International Herald Tribune - Published: July 2, 2008

Focusing on motivated buyers and more marketing are among the popular techniques

By Sara Seddon Kilbinger

As the credit crunch, soaring food and oil prices and other economic problems continue to hobble the sale of homes throughout Europe, real estate agents are being forced to rethink how they can push sales through.

Even though house prices across Europe, especially in Britain, Spain and Ireland, are continuing to fall, borrowing costs are spiraling and lending conditions tightening, making it harder for potential buyers to get financing. Lending in the euro zone between January and the end of March rose by only 5.9 percent, the slowest rate since monthly data were first compiled in 2000, according to the European Central Bank. In contrast, the increase was 12.1 percent during the same period in 2006.

So to stay in business, real estate agencies are being forced to rethink their methods.

In London, homing in on ‘must sells’:

With some clients afraid to make a move in such uncertain economic times, agents are focusing on those with a specific reason to buy or sell.

“Buyers know that prices are falling and no one wants to be the last person to buy at the ‘top’ of the current market before prices fall further,” said Liam Bailey, head of residential research at the Knight Frank real estate agency in London.

Even in sought-after districts like Chelsea, some sellers are being forced to lower their asking price by as much as 10 percent, Bailey said, adding that prices could fall by as much as 15 percent in London this year. The agency reported Tuesday that the price of homes costing more than £2 million, or $3.9 million, fell in both May and June.

So agents are looking for clients with specific reasons to buy or to sell, like a job transfer, said Guy Weston, a senior associate of residential research at the real estate advisory firm King Sturge.

In addition, agents are increasingly conscious that they need to match clients to the right property to increase the chances of a sale, said Mark Wyatt, a director at the Chesterton real estate agency.

“Every effort has to be made to make your property stand out from the rest in this market,” Wyatt said.

In Spain, upping the promotional ante:

Spain is a tricky market in the current climate, said François Carrière Pastor, managing director of the John Taylor agency in Spain.

The country’s housing market has been badly hit by rising interest rates and falling prices. Corruption scandals, money laundering busts and illegal building have damaged buyer confidence in the Costa del Sol while prices in Barcelona have fallen by 15 percent to 20 percent and the nearby Costa Brava has seen as much as a 35 percent drop, Carrière Pastor said.

“Even the high-end of the market has been affected, due to higher interest rates and falling prices, which makes potential buyers wary,” he added.

Redoubling their efforts to sell, agents and developers are turning to marketing. “In the past, it wasn’t really necessary to do much marketing because homes sold without it,” Carrière Pastor said. “Now, finding clients is more difficult and the market is much tougher. Developers who used to do their own marketing are now going to agents for help and glossy brochures are becoming a very important marketing tool.”

Model apartments, the finished products that show potential buyers what their home life could be like, also are increasing buyer interest, said Harry Lewis, director of international development at the Savills real estate agency in London.

“Show homes have become a critical tool in Spain as rising interest rates and the slowdown in the economy hamper interest from would-be buyers,” Lewis said. “However, show homes and their ability to ’sell’ a lifestyle can make the difference between a home being snapped up or languishing on the market. Glossy brochures are being used in much the same way.”

Catering to a new crowd on the French Riviera :

France’s playground is still drawing a crowd, although prices have fallen by about 5 percent so far this year, according to Mike Braunholtz, managing director of the Prestige Property Group agency in Britain, which sells luxury homes in markets like France, Spain and Portugal.

Sales along the Riviera are down by about 40 percent this year, he said, largely due to the strength of the euro against both the pound and the dollar, which is hampering interest from American and British buyers who have traditionally been drawn to the area.

Agents are starting to throw in freebies, things like lifetime spa memberships or complimentary entrees at golf clubs, a practice referred to by some agents as putting “the cheese in the trap,” Braunholtz said.

Yet with many would-be European buyers playing it cool until the market and prices stabilize, agents are now setting their sights on potential buyers from Russia and the Middle East with deep pockets who are showing growing interest in the area, said Lewis of Savills. “In general, oil money is the only money that can afford the top end on the Riviera,” he said.

source: IHT

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