a reasonable offer.

[Horace42]

On 04/01/2019 at 16:56, MartynG said:

 NO NO NO NO NO NO  NO !

 

and another NO

Please provide an explanation, a example calculation for instance, to demonstrate the logic behind your NO's.

....one example will do ....

[WotEver]

20 minutes ago, Horace42 said:

....one example will do ....

I have a boat to sell. Looking at similar boats it’s worth £25k. If I sell it myself I pocket £25k. If I sell it through a broker I pocket something like £20.5k. The commission has cost me. The buyer pays £25k in both instances because that’s what the boat is worth.

 

How much I want is completely irrelevant; I want £100k, but I’m not going to get it because the boat is worth £25k. 

[Tacet]

The issue at stake is whether the costs of arranging a sale are, in fact, borne by the purchaser or vendor.  The largest cost or not usually being a broker's commission, but the principle includes placing a private ad or making a few phone calls.

 

Market Value is defined by the Royal Institution of Chartered Surveyors and International Valuation Standards Committee) as:

 

‘the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.’ 

 

Whilst it is an estimate, the figure does not change depending on who or how it is marketed because it is assumed to be after proper marketing.  So a boat may have a Market Value £50,000.  This requires proper marketing which we will take, for the moment, as being achieved by placing with a good broker who charges £3,000.

 

From the vendor's perspective, the £3,000 might include a free mooring, less hassle in viewing and travel and no other costs etc.  Say, worth £1,500 to him or her.  And, he feels that that he will get a better price as the purchaser may prefer to buy from a broker - viewings are easier, choice of boats, feeling of confidence over buying off-the-bank and awareness of probable competition from other buyers.  If the boat had not been properly marketed, it might only achieve £48,000.  Note this does not change the Market Value - as that assumes proper marketing, not a chance meeting with a bloke in a pub.  So, in this example, the purchaser feels it will be £500 better off by using a broker.

 

Now there will be some people who consider they can undertake proper marketing themselves at little expense – and believe that a purchaser will not be bothered by whether there is a broker involved (or at least, not to sufficient extent).  That’s why some people use brokers – and others do not.

 

In practice, what comprises proper marketing will vary.  Using a broker to sell a tatty canoe will probably achieve little.  And maybe an historic boat is best advertised amongst a smaller circle.  But also maybe a reasonably conventional narrow boat is best advertised quite widely and through a broker.  You decide.

 

[Horace42]

1 hour ago, Tacet said:

The issue at stake is whether the costs of arranging a sale are, in fact, borne by the purchaser or vendor.  The largest cost or not usually being a broker's commission, but the principle includes placing a private ad or making a few phone calls.

 

Market Value is defined by the Royal Institution of Chartered Surveyors and International Valuation Standards Committee) as:

 

‘the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.’ 

 

Whilst it is an estimate, the figure does not change depending on who or how it is marketed because it is assumed to be after proper marketing.  So a boat may have a Market Value £50,000.  This requires proper marketing which we will take, for the moment, as being achieved by placing with a good broker who charges £3,000.

 

From the vendor's perspective, the £3,000 might include a free mooring, less hassle in viewing and travel and no other costs etc.  Say, worth £1,500 to him or her.  And, he feels that that he will get a better price as the purchaser may prefer to buy from a broker - viewings are easier, choice of boats, feeling of confidence over buying off-the-bank and awareness of probable competition from other buyers.  If the boat had not been properly marketed, it might only achieve £48,000.  Note this does not change the Market Value - as that assumes proper marketing, not a chance meeting with a bloke in a pub.  So, in this example, the purchaser feels it will be £500 better off by using a broker.

 

Now there will be some people who consider they can undertake proper marketing themselves at little expense – and believe that a purchaser will not be bothered by whether there is a broker involved (or at least, not to sufficient extent).  That’s why some people use brokers – and others do not.

 

In practice, what comprises proper marketing will vary.  Using a broker to sell a tatty canoe will probably achieve little.  And maybe an historic boat is best advertised amongst a smaller circle.  But also maybe a reasonably conventional narrow boat is best advertised quite widely and through a broker.  You decide.

 

Thanks Tacet.

 

A lot of useful background. To enlarge slightly on the RICS definition (from my current dealings with a house for sale) the basic criteria in the agent's contract is to find a buyer 'Ready, Willing and Able'.

 

Which in reality means I incur a fee based on the 'offer' price - that I will be expected to pay  -  even if the offer is a silly one and I refuse to accept it.

 

I appreciate it could degenerate into an argument over what is 'proper marketing' if it all falls through.

 

I don't know if this is the way brokers in boat selling work - but it is something to watch.

[Tacet]

12 minutes ago, Horace42 said:

Thanks Tacet.

 

A lot of useful background. To enlarge slightly on the RICS definition (from my current dealings with a house for sale) the basic criteria in the agent's contract is to find a buyer 'Ready, Willing and Able'.

 

Which in reality means I incur a fee based on the 'offer' price - that I will be expected to pay  -  even if the offer is a silly one and I refuse to accept it.

 

I appreciate it could degenerate into an argument over what is 'proper marketing' if it all falls through.

 

I don't know if this is the way brokers in boat selling work - but it is something to watch.

I never sell houses in my course of business.  A formal valuation has to refer to a recognised definition - most commonly Market Value, as defined and is usually part of a lengthy report extending maybe 30 sides of A4 (at commensurate expense) ; commercial lending, tax or company accounts are common reasons for needing a formal valuation,    There are some exceptions excusing the use of formal valuations - and giving a guide in the course of an Agency instruction is one of them.  So, when someone on Homes under the Hammer says that a house might achieve £300,000 - that is not a valuation, in my view although others will see it that way.

 

The starting point for what you will be required to pay will be in the contract with your agent.  But the Estate Agents Act (see s18) https://www.legislation.gov.uk/ukpga/1979/38/section/18 deals with some aspects.  And if the agent is RICS registered, the Practice Statement applies

https://www.rics.org/globalassets/rics-website/media/upholding-professional-standards/sector-standards/real-estate/uk-residential-real-estate-agency-6th-edition-rics.pdf

 

 

 

[Alan de Enfield]

3 hours ago, Tacet said:

Market Value is defined by the Royal Institution of Chartered Surveyors and International Valuation Standards Committee) as:

 

‘the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm’s length transaction, after proper marketing and where the parties had each acted knowledgeably, prudently and without compulsion.’ 

The 'market value' is simply an estimated figure.

 

But a Market Price is set & achieved solely by the buyer.

It could be argued that the market price is what two potential buyers value it at, but that the final purchaser has actually paid 'one-bid' over the market price to secure the item.

[WotEver]

15 minutes ago, Alan de Enfield said:

The 'market value' is simply an estimated figure.

 

But a Market Price is set & achieved solely by the buyer.

It could be argued that the market price is what two potential buyers value it at, but that the final purchaser has actually paid 'one-bid' over the market price to secure the item.

And at no point is that market price affected by the agent’s fees, which is the point that’s been argued about ad nauseum. 

[Alan de Enfield]

2 minutes ago, WotEver said:

And at no point is that market price affected by the agent’s fees, which is the point that’s been argued about ad nauseum. 

Agreed but :

 

[Tacet]

4 minutes ago, Alan de Enfield said:

The 'market value' is simply an estimated figure.

 

But a Market Price is set & achieved solely by the buyer.

It could be argued that the market price is what two potential buyers value it at, but that the final purchaser has actually paid 'one-bid' over the market price to secure the item.

Yes - "market value", as defined is an estimate.  It has to be, if you think about it.

 

"Market Price" has no recognized, professional definition so it cannot be discussed too dogmatically.  But,  in the manner you are using it, you may well mean just "price".  Either way, it is not solely determined by the buyer - the seller is likely to have a view too as well as the rest of the potential market to whom the seller might dispose.  

 

In your final line, replacing "price" with "value" 

 

"It could be argued that the market price  value is what two potential buyers value it at, but that the final purchaser has actually paid 'one-bid' over the market price value to secure the item." 

 

would be better. 

 

The "price" more sensibly relates to what is achieved, rather than an estimate of what might/should be achieved - which is closer to value.  There are good reasons why one party may pay a price in excess of its market value.  For example, the asset has synergistic value which is contrary to the Arm's-length assumption of market value.   Or the buyer had not  acted knowledgeably, prudently and without compulsion.

 

If an asset achieves a price in excess of its "market value"  strictly under the terms of the hypothesis defined by "market value" , the market value is shown to be an inaccurate estimate.

 

 

 

 

 

 

 

 

[Tacet]

27 minutes ago, WotEver said:

And at no point is that market price affected by the agent’s fees, which is the point that’s been argued about ad nauseum. 

It does depend on one's definitions - but the "market value" is not affected by the broker or its fees, but it does assume proper marketing which may, in some circumstance, require the use of a broker with its associated fees

 

I don't see any real use of "Market Price" - if it's an estimate (how much would have been achieved if I had had/not used a broker...?)  - you are back to MV - possibly with some additional special assumptions.  But the Price can be affected by the marketing arrangements - e.g. you may well find someone to pay more if the asset is properly marketed.  The actual cost of that marketing does not add to the price - if you are lucky enough to have a brother that is a broker and prepared to market widely at no cost to you,  it won't change the price.  If you agree to pay the broker an excessive fee, it won't change the price.  There is a much wider, more subtle issue as to whether the costs of entering and exiting an asset class bears on its MV (and price) - but that is not what is being discussed

 

So, to summarise:

 

The market value assumes proper marketing.  Just what that requires will vary - but it won't add to the value - because it is assumed.  If you don't market properly (perhaps to save fees) - it is at least liable to affect the price.  Quite whether the affect on price will equate to the saved fees is a separate question.

 

On a separate note, it is usual in the investment market to allow for purchaser's costs.  If a 10% yield is expected on a property that brings in £10,000 pa in perpetuity, the MV might be only £95,000 as the purchaser will incur, say, say £5,000 in various costs.  When analysing the eventual price in order to identify market behaviour, one needs to add back the £5,000 to the reported £95,000 deal - otherwise one over-estimates the yield.  But this relates to the costs incurred by a purchaser - not those of the seller.  

 

 

 

[Richard10002]

2 hours ago, Horace42 said:

Thanks Tacet.

 

A lot of useful background. To enlarge slightly on the RICS definition (from my current dealings with a house for sale) the basic criteria in the agent's contract is to find a buyer 'Ready, Willing and Able'.

 

Which in reality means I incur a fee based on the 'offer' price - that I will be expected to pay  -  even if the offer is a silly one and I refuse to accept it.

 

I appreciate it could degenerate into an argument over what is 'proper marketing' if it all falls through.

 

I don't know if this is the way brokers in boat selling work - but it is something to watch.

Sounds like you have committed to a dodgy estate agents agreement that you shouldn't have. Presumably it's a no sale no fee agreement with no minimum term. If so, I would sack them and get an agent where the fee is earned at exchange of contracts,  which is something that is decided by you and not the agent.

 

[Alan de Enfield]

2 hours ago, Tacet said:

  There are good reasons why one party may pay a price in excess of its market value. 

Indeed, one may pay an 'unrealistic' price for an item to fill a gap in a collection (for example) which is why I suggested the 'market price' is the level at which two people are prepared to pay.

 

2 hours ago, Tacet said:

Either way, it is not solely determined by the buyer - the seller is likely to have a view too

I do not see how a seller can determine market price, he can have an asking price which is what he wishes to achieve, but the market price will be what the market is prepared to pay. If the seller refuses a lower offer then it will not sell, when the seller accepts an offer then that becomes the market price.

[WotEver]

3 minutes ago, Alan de Enfield said:

I do not see how a seller can determine market price, he can have an asking price which is what he wishes to achieve, but the market price will be what the market is prepared to pay. If the seller refuses a lower offer then it will not sell, when the seller accepts an offer then that becomes the market price.

Exactly the point I have been repeatedly making. It’s completely irrelevant what the seller wants to achieve for the boat/house/first born, he will receive what a purchaser is prepared to pay - the market price. The broker’s fees do not alter this price. 

[Tacet]

5 hours ago, Alan de Enfield said:

Indeed, one may pay an 'unrealistic' price for an item to fill a gap in a collection (for example) which is why I suggested the 'market price' is the level at which two people are prepared to pay.

That would be the price - and not the market price.  Economists sometimes use "market price" in relation to a commodity that is widely available - and traded accordingly.  But when you are dealing with a relatively unique product, such as real estate or used boats, there is "price" - which is a post-event fact and "market value" - which is an estimate

5 hours ago, Alan de Enfield said:

 

I do not see how a seller can determine market price, he can have an asking price which is what he wishes to achieve, but the market price will be what the market is prepared to pay. If the seller refuses a lower offer then it will not sell, when the seller accepts an offer then that becomes the market price.

I agree - neither party can determine the price alone.  You said a Market Price is set & achieved solely by the buyer - which I disputed.   I hereby offer £100 for the freehold interest in your house.  But as a potential buyer, I need your agreement before that becomes the price.    The price is not set & achieved solely by the buyer.  Or the seller.

[Naughty Cal]

16 hours ago, WotEver said:

Exactly the point I have been repeatedly making. It’s completely irrelevant what the seller wants to achieve for the boat/house/first born, he will receive what a purchaser is prepared to pay - the market price. The broker’s fees do not alter this price. 

Indeed. Our car purchase is a case in point. Price on the screen £9200. Price we paid £7300.

 

 

[Laurie Booth]

2 hours ago, Naughty Cal said:

Indeed. Our car purchase is a case in point. Price on the screen £9200. Price we paid £7300.

 

 

I bought a flat that was advertised at £45k for £12K.

[Mike Hurley]

I sold my house in 2007, advertised for 147k, i got 150k.

[Naughty Cal]

Our house was advertised for £85k in 2007. We bought it for £85k in 2007.

[Horace42]

On 18/01/2019 at 15:15, Richard10002 said:

Sounds like you have committed to a dodgy estate agents agreement that you shouldn't have. Presumably it's a no sale no fee agreement with no minimum term. If so, I would sack them and get an agent where the fee is earned at exchange of contracts,  which is something that is decided by you and not the agent.

 

Mine is a case of a sole agency, for which there is a lower fee, and being a complex sale, where the agent has to do a lot more work to sell the property - and can do so fairly safe in the knowledge they will be paid something for the effort and expenditure they incur ....  albeit having to wait until completion to be paid.

The problem arises if a deal fails to materialise - perhaps in a case of offers not being enough (for all sorts of reasons) - after proper marketing - the client thus not accepting any - and deciding not sell.

This is when the small print of the RICS type contract becomes magnified  .... especially in response to the blunt instrument of 'sacking.'

These things lurk in the background - but I don't know if this applies to boat sales.

[Athy]

On 19/01/2019 at 11:30, Naughty Cal said:

Our house was advertised for £85k in 2007. We bought it for £85k in 2007.

Boring!

You did well on the car, though - how did you manage to get such a substantial discount? Perhaps you didn't get much for the one you traded in against it, if there was one.

Edited January 20, 2019 by Athy

[Horace42]

On 18/01/2019 at 21:45, Tacet said:

That would be the price - and not the market price.  Economists sometimes use "market price" in relation to a commodity that is widely available - and traded accordingly.  But when you are dealing with a relatively unique product, such as real estate or used boats, there is "price" - which is a post-event fact and "market value" - which is an estimate

I agree - neither party can determine the price alone.  You said a Market Price is set & achieved solely by the buyer - which I disputed.   I hereby offer £100 for the freehold interest in your house.  But as a potential buyer, I need your agreement before that becomes the price.    The price is not set & achieved solely by the buyer.  Or the seller.

I have no problem with the concept of market price or actual price - these evolve during the marketing exercise. My earlier comments were more to do with the mechanism of calculating the sales price to start the marketing process to attract offers.

Put simply, if the broker deducts 25% of the sales price to cover all selling costs, then you have to add 33.3% to the nett price (the minimum you will accept) to arrive at the sales price.

If in the event of proper marketing forcing you to accept a lower price, the 25% the broker deducts will still be equal to 33.3% of the nett price you end up with.

From which, if a broker quotes a percentage for charging - you need to make sure whether it applies to the nett price you ask , or the sales price charged - and for the pedants, who will say it does not affect the market price, then it will certainly affect how much you get.

 

As I said, I do not know about common practice among boat brokers, but it is something I would watch out for, just in case.

[Alan de Enfield]

1 hour ago, Horace42 said:

Put simply, if the broker deducts 25% of the sales price to cover all selling costs, then you have to add 33.3% to the nett price (the minimum you will accept) to arrive at the sales price.

If in the event of proper marketing forcing you to accept a lower price, the 25% the broker deducts will still be equal to 33.3% of the nett price you end up with.

From which, if a broker quotes a percentage for charging - you need to make sure whether it applies to the nett price you ask , or the sales price charged

What a load of bovine excrement.

 

If you have in your mind the 'minimum price you will accept' after the broker has deducted his commission, and, you don't get any offers that achieve that level, then your aspirations are set too high, and 'above the market price'.

 

1 hour ago, Horace42 said:

who will say it does not affect the market price, then it will certainly affect how much you get.

About the only thing that you have posted that id correct & makes sense.

[Naughty Cal]

2 hours ago, Athy said:

Boring!

You did well on the car, though - how did you manage to get such a substantial discount? Perhaps you didn't get much for the one you traded in against it, if there was one.

Traded the Mini in against it. Got £600 for it. Not what we wanted but enough when we considered the near £2k we got off the screen price.

 

We just haggled a lot with the salesman.we also knew the car had been sat there for a few months as we drive past the dealership every day in the week so we knew there would be a deal to do on the price.

 

There are a couple of minor bits needed repairing which helped. The bumper was scuffed getting it off the car transporter. Not badly but enough to haggle and the fuel filler flap is off colour. All minor but enough to get money off so Liam could fix it at work. 

 

After having it for the weekend we are very happy it. Had a good run out to the coast today and it has been very civilised. A nice cruising car.

[Athy]

2 minutes ago, Naughty Cal said:

Traded the Mini in against it. Got £600 for it. Not what we wanted but enough when we considered the near £2k we got off the screen price.

 

We just haggled a lot with the salesman.we also knew the car had been sat there for a few months as we drive past the dealership every day in the week so we knew there would be a deal to do on the price.

 

There are a couple of minor bits needed repairing which helped. The bumper was scuffed getting it off the car transporter. Not badly but enough to haggle and the fuel filler flap is off colour. All minor but enough to get money off so Liam could fix it at work. 

 

After having it for the weekend we are very happy it. Had a good run out to the coast today and it has been very civilised. A nice cruising car.

Very good. What is it?

[Naughty Cal]

3 minutes ago, Athy said:

Very good. What is it?

Hyundai I30 1.6 CRDi Blue Drive

 

Despite us not really driving it in an economical fashion this weekend it has returned close to 60mpg on a mix of steep Derbyshire hills, twisty roads, town driving and motorway.

 

Will be happy if we can keep close to those figures!

 

It is no racing car by any means but it does pull well as it has plenty of torque. Sitting at 70mph with the cruise control on on the motorway in 6th gear it cruises comfortably at 1500rpm and is nice and quiet.