Valuing, buying and reselling residential properties in the current market climate

1. Valuing, buying and reselling residential properties in the current market climate

2. Market conclusions... • House prices are definitely downwards, and will continue that way for some time to come • We are competing with more properties for less buyers, so we need to be more competitive than ever • The risks involved with Part Exchange trading have increased significantly: • Risk of paying too much • Risk of using the wrong marketing strategy • Risk of buyer fall through • ALL LEAD TO INCREASE RISK OF FINANCIAL LOSSES ON PX

3. Who and what is SHP? • £20m property trading company, launched in November 2007 • A joint venture between the movewithus and a bank • Complete outsourcing of PX from developers - including balance sheet funding and risk • Property trading for a fee, rather than buying low and selling high • Same model as developers running PX – looking to turn assets into cash for the value we paid for them

4. How do we work? • “Cost plus” fee basis  – not buying low and selling high • Underlying asset model – no “plot deal” profit, so must get PX transaction right • Risk management approach – segmentation by location, property type, value band, etc, to better understand risk • Asset accounting – each property has own budget and P&L • Portfolio strategy and underwriting processes – understand the “normal” and deal quickly with the “exceptions” • “Pricing-in” the market - understand the “additional” variables and their likely effect

5. Why am I here? • SHP shows that MWU are not “just a service provider” - we own and manage a portfolio of up to £20m of PX stock • Introducing a pure asset trading /underwriting model • We understand and have experienced all aspects of PX trading – all in the current market! As well as managing our own portfolio, we are currently: • Assisting MWU and their clients to move towards a risk management approach

6. Understanding PX • The longer you hold a property, the less you will get for it!

7. Understanding PX • Value and type affect time to sell • You can’t win them all – but know how many you should expect to lose

8. Valuation challenges • Source all available relevant information, and use it appropriately to form a sensible starting point to estimate value • Lack of comparable transactions – widen the net • Using facts rather than opinion or instincts – for accuracy AND conversion rate • Pricing in market decline and local market conditions: • how long will each property take to sell? • what will happen to its value over that time? • how much competition does it face? • how many buyers are looking? • Developers (and their clients) must be able to trust valuations to accept them and the marketing strategy that follows...

9. Resale challenges • In this market, only competitive properties will sell • PX properties are “trade sales”, so market accordingly to ensure viewings (and hence sales) ahead of the competition • Understand realistic resale values range and the effect of time • Regularly review where each property is on the time-on-market / likely value line, and act accordingly. Quickly! • Keep a constant eye on the competition, and stay ahead of it! • We cannot chase “hope values” in this market, if all the evidence suggests a property is priced too high, it most probably is • Difficult decisions now will only get even more difficult later!