Let’s talk about an ugly truth in estate agency: the overvaluing of homes by some agents in order to win properties.
We know that since last year’s mini budget, confidence in the market has dropped, with some so-called property ‘experts’ predicting the decline and fall of the market for quite some time.
Despite this promised property nosedive, and thanks also to a somewhat settled political and economic period, we have seen mortgage rates start to level off and Rightmove reports of an upturn in the numbers of new buyers since the new year.
So, with the signs looking promising as we head into the peak selling months, let’s talk about the importance of pricing; what to do, what not to do, and the problems when agents overvalue homes.
Why do agents overvalue homes?
It’s a well-known fact that estate agency is a competitive industry, and for many agents, the most important thing is to have a steady stream of new listings with their brand colours next to them on the property portals.
What’s the easiest (and most unscrupulous) way of winning new homes for the market? Overvaluing them of course. Preying on a homeowner’s natural longing to achieve the highest possible sum for their home, and subliminally (or in some cases overtly) flattering their ego can also make them resent other agents whose valuations are lower (and more realistic!).
The consequences of overvaluing homes
1. Compromising values
Remember the phrase ‘money talks’? It rings true when it comes to selling houses. Any initial doubts you may have had about an agent’s terms of business, marketing and attitude can be brushed under the carpet once they fill your eyes with pound signs. Put simply, an overvaluation can cloud a seller’s judgement, leading them to go with an agent that is not necessarily right for them or their home.
2. The domino effect
Imagine you are ready to put your home on the market, and you notice that a similar home to yours on the same cul-de-sac or street is on the market for an unrealistically high price. For you, and others on your street, there would be a great temptation to try to sell at the same high price. However, when none of the homes sell, the inevitability is that one homeowner will drop their price, leading to others following suit.
When the excitement of the high valuation wears off, the cold reality of stagnating on the market kicks in. Perhaps when you first went on the market, time was not of essence, but after months languishing on the shelf with a high price tag and no viewings, the desire to sell has now transformed into a desperation to sell.
4. Surveys and down valuations
If you do successfully find a buyer at a sale price that is inflated and isn’t supported by local comparables, there’s a high risk of your home being down-valued by a mortgage lender or surveyor. If your buyer cannot find the additional funds, renegotiates on your price, this can lead to sales falling through or could threaten your purchase as you now don’t have the funds you once thought when you offered on your dream home.
5. Losing you money
Their own valuation will come in lower, and inevitably the seller will be forced to drop the price of their home or accept a lower offer by the buyer. If the buyer loses interest entirely, you could be forced to re-enter the market at a reduced price, having lost that golden first opportunity to make a splash on the online portals. Browsers and Rightmove scrollers will have become used to seeing your photos and, due to the overpricing, probably already talked themselves out of viewing, meaning that to get their attention, you may need to drop your price further still.
Our valuation promise
Here at Wainwrights, we will never intentionally overvalue your property, instead we will be prepared to have an honest conversation with you about what we believe your home can achieve and we will work tirelessly to get you the very best price possible. We will also outline how we’ve arrived at your valuation and can provide evidence as such.
With the right marketing, attention to detail and insight into the local market, we will get you the best price for your home in the best time, without having to resort to reducing your price that we as the ‘expert’ provided you with.
For more information on us, our bespoke marketing and in-depth knowledge of the local market, don’t hesitate to give us a call on 01204 773 556 or drop in the office on Holcombe Road, Greenmount for a friendly chat.