Why over-valuing is a false economy: Spicerhaart boss says agents must deliver honest valuations

| Paul Smith

OPINION PIECE:

A recent Which? report condemned estate agents for over-valuing property to win instructions only to see those properties later reduced in price in order to sell.

Although their attention-grabbing headline fails to reflect that it’s often the customer who demands the higher price, there are certainly plenty of agents who will go way over the odds to boost their listings, with around one in five properties eventually having to come down in price, according to the Which? research.

This is a false economy that does our profession no good in the eyes of the public. The agent ends up with over-inflated property that costs more to market in the long run, with a disgruntled client who may end up having to accept less money, the longer it takes to sell.

Estate agency is a profession of which we should all be proud, but by adopting a policy of over-valuing, we not only let ourselves down but, more importantly, our reputation will suffer.

I’m told that in around 19% of cases, lenders’ surveyors are valuing properties below the agreed sale price – so lenders won’t lend people the money they need to buy, leading to chains breaking and sales collapsing, worsening the stagnation of the property market. Should we, therefore, be getting properties pre-valued by surveyors?

At the end of the day, a property is only worth what someone is prepared to pay for it – and I know cash buyers who’ve been prepared to pay £100,000 more than a property is worth in order to secure the home of their dreams.

The longer we have a shortfall in housing supply, the longer the problem of over-valuing will persist. We need the Government to get on with their promise of allowing more new homes to be built, rather than just empty soundbites.

I’m very clear with all my staff that we must give a true and honest valuation on every property we visit, taking into account local demand. By doing this, the public will maintain their trust in us and our profession, while those who continue to over-value will ultimately damage their own credibility in the long run.

Rules are for the guidance of the wise

For years, estate agents have relied on direct marketing to generate leads from prospective customers, but many thousands of estate agents may be falling foul of the law by not registering with the Information Commissioners Office (ICO) under the Data Protection Act 1998 or adhering fully to the Privacy and Electronic Communications Regulations 2003 (PECR).

Anyone using electronic means such as emails, automated phone calls, fax and text can only target individuals who have opted in to receive unsolicited marketing materials, by ticking a box, sending an email, clicking an icon or subscribing to a service.

It’s critically important that all sales people abide by the law to ensure customers opt in to receive electronic marketing messages. Those making nuisance calls and texts can be fined thousands of pounds or even face enforcement action or criminal prosecution – and suffer reputational damage.

Even if you pay for the services of a third party or marketing agency, you are both responsible for complying with the PECR rules.

You cannot cold call people or send automated messages if they have signed up to the Telephone Preference Service or Fax Preference Service, which means you need to check your marketing lists against the preference service registers first. Nor can you leave unsolicited messages on answerphones. There is no equivalent email or text preference service because you may only send unsolicited emails or texts to individuals if you have their specific consent or to existing customers (provided that you have already offered and continue to offer them an opt-out).

A year ago, the ICO published a report criticising estate agents and lettings agents for not following the data protection rules. Among the issues highlighted were lack of training and awareness about data encryption, security of paper records, password control and keeping customer data longer than necessary. Have things changed? I doubt it.

You need to keep clear records of what a person has consented to and when and how you obtained this consent, in the event of a complaint. You also need to ensure you have robust processes in place so that your data is updated if someone withdraws their consent.

In 2018, the rules on data protection will become even tougher under the EU General Data Protection Regulation for UK businesses offering services to EU citizens – and the UK will have to adhere at least until Brexit occurs in 2019 and maybe afterwards. Such EU law is likely to be transported into UK law and the Information Commissioner is calling for the new rules to stay, arguing Brexit should not mean Brexit when it comes to data protection.

So while it’s important we market our business and the properties we sell, it’s vital we do so in a professional manner that abides by the law, which overall will enhance our reputation and enhance the confidence of both vendors and buyers.

The rules for marketing to businesses are different, but if in any doubt, look at the Information Commissioner’s website at ICO.org.uk.

Focus on your photography

They say beauty is in the eye of the beholder. But when it comes to taking fantastic photos or videos, it’s not just the image that makes a difference but it’s who’s behind the camera that counts.

It’s now very evident in this global mobile world that people are seduced into buying property by the images they are seeing on websites and social media. Around 90% of our traffic in February was on a mobile device so, as the photos are so small, they have to be excellent and decluttered to have an effective impact.

Therefore, while it may be quick and easy to snap and post something on to Facebook or Instagram, it’s not the way to sell property in this fast-growing digital world.

We, at Spicerhaart, are now giving our valuers and negotiators professional advice and new equipment to help them take even higher quality property photos for mobile channels, and this investment is already starting to pay dividends, with more and more people viewing property via our social media channels than ever before.

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25 Comments

  1. Shaun77
    March 2, 2017 at 06:51

    I don’t think the staff at our two local Haart offices got the memo…

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  2. madaboutproperty85
    March 2, 2017 at 07:14

    First of all, why do haart seem to be getting so much space in eye. Are they paying for this advertising. Secondly a litttle rich coming from this company. Over 70% of their properties have had price reductions this year. Pots and kettles.

    Eye is loosing its credibility writing these stories.

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    1. AndrewOverman
      March 2, 2017 at 07:16

      Why give this man “air time”?

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  3. steps56
    March 2, 2017 at 07:14

    I didn’t even bother reading below the headline…. what what I would say to Mr Paul Smith, is tell that to your Romford office#ridiculousprices

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  4. AndrewOverman
    March 2, 2017 at 07:15

    I’m very clear with all my staff that we must give a true and honest valuation on every property we visit, taking into account local demand.

    Clearly your branch here didn’t receive THAT training session. Currently (and historically over the last two years) you’ve been the worst offenders for % of stock reduced.

    Go figure….

    Mr Smith you do spout some utter….

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  5. steps56
    March 2, 2017 at 07:18

    I forgot to mention that I recently sold a property in Collier Row and someone from the Nexus branch  which is n Colchester contacted my vendor one evening to tell them that they can get them more money. The Nexus centre is full of students in Colchester who don’t know Collier Row prices trying to poach my sales

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  6. proagent54
    March 2, 2017 at 07:26

    Pot kettle black! Be wise to take a good look at your own business before telling us all to sort out ours Mr Smith

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  7. Stevie
    March 2, 2017 at 07:45

    I was going to say exactly the same as posters above, this is just an advert for his company for the few outside our field that read the eye but seriously this isn’t informative but self promotion yet eye still allowed it to go to press and from comments above it’s only laughable at best.

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  8. AgentV
    March 2, 2017 at 07:52

    I bet Robert’s system can identify those companies responsible for the highest numbers of sale price reductions and therefore over-valuing initially. There is no doubt that it can adversely affect the vendor’s final end result.
    I wonder who would do it if we all had to declare the percentage of listings we had to reduce in marketing price? Would anyone out there be willing to do that, to help eliminate the deliberate practicing of over-valuing?

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    1. wardy
      March 2, 2017 at 13:57

      Rightove intel can do that for you easily, even gives you a lovely pie chart.

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      1. AndrewOverman
        March 3, 2017 at 07:00

        10.7% in my core market IP24 over last 12 months according to RMIntel. Versus haart at 28%…go figure.

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  9. AgencyInsider
    March 2, 2017 at 07:58

    I think this is really very funny. Mr S is always one to court controversy and like moths to a flame readers get all hot under the collar and start spouting nearly as much b*ll*cks as he does from time to time. Stop rising to the bait. You know he’s going to put the collective blood pressure up and if you don’t like, don’t read it.

    As for PIE running this stuff surely it’s no different to publications who run people like Piers Morgan or Katie Hopkins. IT SELLS PAPERS!

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  10. PaulC
    March 2, 2017 at 08:14

    HAHAHAHAHAHAHAHAHAHAHAHA

    I had to check if it was April Fools

     

    Seriously…

     

    The local branch have been in single digit conversion rates for the last two years. Their absolute tactic is overvalue and then bully down the price over the 20 week contract..

    We are the best so we will get you more, thats why our fee is irrelevant..

    This filters into the average days to sell..

    Seriously Spicer, unless you update your business practises I do not see a rosey future ahead..

     

     

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  11. Property Paddy
    March 2, 2017 at 08:53

    Mr Smith.

    A) It is well known in areas where you have a branch they probably will over value between £10K and £50K

    B) Because you have a bit of staff turnover your never going to have many staff experienced enough to understand the local market and therefore get the price right.

    C) Are you still operating the award for the negotiator with the highest price drops in a year ?

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  12. FromTheHip64
    March 2, 2017 at 08:57

    He clearly doesn’t have a Scooby about what’s going on down on the shop floor. Our local Haart branch stick 10% on every valuation.

    As for the data protection and photography, thanks for the tips. I’ll be incorporating this into our morning meeting.

    Not.

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  13. gk1uk2001
    March 2, 2017 at 09:10

    The irony of this company talking about how agents shouldn’t overvalue property. You couldn’t make this up!!

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  14. Rivero
    March 2, 2017 at 09:42

    This HAS to be a wind-up?!

    In my opinion the most brazenly hypocritical piece I’ve ever read; a bit like Robert Mugabe offering advice on fiscal and human rights policy.

    EYE, why oh why is Paul Smith given this platform? It’s not described as ‘Advertorial’?

    Unless I am mistaken I don’t get the impression he is especially well respected within the industry…particularly if we take my fellow commentators above as representative, so why?

    I think EYE is generally brilliant, has its finger on the pulse of the industry, balances supporting the industry with unbiased coverage very well on the whole, Rosalind is an excellent journalist with unquestionable professionalism…so all the more reason why I cannot fathom this particular blemish.

     

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  15. wardy
    March 2, 2017 at 09:53

    If these articles are designed to get the blood pressure up, it’s certainly worked on me.

    What I am reading here is a call from one of the most prolific over valuers in the game, telling agents to stop over valuing. A reminder about the law on direct marketing from a bloke who’s fallen fowl of the advertising standards authority more times than I care to remember and finally an admission (20 years late in his case) that it might be worth making an effort with photography.

    All this from the bloke who bought you iSOLD and declared traditional estate agency dead. Send this jokers column inches ”down the other pub” and let him have his advertorials down there because quite frankly, he insults our intelligence.

     

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  16. Blue
    March 2, 2017 at 10:03

    Regardless of the author’s obvious hypocrisy, he is right, overvaluing is bonkers and lazy.

    Firstly, a higher price will drive down interest, a lower price will drive up interest.  More interest is what you actually are after, that is what will drive the price up.  Less interest means longer on the market and potential price reductions.  The asking price is seldom the selling price, usually, you ask more and get less. Not very professional negotiating…  going backwards.

    Blaming the “greedy” vendor is a cop out.  Provide valid evidence and put forward a credible and thorough marketing plan as to how pricing a little low (you don’t have to sell at that price), will generate more interest and the opportunity to negotiate the price up, in reality, makes more sense especially to a “greedy” vendor.  Have a plan and take the time to properly explain it.

    Secondly, you look much more professional, and desirable,  regularly achieving over asking price than having a window full of price reductions.

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    1. P-Daddy
      March 2, 2017 at 10:49

      I agree with Blue, over valuing is killing and biting in a few too many areas now. The wisdom and advice being shared by Spicerhaart though….they have a school for touting over the printing works on the edge of Colchester that they own. They have a massive call centre as already mentioned  earlier known as Nexus at the HQ in Colchester. Some of those calls they make…well!!

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    2. AgentV
      March 2, 2017 at 12:29

      Couldn’t agree more.

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  17. shrewdagent170
    March 2, 2017 at 10:05

    Over-valuation slows down the market as ‘over-valued sellers’ don’t become buyers. Read the chapter ‘The Way Forward’ in The Real Estate Agent and the Great Conspiracy Theory for a possible solution.

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  18. invisible25
    March 2, 2017 at 15:27

    Laugh.  I was in one of our vendors house when a Haarts agent door knocked.  He did not realise I was an agent and told me they had buyers waiting and that the house had been undervalued and to take advantage of the 14 day cooling off period.  The property has been on the market 28 days.

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  19. PeeBee
    March 2, 2017 at 16:26

    Well…

    Beats arguing the chuff about PimpleBerks, dunnit!

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