xchain concept & demo

Click to access the latest xchain mockup

Here's how the site can be used:

• Thinking of Buying a property?
• Search properties for sale
• Place your own advert as a Buyer

• Thinking of Selling a property?
• Search Buyers advertising their requirements
• Place your own For Sale advert

• Connect Securely
• When Sellers find Buyers or Buyers find Sellers they can connect securely and without giving away personal email details through an in-site email service

Buyers and Sellers are encouraged to give each other feedback, even if they're not likely to complete a transaction.  The more both sides know about each other the more realistic their approach to the market and the quicker they are likely to secure a transaction.

Advertisers of either Buyer or For Sale adverts will receive user click-through stats. This will help them judge how interested the market is in what they are advertising.

The Private Sale Conundrum

“Brilliant! Someone’s contacted me directly and made a decent offer for my house!”

If this ever happens it’s certainly gratifying.  Without making any effort your property has attracted buyer.

If you happen to be looking to move it’s even more appealing.  All of a sudden, without lifting a finger or incurring Agents costs, you’ve become a buyer with a chain in place.  All the better for securing your next purchase.

There’s just one problem:  How do you know this is a good offer when you’ve not even tested the open market?

If this question occurs to you when the house of your dreams suddenly becomes available the pressure builds.  Do you risk losing it to secure a higher sale price for your own place (less agent’s fees and VAT) or convince yourself you’ve got a good deal? 

Questions like this can drive you nuts.  Trying to do something about it can also result in your private buyer questioning your integrity (“you said we had a deal!”) and the seller of the home you want viewing you as unreliable (“have you got a buyer or not?”).

What you really need is a way for the open market to know about you in the first place.  Somewhere that,  if you’re only thinking about selling and long before you appoint an agent, you can test the market. 

This is part of the philosophy behind xchain.co.uk.  A place where, regardless of how committed they are to moving, people can publicise what they have to sell and what they wish to buy.

With Xchain, should you receive a private offer out of the blue, you could place your own, free, advert to sell and see what sort of response you receive.  You may be pleasantly surprised and if not at least you’ll know your private buyer has made a decent offer.

Of course you could then choose to proceed without an agent but, as I’ve written about in my previous post, Estate Agents, have their uses.

Pricing

Overpriced properties that don’t sell.  I’m sure estate agents have a word for them and they are a problem.

If we all just want to get on with our lives, then having a property unsold for months holds back it’s seller and all of the potential buyers who are out there but unwilling to pay the over-inflated price.

The expectations of buyers need to be more widely known and not just delivered as the opinion of estate agents.  After all, agents, quite reasonably enough, present their market opinion through the prism of a profit making enterprise.  Ask a buyer directly what they’d expect and be prepared to pay for your property and they’ll give it to you straight.  Their assessment will be based on what it’s worth to them.  Ask an agent and they’ll factor in that they want to sell your home and want to attract your business.  

Traditional bricks-and-mortar agents only really have two levers here although they’ll all tell you how significantly their level of service differs from the competition.  These are:

• Their percentage fee they’ll charge* 
• Their valuation of your home

*(I’d be fascinated to hear how fixed price, on-line agents valuations vary from traditional agents)

Unfortunately, as sellers, we’re often dazzled by high valuations.  They may be completely unrealistic and lead to our homes being on the market for months but they succeed in getting us to sign up with the agent.

This is where I think the property market can learn from eBay.

If buyers were able to advertise themselves and their expectations as easily as sellers can advertise properties then sellers would be able to pitch their asking prices more realistically.  

Additionally, if sellers knew what prospective market browsers thought of their advertised property, akin to eBay ‘watchers’ or even Facebook ‘Likes’, they’d get valuable feedback on how their advert was being received.

My belief is that better informed buyers and sellers would lead to a market that operates more efficiently and allows people to move home more rapidly.

This is why I've joined forces with like minded co-founder Tim and decided to create a platform for buyers and sellers to say what they want and connect securely.  It’s early days but at least it has a name. xchain.co.uk.

Estate Agents

I am not going to rant about estate agents and I believe that they can provide a valuable service.  I understand that this is not a universally held opinion though so let me explain.

I like the village I live in but my house is too small.  Everybody else in the village thinks it’s a great place and would very much like to stay.  Therefore, villagers who want to move, have a very limited market to deal in.

Typically, on Rightmove, there’s no more than one page of homes advertised but this masks the fact that a substantial number of village residents would consider a move.  I know this because of the village grapevine embodied by social groups, pub frequenters and a village newsletter.

Many homes, therefore, change hands privately.  Having made little progress from the traditional market, I’ve tried to do the same thing.

This has been an odd experience although admittedly one that has brought me closer to actually moving that taking the traditional route (fingers crossed it actually happens this year!)

It’s been odd because I’ve had to deal, face to face, with other folk in giving an opinion on their homes, hearing their opinion on mine and negotiating.  This is frequently very awkward.  Much as I like to think I can strike a deal, I’ll admit that I find negotiating uncomfortable and especially so over something as personal as my own, and someone else’s, home. 

If negotiating with one person is bad enough, negotiating with several buyers or sellers is worse.  In my view we’re just not suited to it in the UK.

This is where having an intermediary has value and something Estate Agents are ideally placed to provide.

In my earlier post ‘Armchair Analysis’ I suggested that the property market suffers from poor information flow between buyers and sellers.  When I’ve discussed this with friends and asked them to imagine a world of unrestricted contact throughout a potential chain their first reaction is “Great! Then you’d be able to cut out the Estate Agents and save a fortune!”.

My view, tempered by experience, is now more measured.  Yes, you could cut them out and save on some transaction costs.  Be warned though.  You’re unlikely to be a skilled negotiator.  You’re going to have to have some very awkward conversations with strangers and, if you’re lucky, you’re going to be trading-off one person against another to get a decent deal.  This can be uncomfortable, very distracting, and I just don’t believe many of us are very good at it.

Armchair Analysis

I’m a generalist, interested in most things and an avid absorber of facts and anecdotes.

I also go through phases and a recurring one is reading the sort of popular economics based commentary books that Tim Harford, Steven Levitt and Stephen Dubner produce.

Having this enlightened way of looking at things swimming about my mind, whilst musing on why the property market is so dysfunctional, made me think “Is the property market unique?”.  Unique among markets in general as opposed to among global property markets. 

My knee-jerk answer to my own question was “no”; but then I struggled to come up with a reasonable comparator.  Indeed this Wikipedia post suggests it is unique: 
Real estate economics

Dysfunctional is an emotive word and I use it from the perspective of someone who needs, but has struggled, to get the UK property market to help me solve a problem for me and my family. 

I have an answer though following from my own, armchair, analysis after 6 years of reflecting on why I’m still wrestling with the same problem. 

The UK property market suffers from poor flow of 

information between buyers and sellers.

From what I observe, people want to get on with their lives and not lose out financially in the process.  If they had excellent information about each other and were able to deal with one another throughout the life-cycle of making a move (not just at the late stage when they finally appoint an estate agent) then I believe they’d figure out how to do this.

A brilliant example of what good information flow can do is eBay.  Want to sell something and have no idea of it’s value?  No problem.  Load a few pictures and an honest description and instantly get feedback on what ‘the market’ thinks about it.  Watcher and Bidder stats come through the instant they take place and you rapidly understand what your thing is worth to those interested in whatever it is.  You’re also in easy reach for those buyers who can ask you directly about your item.

Now there are very good reasons why the property market can’t work exactly like eBay (although I’m intrigued by the auction service offered by http://www.auctionhouse.uk.net/) and the Wikipedia post above explains this well.  eBay isn’t best suited to selling your most valuable asset that, typically, you only own part of.  Especially one so vital to your families’ well-being that you can’t do without it for one night.  But some of the principles that make eBay a success are valid for the property market:

• Direct contact between buyers and sellers
• Competing buyers inform sellers directly about the value they place on the item being sold
• Sellers get instant feedback on how interested buyers are in what they are selling

Circumstances

For one reason or another I’ve spent much of the last 6 years very much ‘in’ the property market.  Not permanently working with estates agents and advertising on Rightmove but doing everything else one does to move house.  In this time I’ve moved once.

I’ve only been doing all of this for one reason.  To get the right house, in the right location for my family to best get on with life.

 

It’s been 6 years for the sorts of reasons that crop up when weaving relocating in a congested part of the country with the normal ups and downs of family and work life.  Not an unusual state of affairs.

This blog is about what the experiences along the way have made me realise about the property market and state of housing in the UK.

 

It’s also about why I’ve found myself caring about its fundamental influence on the health and well-being of our society far more than I ever expected and my wish to do something to move things in a better direction.