A number of my family and friends absolutely LOVE a conspiracy theory!
Did We Land On The Moon?
Who Killed JFK?
Is The World Ruled By A Secret Illuminati?
And my personal favourite…
Is The Planet Actually Flat?
Of course, most of us take a very traditional view on these and other conspiracy theories, quoting scientific evidence and other accepted facts that suit the official and accepted narrative. A version that we mostly see as the actual truth and that places the alternative version firmly in the world of fantasy..
When discussing these ideas with conspiratorialists, they can always present a rationale as to why they believe what they do, normally based upon a perceived motivation rather than substantive facts. A motivation that would appear to justify the belief around which they build an apparently credible alternative theory. In my experience, most of these seemingly outlandish theories (particularly those involving governments) evolve as a result of a cock up rather than an actual conspiracy. An error or mistake that has an unintended consequence resulting in an apparently credible theory proving malevolent intent, despite normally only a minimal amount of actual evidence. This doesn’t stop people believing a wild theory and doesn’t necessarily mean that it isn’t true.
So in my experience when it comes to most theories that are counter to the accepted narrative, it’s normally “cock-up” and not “conspiracy”.
But what does this have to do with estate agency?
Well actually quite a lot in my opinion, so bear with me.
According to most trusted (and even untrusted!) sources, nearly half of the properties that come to market in the UK simply do not ever sell – ‘ever’ being defined by Zoopla as within 3 years. Compare that to the U.S.A. where apparently 85% or more eventually actually sell. I suspect that we are all aware of these concerning statistics and most of us have our own theories as to why this is the case. Mine?
PRICE!
You may recall that Rightmove suggested that when it comes to selling a home there are 3 P’s that should be considered…
- Price — Setting the correct asking price is critical to attract the right buyers from day one without overvaluing or underselling the property.
- Presentation — Highlighting the home at its best through tidying, staging, professional photography and video so it stands out on property listings.
- Promotion — Maximizing a property’s visibility alongside targeted marketing.
And there’s a reason as to why price is the first of the 3 P’s in my opinion. Yes, of course the presentation of the property is important and the way in which it is promoted is critical but ultimately price is the single most important factor in determining interest as it really is a key indicator that all buyers (not just in houses) seek – value. The word ‘value’ is of course another part to the conundrum I am about to share with you. Perceived value is by its very nature subjective, totally dependent on the perspective of a buyer.
In my experience, most potential listings start with the seller contacting an agent to ask for a ‘valuation’. An appointment is arranged and the agent turns up to provide that seller with the information they require regarding that agent’s services and specifically a valuation. This despite the contention, held by me and some others, that in fact estate agents can’t actually value a house – merely advise on an asking price designed to generate maximum interest.
A house is worth what a willing and able purchaser is prepared to pay.
Clearly, this is a minority view as most (nearly all?) estate agents do believe that they can value a property and are happy to share that view with potential clients. However, and assuming that the seller is either in agreement or happy to accept the recommended valuation from the agent, we are left with the startling fact that only half of the properties that come to market actually sell. It is clear, at least to me, that a substantial number of agents place a value on a property that is evidentially too high – commonly referred to as ‘over valuing’. In my view, this is the single most important variable that negatively impacts the fluidity of housing market. And here’s my question…
WHY is overvaluing happening?
Is the ‘valuation’ offered as a result of a mistake on the part of the agent… or…is it a cynical tactic on the part of the individual concerned to secure the instruction at all costs?
I am willing to believe that sometimes it can be a mistake on the part of the agent, particularly with an individual or unique property which may lack credible comparable evidence of similar sales. In such a circumstance it can be VERY difficult to come up with an accurate idea of the ultimate selling price. I get it and can even understand why, very occasionally, it may be appropriate to ‘test the market’ as long as there is a planned review strategy. That in essence is the cock-up theory in action – a simple mistake.
However, is it possible (some might say probable even) that in actual fact some agents actually intentionally place a higher value on a property than they actually think is realistic or achievable. A cynical attempt to flatter a seller simply to secure an instruction and tie the client in to a 12, 16 or 20 week sole agency during which time they attempt to reduce the original asking price to secure a sale? A conspiracy to increase market share and with it brand recognition.
I’m simply not sure what the answer is. I only know that over valuing a property, either intentionally or unintentionally, is in my view killing the market and preventing buyers and sellers from achieving their objectives. Even more worryingly, I’m not sure what we can do about it.
So let me know your thoughts…
Cock-up or conspiracy?
Simon Bradbury is a consultant specialising in securing new instructions and runs a (very) small estate agency powered by eXp.
Comments (6)
Claptrap!!
The one thing that has not been considered here is the opinion of the Seller – sometimes they have set ideas of their own…against advice or evidence.
I think it is both, Simon, but sellers are part of the problem too.
The circle often starts with an agent giving an optimistic figure. The seller then pushes that figure even higher because, naturally, they want as much as possible. Another agent comes along, knows what figure they need to quote to win the instruction, and up it goes again.
Some sellers would genuinely rather hear the highest valuation than look at the comparable evidence showing what buyers have actually paid for similar homes.
That is where agents need to be stronger.
Our job is not to tell someone what they want to hear. It is to give honest advice supported by proper comparable evidence and explain what price gives them the best chance of actually moving.
But this is not really unique to houses.
Look at secondhand cars, Facebook Marketplace, eBay or almost anything else people sell. People often start at an optimistic price because they hope somebody will pay it. When nobody does, the price comes down.
That is human nature.
With property you then add an agent who wants the instruction and a seller who wants the highest possible figure. That can create a circle where the agent starts high, the seller pushes higher and everyone convinces themselves the number might be achievable.
So why should we be surprised that it happens?
The difference with property is that getting it wrong can cost the seller months and potentially money.
Perhaps it is less cock up or conspiracy and more human nature combined with a system that can reward optimism.
A great lesson in stating the bleeding obvious zzzzzzzzzzzzzzzzzzz
There’s no such thing as a single price when assessing sales value. There’s a best case, worst case and sometime a ‘what if’ price. Over the last 30yrs I’ve operated the market has on the whole been growing, sometimes slowly, sometimes briefly stalled, but growing. Meaning if you miss the mark slightly, time will heal that wound. In both faster growing and falling markets better agents will catch on to that momentum quicker advise well and perform better for the client. Sat on that sofa, it’s a beauty parade and agency is a listings lead business. It’s win or die. So your options are.. impress with knowledge and ability, dangle a carrot with a higher price (or a price the client wants and believes), or cut your fee. Or all three. Crying about ‘overpricing’ is just missing the point and a lazy topic of conversation.
Fab as ever Mr B!