Repossessions are really starting to come through in significant numbers in my local marketplace....

Yesterday I spent the morning taking 2 more repossessions to add to my growing pile. On the 2nd appointment, I met up with a contractor who works for one of the big 5 asset management companies in the UK. It was a surreal moment as he remembered me from the last recession, as we used to be appointed on a lot of the same jobs back in the early 90's.

The big five asset managers basically handle the vast majority of all UK reposessions, each Lender has a contract with one of them to handle all their reposession work and to act as a buffer between them and the angry repossessed people. Each asset manager in turn has affiliations with certain corporate EA chains and issues instructions to market to each local EA office. Anyway, this 2nd appointment was significant because the asset manager for this appointment was not one of our usual ones so I had not met with this guy until then, so I started to ask why we have got the instruction when they usually use one of our rivals.

It turns out the the rival agent has exceeded their internal limit for the number of repos that can be held by one EA in one town, and we are basically being appointed for that reason even though we are not the prefered agent for this particular asset manager. Talking frankly about business and the market, he let it slip to me that at the start of the year he was in charge of a team of 6 that covered London and the home counties and they were busy but coping. Today he now leads a team of 24, and splits his time training the new recruits whilst still doing a significant number himself and they are absolutely flat out with everyone in his team doing at least 3-4 appointments a day with overtime on tap with the diary booked solid for 4 weeks in advance! These numbers if true are quite significant and will start to adversely affect the market quite soon IMHO. I mean that equates to approx 100 per day in London and the SE alone, and remember there are 4 other asset managers who may potentially be carrying a similar workload. These sorts of numbers are easily comparable with those happening at the height of the last recession, not at the so called early stages. When I asked him if there was any trend to the type of property he was seeing, the answer surprised me. He basically said that was everything from a 1 bed converted craphole in the worst parts of London to a 6 bed penthouse apartment overlooking a famous racecourse that the local EAs reckon was worth around £3M! How much trouble must people be in if they can afford to walk away from something like that?

The afternoon was spent attending another repossession this time allowing access to the defaulting borrowers in order to retrieve their personal possessions before the trigger happy asset manager authorizes a total house clearance the moment the 14 day notice expires. This is the grottiest part of my job by far, basically standing there like a prize prat in their former home while some poor couple try desperately to cram their lifetime possessions into a hastily hired white van. I always try my best at empathy and they usually tell me their story. This chap unfortunately lost his job at the end of Oct 07 and was repossessed by a certain recently nationalised bank at the end of February 08 with a mere 6K in arrears but with over 40K in equity left in the property even at forced sale prices. The poor chap said the Banks attitude changed from understanding and accomodative at the beginning to hard nosed agressive coming into the New Year.

That's a very interesting anecdote - many thanks, and please keep 'em coming honest EA! Must admit much as I want houses to become affordabkle again, the actual pace of the collapse is becoming a little scary. Still, best to be informed and this sort of stuff is invaluable.

Blimey, sounds like the recently nationalised bank is acting extemely rapidly. I don't remember the last housing crash that well (slightly too young), but I do recall people often having 6-18 months of arrears. Now I don't know if this guy was in trouble before October 07, but if that is when it really started that is a turnaround in 4 months. Perhaps 6-18 months is how long it takes once the courts fill up, it will be interesting to watch the possession hearings website.

Someone did post the URL, but I have lost it.

If the banks are being agressive- maybe they know that if they dont get these things on the market QUICKLY- they will be worth less than sod all in 6 months time- jeeez- this is a seminal post for me.

this one?

http://tinyurl.com/y3mpo5

The previous link gave a sort of "back-door" way into the site - without registering - which now appears to have been firmly slammed shut. BAH!

Honest EA, your anecdotals yet again make enlightening reading.

And this one gives a nice insight into the human misery flowing from liquidity problems.

May I ask a question out of interest: when you are taking a repossessed property, do you automatically stick it in an auction, or if it is a half decent property do you stick it in your window but at a market beating price?

I would have thought that repossessions could be a nice earner for a typical EA in the current climate, as you won't have any of the problems of vendors refusing to recognise the need to drop prices and so such properties give potential for quick turnovers and more efficient generation of fees.

Or is that benefit reflected in a lower commission dictated by the asset manager?

yes - i've just realised that after spending the last 10 minutes clicking around!

it'd assumed it was my woeful I.T. "skillz"

After repossession I get to fill in a ten to 20 page dossier depending on the lender which generally asks my opinion of open market value and a "forced sale" price. If I think that the property is unmortgageable then I will recommend an auction sale, otherwise I will recommend a sale on the open market. This report must also include details of comparable properties that have recently sold and those that are currently on the market. The asset manager also instructs a chartered surveyor to fill in a similar form independently of the agent, then after comparing the 2 reports will instruct the agent to market at the highest of the 2 valuations for a minimum of 28 days before considering a price reduction. This is to protect the lender from being counter sued by the ex- borrower for allegedly underselling the property. We have a duty of care to prove that we have actively marketed the property to achieve the best price and then we must sign a declaration to the effect that any offer recommended for acceptance is the best price achievable in the current market. Then the amount of that offer and the property address is advertised in the local paper inviting anyone who basically wants to put in a gazumping offer to do so within 7 days of the advert being published. All these procedures were established in the last recession when it came to light that some unscrupulous agents were sitting on properties , artificially depressing the prices claiming they couldn't sell them while at the same time taking backhanders to sell the best ones to their associates.

Yes you are absolutely correct on your second point. I have some collegues who run offices in SE london where 80% of their current register are made up of repossessions. The income from selling repossessions will keep the large corporates afloat in the recession if they can keep a lid on their costs.

Fees from asset managers are generally negotiated at the national level and can vary depending upon the negotiating skill of the senior management, the average being around 1.75% although some are lower than that.

Fascinating anecdotal. Thanks HonestEA.

HonestEA - many thanks for taking the time to post. It's great to hear how things are going now, rather than months down the line when the figures come out.

It's also fascinating to learn some of the procedures in place - had wondered why every now and then there were adverts listing a house address and a price, in a slightly different format to the other ads on the page - thanks for clearing that one up!

Presumably if one EA has a limit on the number of repos at any one time, all EAs have this - if a SE London office has 80% repos at the moment, what is the usual limit?

would seem that things are moving apace.i was speaking to my conveyancing contact and he was saying that at the minute,his team is working at half 2007 levels in terms of completions per month..Obviuosly there could eb wider business issues in play but what is your view on transaction levels?Are they as bad as that?

thanks for the post.

edit to say
conveyancer,I see you're reading any view on tranction levels?

edit to say you've just gone,doh!

Thanks for posting HonestEA. It's fascinating hearing about the what is really going on out there, and it's nice to know that EA's such as yourself do exist!

A question for you. Are you seeing many clients coming to you, who are putting there own home on for a quick sale before the banks foreclose? I'm interested to know whether there are many people out there who are facing up to their financial situation rather than sticking their heads in the sand until it's too late.

If anyone does find another back door way into the possession claims site can they post a link. I am so annoyed that they have made it registration only. Anyone can look at what I paid for my home, but I can't find out the names of those people who can't afford theirs anymore. Freedom of information my a**e.

Back again.

I love reading posts from the Honest Estateagent. I just wish he was in my area instead of the t****** I have to deal with on a daily basis.

It is also good to see that the repos are starting. Good for my business and also good for me trying to buy by own house. I like repos, I have a deposit in the bank and can move fast, if you find a good one then it won't need too much work but the price is normally lower than average.

I don't need magnolia walls and a snotty estate agent telling what "has potential". I can work that out for myself.

Business should be speeding up in a few months then. Once no one buys them at the prices they are on at and the lender's drop the asking prices nice and quickly.

All very well in the early 1990s. IMO that should have to be on the internet. Who reads local papers these days?

Presumably this should never happen should it? I mean, if the mortgage company is the one doing the repossesion then presumably they were mortgagable two or three years ago, what could have changed in that time?

http://www.findaproperty.com/displaystory....p;storyid=20806

for instance!

depends if something material has changed in that time. Depends if the solicitor acting on the purchase picked up the problem on the purchase, Depends if the lender's criteria has changed in relation to what they would mortgage, depends if it is leasehold and the term has now gone below an acceptable level, depends if it a leasehold property and the landlord has gone missing in that time, etc.

A lot can change in a fairly short amount of time.

Unauthorized removal of chimney etc , subsidence, fire damage, pest infestation, malicious damage by ex borrower, over ambitious amateur developer who strips a property to a shell then runs out of money....

Good point. I am sure the 7 day notices will have to be displayed on sites like Rightmove after a few test cases where the ex borrower argues in court successfully that advertising a 7 day notice in the local paper does not disharge their statutory obligation to achieve the best price when they could have reached millions more people by advertising on the internet. It is not standard practice at the moment however.

transaction levels Honest EA?sorry to pester but do you have a view?

Sorry I should qualify that . The quotas are per agent per asset manager. The limits are not publically disclosed and are probably under review but if you have a corporate EA surrounded by a load of small independents, then by default the corporate agent will get the repossession instructions from all five asset managers so they can obtain far higher numbers than they usually would. Asset managers are usually very wary of giving too many instructions to one agent in the same town because the agent can then effectively control the local market which is not healthy.

No. They are in denial and are being repossessed in my area in increasing numbers, generally far more quickly than they had anticipated. This is reflected in the increasing number of repossessions that we see where no attempt has been made to prepare or move out prior to the date of eviction.

50% of 2007 levels is what I am seeing at the moment as well.

And just to back that up, I really believe that if you could find an honest EA in my area they would say the same thing

Great posts, HonestEA.


By what percentage do you tend to mark the forced sale price down from the open market price, when you are filling in the dossier for the lender?

10%

it does seem to tally with what we're seeing elsewher eon HPC.ie lenders rushing to repo.I have a contact in a big banka nd he was telling me that when they see the client is in trouble and unlikely to get the balance back to norms then they are repoing straightaway.The fact that people are not ready for repo is amazing.Unbelievable actually.

So, 90% mortgages aren't safe for lenders any more then, even in a "static" market.

But it's not a static market - which is why they're not safe.

In a static market, they're safe. In a static market you will find a buyer reasonably rapidly.

In a rising market they're gold plated.

You need to add in a percentage for missed mortgage payments (look at the cml website for the number who are 12 months in arrears!) and costs of repossession. If a property has to go to auction, the market is nearly restricted to cash buyers only.
In the USA, the courts have been reluctant to grant repossession orders where the lender has been unable to prove the debt. This appears to happen where the debt has been sold on in, say, 100 slices. In one case, the lender "fabricated" the documents (this is what the documents would have looked like if we had them), which went down a real wow with the judge.

Thanks.

People must have their heads under a couple of tonne of sand to not pack their stuff up. A real sign of the times.

"I have some collegues who run offices in SE london where 80% of their current register are made up of repossessions."

HonestEA - care to elaborate on postcodes or general areas at all? I'm guessing Thamesmead / Plumstead / Bexley but also possibly SE20 where I'm watching. Lots coming onto the market and being reduced now.

You are guessing well.

Honest EA - what advice are you giving to sellers who are intending to buy another house in a sideways move, say from one part of the country to another? I understand the advice to serious sellers is to drop their price by at least 10% below equivalent properties on the market in order to achieve a sale. That sounds fine, but when you then try to buy another property you could well find that the owners of any house you want to buy don’t share the same realistic attitude.

When we moved home in the last property slump (early 90s), we took the EAs advice to drop our sale price – eventually selling for nearly 25% below the original asking price which he originally valued it at. That’s when the problem really started. Quality properties in good locations were just not being reduced in price and the owners rejected what we thought were fair offers, as almost none were in a forced sale situation.

Of course there was plenty of dross on the market at keen prices (there seemed to be a close correlation between badly located / low quality property and distressed sellers), but the good stuff just would not budge on price (at least not until 2-3 years into the slump), even though we were in a strong bargaining position. In the end, as we had gone through with our sale, we had to reluctantly buy something that was less than ideal and needed a shed-load of work (and money) to bring it up to scratch. Having followed the EA’s advice, we then ended up in a pressure situation where we had to buy somewhere. (At the time there were no suitable rental properties prepared to house 3 kids and two animals).

So I’d be interested to know what advice you are giving to clients in these circumstances if they are unable to wait for the market to fully unwind.

Estate agents don't advise clients... they - perfectly reasonably - want you to sell your house so they get their commission.

Somebody should point Disillusioned in the direction of this thread...

I can't see you doing much other than selling at the best price you can and then renting until you get something you feel isn't a rip off. Several people have pointed out that sellers in the last crash were either distressed ( which can take a while) or pretty naff.

People in good houses who could afford them simply decided to stay put.

Given you need to move you are best selling soon to get the best price and plan to not buy for a while. If you get something sooner than expected then result! If not then you've still got your money sitting awaiting a bargin a few years time.

Again if you have to move , especially to an area you do not know very well, a 6 month STR is probably the best advice in this market. Trying to buy a house at the other end of the country, when viewings have to be arranged a long time in advance and when you have limited time in the target area is problematic at the best of times. Weigh up the hassle of moving twice against the potential cost of making a bad mistake and the probability of your target houses falling in price faster than you could pay off the equivilent mortgage. In the worst case you could buy the equivilent of what you sold in 6-12 months but more likely you will be able a significantly better house for the same money or the same house for less money. Remember websites such as Rightmove and the Land Registry prices give far greater transparency to the market than existed in the last recession. It is therefore far easier for a laymen to get a feel for a property market they do not especially know well and judge the trends for themselves. The negotiating power of a non sale dependent purchaser , especially if you can find a seller of necessity in your taget area, grows ever stronger by the week as the downturn starts to gather momentum.

A useful perspective - thanks. You clearly don't see much risk of a reversal in the current decline in prices for quite some time.

In the last crash I seem to recall that Barclays provided someone with a mortgage and when they came to repossess it, found that all that was left was a clear site as he had taken a bulldozer to it.

Back then, I was an EA and we dealt with one repo where the owner had been diying. He had stripped the kitchen and started refitting it, stripped the bathroom and started refitting it, he had started rewiring, chillingly dangerously, and if you were unwary, you risked breaking your neck if you walked out of the back door, as there was a damn great trench there. He had also decided to make the living room and hall open plan... by removing a load bearing wall.

It is amazing the things some owners do.

No I do not frankly. We have passed the top. The debate now is how low can they go and how long do we take to get there.

I suppose the quandry that estate agents have is that it's in their interests for the bottom to come as soon as possible but it's likely to take several years to get there.

We're likely to hear endless claims in the mean time that the market has turned the corner and we'll see plenty of false dawns.

One interesting thing I've seen on my property bee/rightmove search round the Cambridge area is a couple of houses are having the asking price being put up, rather than down. Could it be that the owners are twigging that people are offering 20-30% below asking price and putting up the price accordingly? If so they don't have much of an opinion of buyers' intelligence... particularly these days when it's so easy to track asking/sold prices. Can't see that particular ruse working.

Exactly right. Except probably 2/3 of the estate agents who are still in the business have not realised this yet, since they have only ever worked in a booming sellers market and all they know is confident sounding ramping hot air.

When I sold my house in May last year, my buyer was able to see that he was paying 55% more for it than my neighbour paid for the virtually identical house next door in February last year.

He even mentioned it to the agent.

Great juxtaposition on last two posts. lol

I'm not sure I totally agree.

Yes if you look for it information is more readily accessable (in terms of detail and press reports) however for the majority of people the web is only a medium (something that was forgotten in the dotcom boom) and no different to the tv or papers. Also reports published on the on web can still stuffer from the bias you find elsewhere in the media.

The great benefit of the web is discussion, in the late 80's/early 90's you probably didn't mention your feelings about property to your next door neighbours or even her-in-doors... now it's possible to be vocal, open and anonymous about your thoughts.

Having said that, the other benefit are the independent sites... not just forums, but stuff like propertysnake.co.uk and property-bee.com which wouldn't be posible without the web.

Cheers
BH

I'm afraid i'm with HonestEA on this one.

I think the freeflow of information granted to many thousands of people by the presense of the internet who otherwise would not have it, will dramatically increase the speed by which the markets will move.

The fact I can log on and see house prices in any region of the uk by the click of a mouse is a massive massive tool. Why should I buy in Suffulk if I can buy the same house in Norfolk for £15000 less? Previously, how would I even know about the house for sale in Norfolk, unless I drove there and picked up the local rag?

Knowledge is Power dontcha know

Yes, the speed with which information disseminates (plus a little processing time) will be reflected in the speed with which behavioural (market) changes occur.
Hence the overnight type effect with Bear.

I also agree with this. Buyers know whether a property is over priced or not and sellers are forced to take a dose of reality. If you need to sell, I suspect a rather anxious feeling is generated by seeing a similar house down the road on at a lower price.

Right now the old demand and supply chesnut is in reverse. Too many sellers and not enough buyers, those whose properties are overpriced definitely will not shift them and those that do sell will be the ones who have bitten te bullet and lowered their price.

Even agents are now confirming prices are down 10% in my area, but I have also seen articles (one on the HPC News blog this morning) refering to properties being market down by 20% from last summer's highs. This is presumably the next wave of the drop, ie agents saying "well, they are down 10% from last summer already, but to be competitive I'd probably knock a further 10% off."