Robb Residential have an eye on disrupting the Scottish property status quo by managing vendor risk in an approach not typically welcomed by the legal profession, putting risk mitigation at the heart of prime property transactions.
Iain Robb, Director and founder of the Glasgow-based estate agency said: “Increasingly, in our middle-to-prime market we are seeing the appearance of chains, representing a shift towards the pattern of the English house sale market. And although rough fall-through rates are around 9% in Scotland, any collapse tends to occur well down the selling process, often on the cusp of completion.
“In that journey, the agent, the house seller and their family have all put in a lot of effort to get the right sale at the right price and to make the whole process as smooth as possible. We’ve seen families with removal vans loaded, off to their new home, only to find the one they’re selling, all of sudden, does not have a buyer.”
Robb Residential, active in middle-to-prime market property sales across the West of Scotland, have seen a move in the last two decades away from a system that honours formal offers which, at one time, were deemed to be legally binding. This appears to be partly driven by a UK-wide sales’ arena, and possibly a global one: some buyers are not familiar with the history and nature of the Scottish system, and won’t think twice about withdrawing if that suits their interests. If you are based on the south coast, overseas, or anywhere many, many miles from a beautiful home that requires a ferry or two from Glasgow, before one can sit up in front of a roaring fire, staring across the loch of your choice with a fine malt, it’s easier not to honour an offer whilst having no real appreciation of the impact.
To support vendors, Robb recounts: “On occasions we have sought to mitigate risk and reassure our sellers by requesting 2% of the purchase price as a reservation deposit from a buyer. Or we seek early conclusion of missives to secure the exclusive rights to a home purchase.
“This sharing of risk delivers two outcomes. Security and comfort to the vendor, as the reservation in place provides strong demonstration of intent and commitment to the purchase by a would-be buyer. And the buyer now benefits from assured buying rights and the property is removed from the marketplace as the selling process continues. With this, vendor risk is significantly managed and reduced.
“Without a reservation deposit and pre-conclusion of missives, all the risk sits with the vendor. The purchaser carries no risk and can withdraw from the purchase at any time without penalty. This situation is unfair. Many significant purchases in life require a deposit or some form of upfront financial assurance. It doesn’t feel reasonable for this to not apply to what is often the largest financial transaction one will undertake.
Try buying a new house from a national builder/developer, the first thing you will be asked to do is to pay a reservation deposit, the developer will then work up the legal details safe in the knowledge that with the buyer’s reservation fee in place, the purchaser is committed to the transaction.
“If the house is taken off the market or in some other way not sold at the owner’s behest, the reservation deposit becomes fully returnable. If the intended purchaser withdraws, the deposit provides some appropriate jeopardy. Of course, this also roots out timewasters, procrastinators and the occasional fantasist, but it also goes to the nub of the Robb Residential ethos.
“We start to build our relationships from our very first interaction with a possible seller. It’s important to visit their property, understand the love, care and attention that went into it and to also discover the motivation for the sale. Sometimes it’s lifestyle or career change, often it’s the simple but important desire to find a new place to make one’s home.”
The focus of Iain Robb and his team is attuned to a wider marketplace under some siege from interest rate uncertainty and recessionary concerns and, specifically, the estate agent’s role in managing risk for the vendor. In 2020 and 2021 properties of all shapes and sizes were selling like hotcakes from the Aga but times have changed and economies around the world are impacted by wars, climate change and the economics those dictate.
Robb continued: “The estate agent’s role is to actively manage and play a part in the selling journey from start to finish. This is not something you can expect from the franchisee or the passive seller who lists and expects magic to happen. We have to play a part in that magic. We are not just selling houses. The middle-to-prime market offers luxury, beautiful surroundings, and a whole spectrum of lifestyle opportunities. Often that’s all in a single property. But with a transaction failure rate of just under 10%, and the typical offer-to-conclusion window being eight weeks, there is risk all along that timeline, and we don’t feel it’s fair that the vendor bears all the load, so we seek to mitigate it when we can. One law firm we deal with has drawn up a minute to cover a reservation deposit as being separate from Scottish standard clauses. We may also request proof of funds so from the very outset. But we also recognise transactions can fall through for other reasons.
“This is another reason why employing an agent with outstanding credentials and experience is essential. Robb Residential don’t own your house, but we own the selling of it. Risk, liquidity and intent all go hand-in-hand with carefully planned strategic advice, honesty and openness.”
It’s easy for vendors to see all agents as similar, especially with online marketing allowing a more passive selling approach. Posting photos on the internet and hoping buyers materialise is not estate agency as Robb Residential recognise it. Sweating the market hard, finding buyers with a rifled approach and alerting to them to a new listing in a carefully planned manner is the sophistication Iain and his team bring. And once the buyer is identified, forensic research of a buyer’s ability to complete has now become the Robb Residential norm.
Robb Residential would be one of the first agents to admit they greatly benefitted from the pandemic boom. With a lettings’ arm, too, and the current dynamism on rent rates often in the news, the firm also saw a surge in Covid-related purchases. Its traditional focal points of rural, coastal and other bucolic settings saw buyers from all manner of milieus, the prosperous young professionals moving from cities; the time-served looking to slow down a bit; as well as the now economically inactive either taking time out, thinking about retiring or having taken that plunge. None of this has seen Robb Residential take their hand off the rudder when it comes to being pro-active agents who need to step up way beyond planting a for sale board in the front garden or, as often in Robb’s case, at the end of a long country drive, or just on a main road, directing buyers to some hidden gem set behind a stand of trees or well-appointed stone wall.
Robb Residential are already witnessing the 2024 property market play out, with the rules of engagement suggesting continued shortage of stock, and cash buyers and those who’ve already sold their homes find themselves in the strongest buying position.
However, rest assured, regardless of whether or not inflation persistence, interest rates or political uncertainty remain, Robb Residential are committed to intelligent, proactive agency. Much like active investing: selling your property, not just putting it up for sale.
Robb Residential are an Estate Agent based in Glasgow who deal in a range of unique and beautiful properties in the middle-to-prime market in Scotland. For more information, please contact us, email or call on 0141 225 3880.
Note: all statistics, percentages and references are correct at the time of writing.
