addition my client INVESTED PERSONALLY £35000 in cash in each property. All of which he has lost. His pension fund.
I believe this is fundamentally unfair and therefore unsustainable under common law.
All of these fees were paid by my client, who lost absolutely everything.
If the Valuer, Estate agent, Solicitor and Dealer have absolutely NO RESPONSIBILITY for the loss sustained why on earth do we require Valuations, Legal Transfers, Mortgages secured by Deed and all the other charges.
If a Valuation can fall without any liability to the valuer by 75% in a period of over 6 years where on average property values rose by in excess of 50% surely there MUST be some comeback on the valuer. If this is correct there is no sense in valuations for a borrower other than to give a professional fees. The service has no real value to the client.
If we are saying its all my clients fault, which entirely accept is a possible view, then why continue with a system which offers no protection whatsoever in the event of a dramatic fall in values well in excess of 50%?
These are huge falls. and seemingly one man's risk.
Is this not like having insurance which is invalidated in the event of a claim?
Furthermore what on earth were the FSA (again charging massive fees) actually doing to supervise any of this? Or the RICS or The Law Society.
Whilst I understand the caveat emptor answers I find the particulars of this case too serious to be left at this point.
I really think there is an issus or issues to be tested and I am very interested in the opinions of others.
Steffan said:
All by overpricing to a level where SIX YEARS LATER the property is worth 75% less.
Please bear in mind in addition my client INVESTED PERSONALLY £35000 in cash in each property. All of which he has lost. His pension fund.
It was his decision to buy - if he'd bought a different property then it may not have dropped in value so much. But he decided to buy at that price.Please bear in mind in addition my client INVESTED PERSONALLY £35000 in cash in each property. All of which he has lost. His pension fund.
How's he paying your fees if he's bankrupt, or are you hoping for a share of any winnings you can get for him? Greed, it's a wonderful thing
Steffan said:
If we are saying its all my clients fault, which entirely accept is a possible view, then why continue with a system which offers no protection whatsoever in the event of a dramatic fall in values well in excess of 50%?
Not sure who your rantings are aimed at but of all the persons you have directed vitriol against, only the Valuer is responsible for the valuation bit. As much as i like not Estate Agents they are exactly as described - agents - and putting your trust in anyone with big cufflinks is generally not a wise thing.BTW - did your client carry out his own valuation, especially since you state that he put all his eggs into this 'investment'?
Edited by fido on Sunday 6th March 14:36
It seems that you (or your client) are implying that these experts should been able to predict the recession thus not have valued the properties so highly; very few managed to predict it and even fewer made money from the prediction thereof. Slightly off-topic but nobody complained when they were raping the property market claiming to be genius property developers; you sensed that people said they were property developers like I was supposed to think they were clever. Reality: in 2002, you could have bought a derelict property, taken a s
t in every room, sold it in 2006 and made a big profit. Genius? Greedy and lucky, more like.
So, back to your client. Would your client have given the lender, the estate agent, the dealer, the valuer and the property developer a bonus payment in 20 years' time when he/she retired with a massive property portfolio worth millions? If not, then I stand by my guns and suggest your client suck it up. Am I being too harsh, opinionated and ignorant?
t in every room, sold it in 2006 and made a big profit. Genius? Greedy and lucky, more like.So, back to your client. Would your client have given the lender, the estate agent, the dealer, the valuer and the property developer a bonus payment in 20 years' time when he/she retired with a massive property portfolio worth millions? If not, then I stand by my guns and suggest your client suck it up. Am I being too harsh, opinionated and ignorant?
BTW - did you client carry out his own valuation, especially since you state that he put all his eggs into this 'investment'?
He paid for formal RICS valuations on both properties.
However the valuer in both cases is no longer in business.
I agree this is the first line of attack. But I think there are others.
Clearly from most of the posts contributors regard this as foolhardy and his own fault. I think it is partly true but also partly the collective greed and irresponsibility of the property business as a whole.
Interesting
He paid for formal RICS valuations on both properties.
However the valuer in both cases is no longer in business.
I agree this is the first line of attack. But I think there are others.
Clearly from most of the posts contributors regard this as foolhardy and his own fault. I think it is partly true but also partly the collective greed and irresponsibility of the property business as a whole.
Interesting
No I am not on a no win no fee basis.
I do not charge any fees to assist these individuals whatsoever.
Happily I made enough money as a Accountant to not need to continue fees.
I do this because I think these individuals need help.
I also assist with a lot of complex Benefit Entitlement cases again no fees.
I am NOT an Angel as my friends would confirm at length, but I like to put a bit back where I can.
I do not charge any fees to assist these individuals whatsoever.
Happily I made enough money as a Accountant to not need to continue fees.
I do this because I think these individuals need help.
I also assist with a lot of complex Benefit Entitlement cases again no fees.
I am NOT an Angel as my friends would confirm at length, but I like to put a bit back where I can.
AVeryNaughtyBoy said:
I am glad that someone has aired this topic. I find the world of property unbelievable. My understanding, which may not be entirely accurate, is as follows:
Someone decides to put their house up for sale and calls an industry expert, their local estate agency. A few days later an early twenties bloke turns up in a cheap suit with a short & fat tie and uses his extensive experience to value the property. As far as I am aware there is not professional qualification system for estate agents. His verdict is great news for the seller: the house is worth loads of cash! He goes on to say that buyers expect a 10-20% discount on advertised prices, so they agree to advertise at the inflated price.
Right Move collect this data and release it to the press. The press say that house prices in that area are up 10-20%. Buyers arrive and are told that the prices are as advertised and discount is rare, the national figures support it. Suddenly prices are up. When times are good the mortgage broker is set to to well off the deal too so the sale goes through. When times are bad, the sales fall through or huge discounts are forced but the industry does not quote the land registry actual sale prices and maintains that (advertised) prices are still rising.
Considering that houses are the most expensive thing that most people ever buy I find it shocking that the prices can be forced up by one, largely unregulated, industry who act for both the seller and the buyer.
New builds are just a shining example of this.
Suddenly the banks / building societies are acting and a conscious for the industry and are not permitting inflated price sales to go through and the world is in shock...
I think you may have simplified the whole process a little too far. You may have a case for "professionalising" the estate agency part of the process (not without downsides, too, however), but you leave out the "professionals" within the process including solicitors, mortgage vlauers/surveyors and others. In my experience and honest opinion the number an agent sticks on a photo in his window has less significance on the number recorded on the TR1 than the opinion of the professionals and the sentitment of the broader economy.Someone decides to put their house up for sale and calls an industry expert, their local estate agency. A few days later an early twenties bloke turns up in a cheap suit with a short & fat tie and uses his extensive experience to value the property. As far as I am aware there is not professional qualification system for estate agents. His verdict is great news for the seller: the house is worth loads of cash! He goes on to say that buyers expect a 10-20% discount on advertised prices, so they agree to advertise at the inflated price.
Right Move collect this data and release it to the press. The press say that house prices in that area are up 10-20%. Buyers arrive and are told that the prices are as advertised and discount is rare, the national figures support it. Suddenly prices are up. When times are good the mortgage broker is set to to well off the deal too so the sale goes through. When times are bad, the sales fall through or huge discounts are forced but the industry does not quote the land registry actual sale prices and maintains that (advertised) prices are still rising.
Considering that houses are the most expensive thing that most people ever buy I find it shocking that the prices can be forced up by one, largely unregulated, industry who act for both the seller and the buyer.
New builds are just a shining example of this.
Suddenly the banks / building societies are acting and a conscious for the industry and are not permitting inflated price sales to go through and the world is in shock...
Rightmove for sale price stats may be read by agents and used as part of the sales process to potential purchasers but are not that interesting to the "professionals". A party purchasing without a valuation report form a professional is taking a fairly large risk in what may be their largest single purchase. (Didn't annuities used to be our largest single purchase?).
Anyway, if anyone can come up with a "better" system that suits our legal processes, our financial institutions, our legislators and the will of the buyers and sellers out there can they write to the Rt. Hon. Grant Shapps, Palace of Westminster? He seems to be needing a bit of help with it anyway.
Back on topic, best of luck with proving criminal activity. I suspect you'll need it.
On the reverse, can I sue the property owning masses for the house price growth over the last 20 years that has led to an entire generation of younger people unlikely to enjoy the same property ownership of their parents or even their elder siblings' generations?
I suppose those years' price growths were similarly entirely the responsibility of the 20yr old spikey haired tie-wearer...
Steffan said:
why continue with a system which offers no protection whatsoever in the event of a dramatic fall in values well in excess of 50%?
Because nobody can predict the future and it is usually made clear that prices can go up and down?Do you feel that you could have been duped in the same way as your client? Or would you have done more research?
Well, what a surprise.
"It's not my fault", is, seemingly, now totally engrained in our collective minds.
Not forgetting the old "Property only ever goes up".
Zero sympathy from me, especially as there were some questioning the whole "Btl, the road to your becoming a millionaire", for nearly everybody.
Not saying that isn't possible but it requires work not arse sitting.
A simple question to ask was, just how many reasonably earning young urban professionals, you know, that utterly gorgeous couple, wine glasses in hand, smiling out from the massive hoarding on the building, are there in the locations for so many of these developments, able to pay the rents that were projected.
As we passed such developments in many places I sometimes remarked to Mrs. WG that many would probably end up as social housing and become rundown, then twenty or thirty years hence be demolished.
That idiot Prescott, of course, didn't help with those density rules.
There really is a sense of mass mania about the whole thing, sorta tied in with the "glorious utopia" of New Labour.
"It's not my fault", is, seemingly, now totally engrained in our collective minds.
Not forgetting the old "Property only ever goes up".
Zero sympathy from me, especially as there were some questioning the whole "Btl, the road to your becoming a millionaire", for nearly everybody.
Not saying that isn't possible but it requires work not arse sitting.
A simple question to ask was, just how many reasonably earning young urban professionals, you know, that utterly gorgeous couple, wine glasses in hand, smiling out from the massive hoarding on the building, are there in the locations for so many of these developments, able to pay the rents that were projected.
As we passed such developments in many places I sometimes remarked to Mrs. WG that many would probably end up as social housing and become rundown, then twenty or thirty years hence be demolished.
That idiot Prescott, of course, didn't help with those density rules.
There really is a sense of mass mania about the whole thing, sorta tied in with the "glorious utopia" of New Labour.
anonymous said:
[redacted]
They sold..... eventually with every financial incentive thrown at them. The point is they were made "easier" to buy at an inflated price by the builder and Mortgage lender. They didn't make that money before the crash when re-selling precisely for that reason. fido said:
Not sure who your rantings are aimed at but of all the persons you have directed vitriol against, only the Valuer is responsible for the valuation bit. As much as i like not Estate Agents they are exactly as described - agents - and putting your trust in anyone with big cufflinks is generally not a wise thing.
BTW - did your client carry out his own valuation, especially since you state that he put all his eggs into this 'investment'?
"Rantings", "vitriol"? He's been polite and measured as far as I can see. Odd that people do this.BTW - did your client carry out his own valuation, especially since you state that he put all his eggs into this 'investment'?
Edited by fido on Sunday 6th March 14:36
OP I'd agree with the view that your client has been a greedy berk and is now reaping the unfortunate reward BUT there'e plenty of evil little con artists on the other side too. Very difficult to get them into a court though, and near impossible to get them convicted.
anonymous said:
[redacted]
I'm with Tonker on this one.Rule 1 of investing for idiots(like me)- do not invest anything you cannot afford to lose in a high risk investment. Newbuild BTL leveraged to the nth degree is high risk.
Rule 2 of investing for idiots - do not put it all on the same horse; say not more than 20% of your pot in any one asset class. That's why the government don't let you put your pension on 'little lad' in the 2.15 at Haydock.
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