Monday, 13 April 2015 00:00

Estate agents intentionally overvaluing homes

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Delusions of grandeur? Delusions of grandeur?

Estate agents intentionally overvaluing homes as sellers ask for around £74k more than property is worth

People selling houses in the UK are asking around £74,000 more than what they eventually sell for, a new survey suggests.

While average sale prices hover around the £207,000 mark, based on the leading house price indices, asking prices listed on Rightmove are in the region of £281,000.

The disparity between asking and sale prices raises the murky issue of high street estate agents paid by performance intentionally overvaluing homes to make sure they get sellers onto their books, survey author eMoov says.
Delusions of grandeur? People selling houses in the UK are asking around £74,000 more than what they eventually sell for, a new survey suggests

In its survey of over 2,000 sellers in England and Wales, eMoov discovered that 56 per cent of people would follow the advice of estate agents when it came to setting an asking price for their home.

Thirty-six per cent would list their property at a higher asking price than recommended by their estate agent, while only 4 per cent would be happy to list their home at a lower asking price than advised, eMoov said.
eMoov, which is an online estate agent, said  the disparity begs the question of why high street estate agents continually price sellers out of the market. According to eMoov, a high street estate agent will often intentionally overvalue a property to make sure they get the seller onto their books.

Motivated by making a percentage fee, the estate agent will then eventually call the seller and advise them to drop the price when the property fails to sell.

The disparity between the initial asking price and the estate agent's new lower suggestion will, fortunately only for the estate agent, make little difference to their profit margins, eMoov suggests.

Russell Quirk of eMoov said: 'Unfortunately it’s a common place practice in the high street sector. The agent is driven by a percentage fee so they will overprice a property to try their luck, win the business and increase their profit margins.

'Understandably the seller opts for the agent that claims they can get the highest price, as we are all motivated, to some extent, by money. Then as regular as clockwork the agent will ring them a few weeks down the line and “advise” on a lower asking price in order to sell.

'Yes, it is in part down to the seller. If someone has it in their head they should achieve x amount, they will list at this regardless of what advice they receive. However as the professional hired to aid the sale, the agent should always provide a realistic, truthful valuation based on what the market at the time dictates'.

In London, 41 per cent of people would happily set an asking price higher than recommended by their estate agent.

Somewhat surprisingly, nationwide only 30 per cent of people said that the most important factor when selling their home was getting the highest price for it.

For London, this figure rises to 31 per cent. Sheffield house sellers came out as being most concerned about getting the highest asking price, with 39 per cent saying it was the most important consideration for them.

Meanwhile, in Cardiff, only 23 per cent of people surveyed revealed that getting the top price was their most significant concern throughout the selling process.

Securing a buyer in a stable financial position was deemed another important element to consider for many sellers, with 25 per cent saying that was the most significant issue when selling their home.

Only 8 per cent reported that securing a quick sale was their most important consideration. Fourteen per cent were most concerned that about not missing out on securing a new home.

Whatever sellers feel the most important factors when selling their home are, there is an apparent disparity between initial asking prices and sold prices nationwide, eMoov says.

Taking Rightmove as a guide, average listed asking prices are around £281,000, while average sold prices are in the region of £207,000 according to data analysed by eMoov from a number of recent sources.  

Percentage by location most concerned with achieving highest asking price  

1. Sheffield 39%

2. Leeds 35%

3. Norwich 34%

4. Manchester 33%

5. Nottingham 32%

6. London 31%

7. Liverpool 29%

8. Southampton 29%

9. Birmingham 28%

10. Bristol 28%

11. Plymouth 28%

12. Newcastle 27%

13. Brighton 24%

14. Cardiff 23%

 Source: EMoov

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