Foursquare Financial Ltd Weekly Blog – Episode 5

Friday is amongst us, meaning only one thing………. Blog time!

Read on to find out more about the divide between online and traditional estate agency, the myth that is “cash buyers only”, some fantastic news for one of our directors and an insightful piece from our friends at The Swansea Building Society.

Emoov chief calls for radical 'blend' of online and traditional agency models – Source: Estate Agency Today

The chief executive of Emoov, Russell Quirk, has suggested that the unexpectedly low take up of online agents may mean that it’s time to propose a compromise future estate agency model combining elements of digital and traditional operations.
In an article on LinkedIn he says ‘pure’ online and High Street models are now out of date, and likens them to ‘radical left’ and ‘traditional right’ politics - neither is appropriate for the modern world and a centrist alternative is required, he suggests. 

“The current online model is generally tainted by allegations of there being no incentive to sell given its charging model and a perception that service levels are 'basic'. This latter charge has been levied by High Street agents keen to show that their higher fees are justified in return for a better outcome” says Quirk. 
However, he concedes that this is in fact “a decent argument” against some onliners who are working merely as a listings operation rather than a true agency business. He hints that the basis of much online agency marketing - involving his estimate of £40m spending a year for Purplebricks, his Emoov service and Yopa combined - is unsustainable.

“On the other hand, high street agents are also caught by perception. A perception that they do little and charge a lot. This, in an Amazon world, is also unsustainable. A '9 to 5' approach and an opaque transaction is the antithesis of what the internet generation now insist upon. … A £3,000 bill that's based upon the necessity to cover office costs when the office is less necessary nowadays?” he questions. 
Instead, Quirk - at one time a fierce defender of online agents - is now suggesting that the estate agency of the future is “a blend of these things.

He says there could be the credibility and trust of a High Street brand “with a semblance of a branch network to provide that visible comfort” - but without the scale of rent, rates and refurbishment costs that go with an old-fashioned concept of a large network of offices.

“The next generation estate agency model is not low service, upfront fees, nor expensive and unnecessary high street premises that few visit. It is a mix of the established branch approach, albeit diluted, at a justifiably healthy fee and one where an understanding of being able to grow market share but without the suffocation of a 1980's physical branch ethos, is key” Quirk insists. 
But he insists that such a combination is extremely difficult to execute successfully - and he says the evidence is the similar experiments undertaken by Countrywide (“catastrophic”) and easyProperty (“a franchise disaster).

“My suggested utopia is one of healthy revenues and lower agency overheads - bigger margins and a sustainable P&L. But being clever about it. And agile. And unconventional. With a challenger online brand bolted on in order to capitalise as this sector grows but whilst sharing the broader infrastructure of a parent company” he concludes.
 
Confused about what’s best for you? At Foursquare, we’d be delighted to recommend a quality estate agent where you live, and help you understand the differences between online and high street options. We have relationships in many areas of Wales and the South West of England and would be happy to recommend an agent to meet your needs.

Case Study

“The property is not mortgageable!”

Peter and James hear this from estate agents time and time again, yet in the last 10 years, those parameters have changed drastically.

As an example, in the last 3 months, we have completed a remortgage on a barn with no heating, water or electricity supply and we have also arranged bridging finance (click here) on a property that was bought at auction with no bathroom or kitchen, and was a real fixer upper! The project is now underway and as soon as the property has been refurbished, the client will have access to high street mortgage products, but was able to buy the property at auction with only a 30% deposit.
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The truth of the matter is that traditional estate agency businesses who have an in house mortgage broker are often tied to a panel with 15 or so lenders available to them. They can go off panel to a somewhat wider field, but the off panel offering isn’t truly whole of market due to various restrictions. So agency managers rely on their mortgage broker to sign off on whether they can get a mortgage on the property or not. As these brokers aren’t truly whole of market and don’t have access to many of the specialist finance providers who will look at this type of security, often the property is listed as “cash buyers only”.

If you are a property investor, looking to buy properties that you can add real value to, please get in touch, or if you are an independent estate agent or auction house that wants a whole of market approach to the “mortgageability” of a property, please email us on info@foursquarefinancial.co.uk. You’d be surprised at what you can get a mortgage on!

Company News

As previously announced, Benjamin Walker began his role this week as our client manager. He’s taken to the role like a duck to water, and all of our clients will be hearing from him in the not too distant future.
 
We will also be excited to announce some new partnerships in the next few weeks. Peter and James have been working hard behind the scenes to ensure that Foursquare Financial Ltd will be front and centre of the communities we work within. Keep your eyes peeled!
 
Finally, it is with great pleasure we are able to confirm that James has been officially signed off at competent adviser status (CAS) with our network. James retrained from an estate agency role when the business started, and in the last year has had to take 3 degree level exams and have every case he has submitted checked by our in house compliance team and has come through with flying colours. CAS is a huge milestone in any mortgage or financial advisers career, so thanks to all at the network and within Foursquare HQ who have helped James on his journey.
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From Our Network – Richard Miles, Swansea Building Society
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The rise of the small building societies
 
In today’s complicated world, the need for lenders to assess cases on an individual basis and to use a bit of old fashioned common sense when making decisions is needed more than ever.  As more lenders look to computers to make the lending decisions (and often it is claimed they seem to be adopting a computer says no mentality), it is refreshing to see a new breed of small building societies who are willing to look at cases on an individual basis and show flexibility when required in how their lending criteria is applied.
 
A great example of this is the Swansea Building Society.  Established in 1923, the Swansea is currently the 35th biggest building society in the UK with mortgage lending of over £215 million pounds.  The Society does not credit score and manually underwrites all mortgage applications.  Their front-line mortgage team have years of experience dealing with all sorts of niche and quirky mortgage lending by applying a flexible approach to their lending criteria.
 
The Society specialises in mortgages for those who are self-employed (up to age up to 75 / 90% LTV) by looking at all sources of income and will work closely with the customers accountants and consider various sources when assessing income. Retained earnings and one-off items can be added back into the income figures where relevant and other provable sources of income can be used to calculate the customers true income.  The Society does not just look at net profit when assessing the customers income.  The Society has a large proportion of its mortgage book lent to customers who are self employed with local Accountants referring their clients to the Society as they know each case will be looked at on its own merits and accounts produced being fully analysed and understood.  A good example of this is where the Society has recently helped a self-employed customer obtain a mortgage by allowing new income streams to be considered when assessing income and affordability.  By working with the customers Accountant, the Society was able to evidence how the new income streams would impact on income and profitability and ultimately what income could be taken from the business to justify the mortgage amount required. 
Other areas the Society specialises in are customers having a lower interest rate where they have a high household income and / or their role requires a professional qualification (up to 90% LTV) which also extends to Police Officers, Fire Officers and Nurses. The Society will lend to retired home owners over 55 looking to raise capital from their home for various reasons (term up to age 85) and those looking for a Buy to Let / Holiday Let mortgage (Air BnB income accepted).  The Society can also assist customers looking for a short-term bridging facility to move home (even when they have not sold their own home) which recently allowed an older couple to downsize to buy their dream home but not to have to worry about selling their own home first (and they were charged residential mortgage not bridging interest rates).  The Society can also help includes those buying at auction, those looking for a mortgage in relation to a purchase of a barn/house conversion (even if no kitchen or bathroom) and those looking to purchase a small holding (even if a business such as an equestrian centre is being run from it and / or has an agricultural restriction on the land) and those looking to add a guarantor to a mortgage (for example where a parent wishes to help their child buy their first home).
 
Examples of cases recently written include:
·         A couple who capital raised against their existing unencumbered property to fund a self-build property on their existing plot of land. 
·         A mortgage for two doctors to purchase a property where one doctor only had one year’s accounts in private practice;
·         A mortgage was granted to a mother and son living in London to allow them to purchase a holiday home in Cornwall;
 
While the Society predominantly lends in Wales and the welsh borders (BS, GL, HR, SY and WR postcode areas), it will consider high net worth cases throughout the rest of England. 
 
By adopting a personal, tailored and common sense approach to mortgage lending without a computer says no mentality, the Society is able to meet the needs of those who are often overlooked by the main lenders in the market.  The Society is delighted to work with mortgage professionals such as Peter and James in Foursquare Financial who ensure that their clients get the best advice and widest range of lenders to ensure their needs are met both now and in the future. 
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More from us next week, have a great weekend!

​Pete & James