Zoopla has warned of the impact of estate agents over-valuing properties.
Research by the portal claims that ‘over-priced’ homes take 58 days longer to sell than those that are sold for closer to asking price, rising to 60 days in London.
The research, which analysed initial asking prices and cross-referenced them with sold prices from the Land Registry database across 12 months, says over-priced properties end up selling for £12,000 less than their initial valuation.
Homes that were not discounted in the final sale price were described as fairly priced and those that were discounted in the final transaction were deemed to have been initially over-priced.
A Zoopla spokesperson said: “Where homes have been subject to a discount, they are categorised as having been over-valued initially. In other words, the research has been underpinned by an assumption that the transaction value represents the true market value.”
The analysis covered the period between June 1, 2018, to May 31, 2019, and found that the median asking price for over-priced homes – those that end up selling below asking price – was £235,000, while the eventual sold price at the Land Registry was £223,000.
In contrast, homes that were deemed to be priced fairly were listed at £199,995 and sold for £200,000.
It took 77 days for homes that were eventually discounted to go under offer, and 19 days for those that weren’t.
The research found that homes in Salford, Driffield and Dronfield, on average, each achieved 100% of the initial asking price, which Zoopla said suggests agents based in these towns are particularly skilled in managing sellers’ expectations and assessing the state of the local market.
The success of sellers in these towns compares to the English and Welsh average of homes achieving 96.3% of asking price.
Charlie Bryant, managing director of Zoopla, said: “Our research highlights the importance of accurate pricing and reveals the areas where there is the healthiest alignment between a seller’s expectations and what a buyer is willing to pay for a property.
“When a home is valued too ambitiously at the start, or simply overpriced, the sales process can be derailed. Homes can languish on the market for much longer than they should and the vendor loses control of the sale, often leading to price reductions.
“Agents in Salford, Driffield and Dronfield stood out in our report in aligning their vendor expectations with the realities of the market, and what a potential buyer is willing to pay for that particular house, in that particular location.
“The English and Welsh average sold price, which amounts to 96.3% of the asking price, indicates a market realism, and moreover a market that is transacting good values, despite wider macro-economic and political concerns.”
| Overpriced | Fairly priced | ||
| Median Zoopla listing price | £235,000 | £199,995 | |
| Median Land Reg Price / achieved** | £223,000 | £200,000 | |
| Difference between listing and price achieved | -£12,000 | £5 | |
| Average time to sell | 77 days | 19 days | |
| Average time to sell – difference between discounted and non-discounted | |||
| 58 days |
This is nothing new. With so many agencies, high street, hybrid, online and the hub style businesses agents have to compete against one another to the death! In most cases these estate agents who haven’t been trained on how to give a real estimate and deal with the vendors expectations if they are too high are doing it because theyre bosses are telling them “win the business and reduce the price later!” I’ve been in the industry for over 14 years and almost every estate agency has told me the exact same thing, get it on and reduce it later. It’s a dog eat dog market and money talks so if you can convince a vendor that “we can get you 40k more” of course they’re going to try.
The root of the problem is, all agents don’t sing from the same hymn sheet. If all agents HAD to give a real and true estimate using one all inclusive valuation tool by law or we all had to have a surveyor attend Valuations with us, and all estimates came in the same, and all agents refused to market a property higher than the market value then this wouldn’t be the case. Business would be won based on the agents merits not who can value the highest . But it would never happen, too many untrained agents out there just trying to hit their corporate or branch target for fear of their jobs.
The second reason annoys the heck outa me! Vendors who have invested £500 on some paint and a clean job expect £50,000 more! Once again, because we as agents don’t want to lose business we go with it, if a vendor does that to me and cannot be swayed, I usually recommend them to someone else. I have no time for ridiculous expectations and most of these people learn the hard way, as per the figures in this post.
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Agents are always accused of purposefully overvaluing. I’ve been in the business for 36 year and have yet to come across an agent that admits to being the one who does it on purpose. Agents make mistakes and I’ve made a few myself over the years. But, moreover clients want to dictate their asking prices and often cause their own problems. I enclose below an excerpt from an email that I received just now about a property that I valued at £850,000. You decide what you would do.
“Whilst appreciating what you have said concerning the price on any new sale we feel that we should make it clear at the outset that it is of some importance to us that we obtain a figure of £950,000. If in these circumstances you feel it would be wise to quote the price being sought at something higher eg £975,000 or something in between please feel free to do so . We leave the decision to you“
These clients have also said that they absolutely have to move due to health reasons. The house HAS TO BE SOLD in the next six months. What would you do?
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They have PDS (Price Denial Syndrome); a common health issue which is about to be made much worse by the looks of your assessment.
Personally I would treat them with a dose of “No viewings until you show signs of realism” usually does the trick.
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They need to weigh up what’s more important to them, price or speed? I usually tell my vendors that we are the professionals and our professional opinion is 850k, you can’t get the best of both worlds. So if money is more important go with the 975k but you aren’t promising a fast sale at this figure. Either that, or like I do, I stick my ground and tell them that they wouldn’t reject their doctors diagnosis and tell them they have something different so why us? After extensive market research Mr vendor your property is worth 850k, if you want it to sit on the market for a long time we can start at 975k and reduce it multiple times before its sold then that’s fine. But speed and over value don’t usually go hand in hand.
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“Morning Mr and Mrs Vendor, I don’t think we are the agent for you but I wish you all the best.”
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Best answer. With 50% – 60% of vendors switching from the agent that gets the initial instruction, agents have to make sure as best possible the vendor is right for them (and vice versa of course). It is this depressing statistic that the industry really must address.
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The other thing I have found when saying this to a vendor (and I have quite a few times) is that they realise that if I am prepared to walk away from them then my advice was probably coming from a place of professional integrity and some of them would respect that and agree to market at the right price.
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Motivated vendor, so take it on and get them the best price you can. If you’re right and all the offers are at around £850k they will probably understand it’s the buyers who decide what a property is worth!
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The ‘Z index’ providing the public with a valuation on their home is one of the biggest culprits.
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Hahahahahaha! Whats new?
I started in the industry in 1982 when there was a local cartel. Sole agency fee at 2% & Multi at 3%. The agent that won the instruction had 2/3 weeks, from memory, exclusivity before sub instructing the competition on a half split. No over valuing and vendors unrealistic expectation were easily managed. Worked well untill some greedy dick ‘ed ruined it. Inevitable, I guess.
In my experience, the agent that entertains a vendors unrealistic expectations or over values to win the instruction, seldom sells the property. Anyway, what the eff do I know about anything.
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I see myself as a honest agent. I lose more than I win to competitors, but the ones I do win sell due to the fact its realistically priced and the physical man hours involved in the sale are reduced meaning better pay in total.
I’ve found where I work (South London) if you give the vendor the honest val, say £500k and they want £600k it doesn’t matter how many price reductions the property has, they with NEVER come back to me, not sure if that’s because of my approach or stubbornness but I tend think its more embarrassment…
In conclusion, keep your integrity and feel good about your approach, or over value, deal with the complaints and know you’re working far harder for your money than you should be.
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