Homes across the UK have sold for 22% less than the asking price on average in Q1 this year, suggesting overpricing from estate agents and vendors.
The average UK asking price in the three months to the end of March was £365,357, according to Rightmove. However, the average sold price that month, according to the Land Registry, was £289,818.
That reveals a 22% gap between initial listing prices and what homes are selling for.
But it is important to note that comparing the two indices is not ideal, as Land Registry data relates to completed sales where the price is likely to have been agreed in prior months.
However, the size of the gap still suggests that homeowners are prepared to negotiate on asking prices significantly.
Other metrics record an even bigger discrepancy. The property website BestAgent says there are currently 604,546 homes for sale in England alone with an average asking price of £494,011 and an average agreed sale price of £360,429.
This suggests there is a 37% gap between the average asking price and the price at which properties in England are going under offer.
But BestAgent says the gap is being distorted by homes that are vastly overpriced, which it says could account for up to 30% of those on the market.
Charlie Lamdin, founder of BestAgent, believes that some agents are prepared to overvalue in order to gain an instruction.
He said: “Many aggressive estate agency businesses seek to maximise their market share – arguably mostly the bigger chains.
“Many paid listers – the people who come to value the property and sign you up – are targeted on listings, irrespective of the price.
“It would be wrong to blame estate agents as a whole for this problem, because it is only very poor estate ones who actively engage in overvaluing to win business.
“But it’s true to say that there is a vicious cycle of some estate agents who are selling fantasy prices to sellers.’
Lamdin added: “There’s also no doubt that there are plenty of what some would call “greedy” sellers, who have been told by agents that their house is worth what they think it is.
“It makes them think they can afford to upgrade their life. Is that greedy? I don’t think so. It’s aspiration that’s being taken advantage of by agents seeking to list as much property as they can.”
Comments (8)
My apologies to Charlie I had wrongly read this as being his article . I stand by the view the stats are not a valid measure of overvaluing but Charlie didn’t write the article and the stats that are his he had no knowledge or part to play in the context they were written.
For the avoidance of doubt, this article was copied directly from Mail Online, This is Money, written by Ed Magnus.
The only numbers quoted from me are:
“The property website BestAgent says there are currently 604,546 homes for sale in England alone with an average asking price of £494,011 and an average agreed sale price of £360,429.“
Where it quotes me, those are my words. However the rest of the article was written by Mail Online and the 22% and 37% figures are nothing to do with me. That’s the journalist calculating the difference between RM and Land Reg prices.
But weak agents who rely on overvaluing to win business are always triggered by this topic.
it was first the cooperate valuers needing to tick boxes so they just pluck a figure and if you monitor the properties (which you should be doing) you can see this by the number of reductions that follow in the weeks after. Because of this some local agents started doing the same and now it seems to be a free for all when valuing as most vendors still believe in the unbelievable regardless of the comparable evidence you give them. However, this Charlie Lamdin, founder of BestAgent, whatever the F**K that is, is stating the bloody obvious that all proper estate agents already know!
Having just exchanged on a flat at asking price last week and agreed a sale over the asking price two weeks ago and about to exchange this week at asking price on another property all I can say is more rubbish being spouted by this person!! 9 months ago, he asked where we get our data from and what the best house price indices were, now he is some sought of expert. He has been calling for the market to fall for over a year now and like all negative commentators over the last 40 years he has gained traction from people who only wish bad things from those who own or invest in property. He has changed his tune from the market collapsing in the short term to falling over the next 5 years. Yes the market may take a correction due to a number of factors but it is cyclical and if you have been around long enough you will know that what goes down does come up again.
Charlie Lamdin in “Stating The Obvious” shocker. Most unlike him…
Anyway
Agents have always overvalued in order to win instructions, however the current market especially lends itself to this. Simply, many vendors want last year’s prices, so instead of giving the correct spiel, a lot of the less skilled agents are simply agreeing with the vendor, to get the quick win.
The conventional – and wrong – view is that the asking price influences the sale price when it really doesn’t. The message from agents should be (apart from being a lot more about service) more about the benefits of pricing correctly in order to gain sufficient interest to be able to drive the end sale price upwards to the level they want.
In other words “Let’s talk about how we get you to your price”
A guy who is not an agent stating the bleeding obvious
Well done
LOL
Overpricing to win the instruction is a problem and it needs resolving however the stats presented by Charlie in this article are very misleading and probably deliberately so.
The difference between average listed price and the average selling price merely shows that it’s the lower value properties selling not the higher ones . In order to find out any real evidence that properties are coming to the market at over market value is to study 1st on market listed price vs actual completed sold price via land registry .
It is also very important to understand the difference between overvaluing and working either with a price the vendor has requested the agent to try Vs the actual valuation provided and or an agreed marketing strategy to try high and see if demand will provide the owner with a fuller price and if not make changes to the pricing and or marketing strategy .
Is a lot of unsold stock overpriced , 100% yes
is this a new problem 100% No
is this a problem , 100% yes
Wether the figures in this article are designed to inform and give valuable insight or to gain exposure , you decide .
Maybe estate agents arent great negotiators? The no-sale. No-fee offering isn’t conducive to always getting the highest offer.