"Customer for life" with Sherry FitzGerald

As part of my house-hunting saga I was invited to a Sherry FitzGerald talk in Clontarf Castle the other night. We were given a brief overview about the Irish economy and the past, present and future of the property market by Marian Finnegan, followed up by a bit of a sales pitch from Sherry FitzGerald Mortgages.

The overriding message that came through was that Sherry FitzGerald is a seriously professional organisation. Looking and listening to their well-turned out employees, one is given the impression that no matter which Sherry FitzGerald agent you’re dealing with, you’ll get the same straight talk, the same grounded opinions, and the same honest answers. Of course, this is exactly what buyers are hoping for in the agent they’re buying from.

The talk offered one everything one needed to know about the property market in 20 minutes. At the end the room was still hushed; everyone was waiting for an answer to the big question: are prices going to drop much more?

Being the cynic that I am, I expected a closing message about how now was a great time to buy but refreshingly it never came. Instead we were informed that 10 years ago was a great time to buy and in 10 years time, 2008 will have been a great time to buy, but as regards this year compared to next - it’s all down to consumer sentiment and that, we were told, is down to us. (Sorry, Marian but that’s far too much responsibility!)

And that was it; either a small increase or a small decrease and no-one knows which. You could sense the disappointment in those who thought that she would provide a definite answer or tell them that a 20% drop was on the way. But I think that a lot of people were satisfied with having been given an informative clear rundown on the market (along with a free pen and key-ring).

Putting myself in the shoes of a fresh-faced first-time buyer who has little background information or understanding of the property market, I would have been very impressed with the evening and would have left confidant that Sherry FitzGerald are good people to do business with.

And that’s the real sell. Though many of these people will be considering all homes, and therefore dealing with whichever agent happens to be selling their home of choice, I’m pretty sure who they’ll go when they become vendors.
It’s all about the "customer for life" approach.

Hendrick Robertson leave Property Partners

Adrian Hendrick & Douglas Robertson have rebranded as Hendrick & Roberston Estate Agents, having pulled out of the Property Partners network just before Christmas.

With an office in Donabate & another in Malahide, this is a further reduction to Property Partners' footprint in Dublin - PP Martin in Drumcondra; PP Declan Bolger in Clondalkin; PP KBA in Lucan.

A Buyer’s Market?

According to everyone in the industry, I’ve happened upon a great time to enter the property market. Comments from estate agents and pundits are constantly reinforcing the message that now is the time of the cheeky offer and that opportunities abound for the savvy investor.

But I’m not an investor - I’m a wannabe homeowner. This curtails my house selection somewhat as a good price is not the only characteristic I’m looking for.

To be clear, I’m looking for a large two-, or small three-bed house in any one of about four areas relatively close to the city centre. My budget is, according to all the latest reports, ample enough for me to secure such an abode.

However, I’m increasingly finding that in the time of the buyer, no-one’s selling - at least not at realistic prices.

If I sought an unoccupied apartment on the outskirts of Dublin, or a newly built house in the commuter belt, I would surely profit from the much publicised drop in prices. However, I’m discovering that this drop in prices isn’t being consistently applied to second-hand homes in prime locations.

The main reason for this seems to be that I’m trying to buy from those standing one rung further up the property ladder. In the same way that my mortgage approval sets pre-defined limits on my spending power, the price originally paid by vendors for their home and the equity it represents for them sets limits to what they will expect and can accept – and today’s prices appear to be too low to many of them, at least the ones I’ve been dealing with.

So if no-one’s selling, are prices actually dropping? Reading the Sunday Times ‘Home’ supplement yesterday, I was given the news that, in one of my target areas, the two-floor over basement houses have dropped by 30%. But the Sunday Times admits that this evidence is anecdotal and based on the opinions of agents. The scientific reality I’ve experienced is that facing a price of cut close to 30% combined with record rental incomes and a prediction that the market will begin to pick up in a year, vendors are more likely to consider becoming landlords than selling below their expectations.

So the pattern I’m following begins with a suitable house coming on the market at a mid to late 2007 price. Upon contacting the agent, I’m told that while the vendor may accept a slightly reduced offer, if they fail to achieve close to the asking price, the property will go for rent.

So if nothing’s selling have prices actually dropped? Is ‘buyer’s market’ just a positive way to describe a stagnant market, or does it just depend on what you’re buying?

If the Sunday Times based their information on sales agreed and achieved prices, I’d guess that the number of these houses sold with almost a third slashed off their prices would constitute too small a sample size to be taken seriously by any statistician.

And, I’m worried that this anecdotal evidence feeds the market stagnation. If you’re told by your Sunday newspaper that the single property you own has dropped by 30% in the last few months, you will surely be less likely to put it on the market, whereas a keen purchaser like myself may judge it as only having fallen by 15% in value.

This is like the few (but much publicised) houses in South County Dublin that sold after a €100,000 drop in price - suddenly anyone in the neighbourhood with plans to move thinks again.

At some point a needy vendor of a probate sale will fall into my lap, but realistically I expect to be house-hunting for quite some time. During this time, my sympathy will lie with the estate agents who are arranging and attending so many viewings for houses that will probably end up being up for rent.

Quotes of the Week 25/01

“For house hunters, there will be great deals from the start of the year, as most educated vendors develop acceptance as to where values really are. The wise ones will strike in the first six months.” – Peter Stapleton, MD, Lisney.

"Overall, I would say to people that the market is beginning to stabilise. The worst is over ... this levelling off should begin to reverse itself in early 2009, and we would hope to see the property market growing again some time during that year" - Robert Ganly, IAVI.

“A look at property markets everywhere presents both a terrifying and exhilarating picture. Fortunes will be made and lost in the next five years, as positions are unwound and the subprime mess is sorted out. This will mean pain for some, but will represent opportunities for others to pick up undervalued assets.” – John Mulcahy, MD, Jones Lang LaSalle.

“So far Capel Construction, Albany and Kingscroft have all cut prices -- sometimes almost back to 2005 levels -- in a bid to shift unwanted apartments, particularly those on the outskirts of Dublin.” – Sunday Independent

“Once a property is priced to what the current market will bear, buyers will make offers. It is best to make an offer based upon the prices at which similar homes in the market are selling for. In a buyer’s market, there are more opportunities for negotiation, but making an offer is an important step.” - Nick Hughes, CEO, Coldwell Banker Ireland.

"Things are more static on the availability of credit in Ireland. It is not just that the banks have stopped lending - it is that people have stopped borrowing." – Ulster Bank Chief Economist Pat McArdle

"I have felt for a long time that rates in Europe have peaked. We will get at least a 0.50pc cut and the markets now think that," - Bank of Ireland Chief executive Dan O'Loughlin.

“There is a severe undersupply of accommodation in certain areas, which provides a market opportunity for developers and investors alike.” – Guy Hollis, MD, CBRE Ireland.

Competitor bashing in advertising

The compeition between MyHome.ie, Daft.ie & Propertynews.com for property advertising budgets has entered a new phase.

Propertynews.com is running an unusual radio ad at the moment; unusual, in that it mentions the competition (Myhome.ie) by name - something not as common in Irish advertising as it would be in the US.

MyHome.ie themselves in a previous radio campaign alluded to the competition, but not by name, when they emphasised the number of actual homes ('not dog kennels') actually for sale (not for sharing) advertised on their site at any one time.

It's not the first time propertynews.com has sailed close to the wind in its advertising. The Advertising Standards Authority previously upheld a complaint by Daft.ie relating to an advertisement that claimed propertynews.com to be "Ireland’s largest property website with over 30,000 homes for sale and to rent right now”. Daft complained that it was the larger website and that the 30,000 figure was an exaggeration. The Advertising Standards Authority upheld the first claim but not the second.

Don't be a lazy agent

From Gary Quinn, journalist & house-buyer, in the Irish Times today (http://www.ireland.com/newspaper/property/2008/0124/1201073465666.html)

"We've also managed to recognise the real salespeople from the charlatans who hitched a lift on the housing boom at its peak and never learned their trade. It's quite something to watch an agent turn up 30 minutes late for a viewing and then spend most of the time leaning against the sittingroom wall texting as you view the house and then admit that he doesn't really know the area or much about the house "but let me know if you're interested in buying it"."

Nando's fast food chain

Bannon Property Consultants recently announced that they have signed Nando's for the Dundrum Town Centre, in a unit of 2530 sq ft, proposed to open March/April 2008. This will be Nando's first outlet in the South, with one in Belfast due to open in Victoria Square.

"The Irish Economy Needs Lennox Estates..."

Some marketing claims go just a wee bit too far.

In a full page ad in the Sunday Times last weekend (January 13), Gordon & his team from Lennox Estates, looking slightly awkward, are pictured in a field on the shoreline, with their backs to the sea, and their shadows cast across themselves on the grass. It's a forced image - causing one to be distracted by the process behind the picture instead of the team message: you find yourself picturing the lot of them leaving the office in convoy (or did they arrange a bus?) and parking with difficulty on the side of the road and gathering around in the field uncertainly until the photographer arranged and rearranged them into some kind of order, and the nervous joking about who would stand where and whether the ladies should cross their hands in front of themselves and the men should button or unbotton jackets and so on.

Anyway, it's really the claim of the headline that's most problematic: that the Irish economy need Lennox Estates. Clearly it's not meant literally (- it is explained below that it is the level of professional service that Lennox Estates offers that the Irish economy needs; and one would think it needs a lot more besides before it needs that), but it goes too far and makes the whole ad collapse in on itself for not being able to take it seriously.

Agents go to the Races

Increasingly I have noticed estate agents and auctioneers getting involved in sponsoring horseracing in Ireland, lending their names to races across the country. Developers and construction firms have been part of this scene for quite some time, such notable events include the Pierse Hurdle and the largely Durkan New Homes sponsored day in Leopardstown over Christmas. Some examples of agents' participation include:

The Knight Frank Ganly Walters Novice Steeplechase
The Sherry Fitzgerald Stephenson Crean Handicap Steeplechase
The Sherry Fitzgerald Lettings Novice Hurdle
The Jordan Town & Country Estate Agents European Breeders Fund Summer Fillies Handicap
The Nolan & Brophy Auctioneers Flying Five Stakes
The DNG Nationwide Steeplechase for the Ladies Perpetual Cup

Fair play to them I say.

"Property" is back

The importance of property advertising to the Irish Times is plain to see. Ever before the company bought MyHome.ie the newspaper's revenues from property advertising were clearly very important to its bottom line; and since its €50m purchase of that property advertising website, the dependency has intensified.

With this in mind, today's banner headline 'Property Is Back' is a loaded one. It is, of course, referring to the supplement, which is called just Property, being back in the fold of the paper after the Christmas holiday period did away with (as it always does) any chance of selling enough property advertising space to justify a separate print process. But it is funny that they chose such a direct way to announce the return: Property is Back (more important than Clinton v Obama! and nearly as important as THE IRISH TIMES title). Even in the same important location on the page, they could have put it differently: Property Supplement Back, or even "Property" Is Back. But, instead they allow the reader to do a double-take and think for a second they're saying, maybe, Property is back in fashion (after a slump in interest), or perhaps even, The property market itself is back.

It would be a nonsense claim to say that the Irish Times property supplement IS the property market. Of course, it's not true in any numerical sense in that the specific readership profile of the Times limits the percentage of the total market that is represented in the pages of the supplement. However, in a looser sense the claim is at least partly true - a very important niche of the Irish property marketm (one which has an influence on the other levels of the market) is almost totally conducted through & dependent on the pages of the supplement.

Of course, that's not necessarily a problem. It's a really good read, Property in the Irish Times, and we all know it's not a forum for reporting or even independent thought on the property market; and also the revenues are put to good enough use (in my opinion, at least) in that it's a damn good newspaper all round for a country our size. But, one would hope that

1. The property market could cope without the Irish Times (Surely ...)
and
2. The Irish Times could survive without property advertising (Hmm, you'd wonder, especially with it carrying the MyHome.ie purchase ...)

Young professionals should not be the only targets of new homes marketing

In a document about the development of spaces for playing, the DDDA observes:

A survey of marketing literature and advertising for developments
in Docklands, reveals images that are all aimed at young
professional people. There are no images of children, or indeed
older people. The message in marketing brochures is at odds with
the aim of creating a family-friendly quarter of the city. This may
lead to people having different expectations of the use of public
and semi-public spaces, and may discourage families.

By not creating family- or child-friendly spaces in Docklands, it will
become difficult to cultivate a permanent population, rather than a
transient one with revolving tenancies of people without children,
and to discourage young families from moving to other areas.
The inclusion in marketing literature of images of a broader range
of people using inclusive spaces will help communicate the aims
of the Dublin Docklands Development Authority, and shape the
expectations of residents moving in to new developments.

Valuation as diagnosis: Darren Chambers of Lisney on Michael Lynn's Howth property

Hearing Darren Chambers of Lisney on RTE Radio yesterday afternoon showing the reporter around the Michael Lynn property in Howth, I suddenly found myself picturing hospitals; ward rounds to be precise, and the practice of one team member "presenting the patient" to the consultant - formulaically summarising the key aspects of the person's condition and treatment, so that the consultant and the rest of the team were quickly and smoothly up to speed on the all the defining information, so that the diagnosis and treatment can be agreed upon.

The language of doctors goes as follows:

The patient is a thin, 40-year-old smoker who presented to the Emergency Department complaining of chest discomfort and numbness. The patient has a history of alcoholism and poor dentition including recurrent dental abscesses, the most recent which was two months and drained itself spontaneously. He states he has had a dry, non-productive cough for the prior year. He reports a recent 15-20 lb. weight loss and a 4-week history of night sweats. His past medical and surgical history is otherwise unremarkable except for childhood asthma. Additional review of systems was unrevealing.

On physical examination, the patient was afebrile with stable vital signs. He was a thin male who appeared older than his stated age. Head and neck exam revealed poor dentition without any palpable cervical or supraclavicular lymphadenopathy. There was a left chest wall mass approximately 6 cm in diameter surrounding the left nipple, which was firm, non-mobile and non-tender to palpation. There was no skin discoloration, erythema, fluctuance, or draining sinuses noted. The patient had full passive range of motion of his left shoulder. The lung exam was clear bilaterally with no rales, ronchi or significant wheezing. His cardiovascular and remaining exam was without gross abnormality. His chemistry lab values were within the normal range. The patient has a white blood cell count of 9,800, a normal differential, and his HIV serologies were negative.

Listening to Darren brought to mind a picture of the Lisney team in a board room setting, at a weekly "new instructions" meeting, and each branch manager summaring the age, type, condition, size, setting etc. of each property under consideration, opening the floor for comments on the valuation (diagnosis) and marketing plans (treatment):

Approached by a winding driveway from Thormanby Road the residence stands in a sheltered secluded position in an oasis of peace and tranquillity. The fact that all the amenities of Howth Village and the Yacht Clubs together with Sutton are only a few minutes away and the city is a mere 12 km and Dublin International Airport less than twenty minutes drive seems hard to believe.

Extensive renovations on this important residence have commenced. Glenlion House now offers a potential purchaser an outstanding opportunity to bring out their own taste and fashion in completing this interesting development. Included in the sale is a detached chalet together with detached double garage.

A unique opportunity to acquire a truly magnificent south facing marine site enjoying mesmerising views over Dublin Bay and Baily. Subject to the necessary Planning Permission a truly magnificent family home could be created.

Straight talking over at Irish Mortage Brokers

You've gotta hand it to Karl Deeter at Irish Mortgage Brokers: a truly remarkable website (including a virtual version of himself, "avatar", talking visitors through the site), and a blog that redefines the phrase "sticking your neck out" in the Irish business world. Consider saying anything like the following on your company website ...

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Now Ulster bank have come out and said that they are halving commissions.... The broker is now in a predicament, don’t put business with Ulster bank or do so and charge a fee? the fee will be burdened on the consumer. in the past we never did this because the commission levels didn’t require it to cover costs. And we often used the commission to make the deal better for the consumer, something the banks NEVER do...

Permanent TSB are also ’suddenly’ talking about reducing commissions, this kind of move (within 48 hours of each other) after decades of a status quo rings to me of a cartel move. I sincerely doubt that it is happening by miraculous design.

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I have to say ‘hats off’ to Mr. Lynn though… I mean, how the hell did he pull that off? My first suspicion is that part of the way he did it was bank greed, I know what most people have to go through in order to secure finance, there is no way of lying your way through it, however, some people are ’special’ clients, and I don’t mean they catch a short bus.

Thomas Byrne is another one, but he only robbed €30 million… bless…. Thomas Byrne didn’t do a runner, but why isn’t he in jail? I know a man (we’ll call him Bertie for the sake of this article) and he’s a good for nothing thief, a liar and a cheat - this is not our taoiseach by the way, its a ‘fictional’ character - and Bertie decided to make a withdrawal from his local bank, he did this while wearing a balaclava and carrying a twelve guage shotgun.

He is now serving a twenty year stretch in Mountjoy Prison and all he got away with was two grand, actually he didn’t get away with much as he was caught, and never got to spend any of it. If you divide the two grand out by twenty years it works out at one hundred a year, so crime doesn’t pay, if it’s not white collar that is.

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Anyways, Saudi’s are also doing their utmost to supress freedom of speech and reform, they recently jailed a blogger named Fouad Al-Farhan because he stated on the internet that he wanted to see political reform (oh the cheek of him!), its a good enough reason to go to war with the Iraqiis but apparently all it does for the Saudi’s is sponsor a state visit with open arms. Actually Iraq got a state sponsored visit too but theirs was from the US Marine Corp. Big difference…

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the public didn’t complain about the government bailouts, the lack of transparency in some banking procedures which helped bring this about, the golden handshakes to CEO’s behind them and the possible creation of a recession.

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When the government raised the bar for stamp duty to €317,500 house prices took a jump and suddenly every house was valued at €317,500. This meant that a huge amount of stamp never entered government coffers and many people blamed estate agents. Rightly so, it was a disgrace but it happened and now we can’t reverse time.

Seedy FAMILY HOUSE for sale in Pimlico

Kelly Hudson use the well-reheased idea of poetic licence in estate agents' property descriptions to distinguish themselves, perhaps aiming to be a Roy Brooks of Ireland. One of Roy Brooks' property descriptions from the 60s ran as follows:

Darkest Pimlico. Seedy FAMILY HOUSE two rooms in the basement, ground, 1st & 2nd floors and attic rm. on 3rd. Decor! peeling, faded and fly blown. Garden - good G.R. £60 p.a. £6,950. If you are too late to secure this gem we have a spare along the road rather more derelict. A lightly built member of our staff negotiated the basement stair but our Mr. Halstead went crashing through.

Property is taken so much more seriously nowadays Kelly Hudson would have a hard time trying to convince vendors to do something similar.

Update on IAVI

It's slightly shocking that the IAVI is taking so much credit for the recent reform of stamp duty. They issued a press release on the 20th of December, as follows:

"IAVI Delivers on Stamp Duty Reform 20-Dec-2007

It admittedly took a long time, and a change of tack, but the long standing pressure by the IAVI to have some equity brought into our national stamp duty regime eventually bore fruit in the December budget."

We're aware of the size and scope of their recent lobbying campaign but the tone is surely far too self-congratulatory for something as complex as budget decisions: so many influencing factors, so much lobbying by so many organisations, so much time spent dwelling on what should be done.

The next step for the IAVI, apparently, is a major campaign aimed at the public that will promote the differences between IAVI and non-IAVI auctioneers, or as they put it, 'truly qualified professionals' and 'fly-by-nights'. So we might expect them some day to be taking single-handed credit for reforming the estate agency business!

The Institute's winter 2007 magazine is also out and features articles on:

Ski Resorts
Budget 2008 - Property Related Aspects
Sir Gerry Robinson's Speech - Presidents's Lunch
Dublin Airport - A New Era
Review of the Fine Art Market in Ireland in 2007
Wexford Agricultural Land Prices 1920 to 2000
The Impact of Archaeology on Construction Projects
Student Focus
Legal Updates
European Real Estate Challenge
SIMA O8