32 | BUSINESS Legal WORDS | John Howell
BUSINESS Prepare anew
John Howell has sensed optimism on his travels. But he has a warning for agents who want to survive to take advantage of the recovery – make sure you have tight contracts and systems in place to handle complaints or you could up spending your hard-earned commissions on compensation payouts ... or something even worse.
Portugal, Turkey and Cape Verde – and I have seen a pretty dramatic change in the morale and expectations of the agents and property developers I have been meeting in the places I have been visiting. These trips have also highlighted some interesting differences between market conditions. The good news is that, in each of the
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countries, agents and developers seem, genuinely, to be much more optimistic than they were say 6 or 12 months ago. This is particularly true in Spain, where houses have actually been selling! A few months ago there was almost universal despair. Now, sellers have realised that they have to drop their prices if they want to sell – and the agents are fi nding buyers for the properties. For example, the apartment where I was staying in Marbella had been on sale for a couple of years, at a ridiculously optimistic price. Whilst I was there, the owner dropped the price – and had four inspections and two offers within a week. The offers were not silly offers and it is likely that the
ver the last couple of months I have been doing quite a lot of travelling – Spain, France,
property will be sold. In Portugal things seem a little slower, particularly on the Algarve, but there is still an enthusiasm about the future that was totally lacking last year and agents are reporting more enquiries and more visits lined up for April/May then they had last year. The French market has, of course, been patchy but much of it escaped relatively unscathed from the turmoil of the last few years. Yet here too, there is increased activity and optimism. Interestingly, several agents have mentioned to me their feeling that the austerity measures now being taken in the UK and Ireland are likely to encourage many people to bring forward their plans to retire to France – especially if they lose their jobs back home. The same phenomenon may well also benefi t Spain and Turkey. Turkey, particularly in the Bodrum area, still has a huge overhang of unsold property but I have spoken to several developers who are taking the view (in my opinion correctly) that much of the property that is unsold is the wrong type of property in the wrong place and that, if they
build to suit the real demand, there are strong potential markets both within Turkey and overseas. These developers are each now looking for land and preparing to launch new projects over the next few months. In Cape Verde the change is
different. After several years of hype and empty promises from mainly ‘foreign’ developers there seems to be confi dence at government level that their time is at last coming, that some of the current developments are going to be delivered and that the new developments in the pipeline offer the employment and economic benefi ts so badly needed by the islands. The common threads, of course, are optimism and opportunity.
Several new ‘international property’ companies have been set up in the UK over the course of the last few months. Most seem to be targeting, quite specifi cally, these new opportunities and are taking on product that addresses this new reality rather than the old ‘get rich quick’ investment model. One or two even seem to have read my columns in OPP and understand the importance of getting their paperwork right! Which takes me more or less neatly to my last point. Over the last few months I have seen a huge increase in people wanting to sue the UK agent who sold them a ‘dud’ property overseas. The property hasn’t been delivered. The developer has gone bust/is doing nothing/is located in a consumer unfriendly
John Howell 020 7836 2841
john@jhco.org Property law expert
overseas jurisdiction. The agent is the best or, in some cases, the only surviving target.
I tell them that I no longer do
that sort of work and pass them on to a fi rm of UK solicitors, but the trend is easy to spot from my point of view. At the risk of bolting the stable door after the horse has bolted, if you want to be around to benefi t from an improvement in market conditions, follow my fi ve point plan: (1) Be clear in your own mind about your business model and, in particular, who is your client? (2) Draw up proper contracts between you and the developer/seller of the property you are offering for sale. (3) Draw up clear items of business for use by the buyers using your services. (4) Draw up proper reservation contracts. (5) Put in place a complaints handling procedure to defuse problems quickly and cheaply.
It is very frustrating, especially when times are tough, to pay out lots of money by way of compensation. One of my estate agent clients has paid out tens of thousands of pounds over the last few months – because he ignored these basic principles. Incredibly, even now he has not taken any steps to prevent this happening again!! Learn from his mistakes and get prepared for the upturn.
Global | optimism is breaking out around the world. Get ready now.
www.opp.org.uk | APRIL 2011
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