New research reveals significant number of properties withdrawn from sale in the UK
The number of properties withdrawn from sale in the UK have overtaken those sold meaning that estate agents have effectively lost over £4 billion in potential fees, new research reveals.
In the second quarter of 2018 some 51% of properties taken off the market were withdrawn from sale versus 49% with a completed sale, the first time withdrawn properties have overtaken completed properties since May 2016.
According to the joint research from real estate software platform Reapit and property market intelligence consultancy Dataloft, this corresponds to £4 billion in potential lost fee income.
Reapit chief executive officer Gary Barker said:
‘Estate agents are constantly looking for ways of maximising their portfolios and customer data to weather a perfect storm of lower stock, reduced demand, falling prices and high incidents of withdrawals.’
He pointed out that as estate agents usually only get paid on completion, they are currently spending resources in both time and money on listing properties that they do not actually sell.
The report analysed a dataset of over 100,000 properties for sale across a wide cross section of estate agents in the UK and it also found that the majority of properties withdrawn never even received an offer. Indeed, only 38% of withdrawals received an offer.
However, estate agents still incur a significant cost to market and service properties that are subsequently withdrawn, whether taken off the market altogether, or to be re-listed with a competitor. The average withdrawn property has been marketed for five and a half months.
Regionally, London had the highest withdrawal ratio by a significant margin, with 61% of properties taken off the market due to being withdrawn from sale. With the highest property prices in London, the high proportion of withdrawals hits the London estate agents the hardest.
Scotland’s relatively low withdrawal ratio of 17% reflects the differences in the home buying system, the report pointed out. The different market and legal process plays a major part in ensuring fewer sales fall through. Buyers are required to have a mortgage agreed in principle upfront, initial searches are completed beforehand and solicitors are involved in the process of registering offers. The parties show more commitment because they have already incurred costs and would lose out due to the up-front fees business model.
‘The research shines the light on the difficulties challenging our estate agents during a perfect storm of lower stock, reduced demand, falling prices and high incidents of withdrawal. It’s important now more than ever for agents to explore the well-versed best practices to track, react and reduce withdrawal numbers.’
Kindly shared by Property Wire