Sky News Highlights a Problem We See All Too Often: Overvalued Homes

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We were pleased to see Sky News recently highlighting the issue of estate agents overvaluing properties in order to win instructions. It is a topic that isn't discussed nearly enough, despite being something we see time and time again, particularly in more challenging market conditions.

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At Heart & Home, one of the key points we discuss during every Market Appraisal is the importance of evidence. A marketing figure should never be based on what a seller wants to hear. It should be based on comparable sales, current market conditions, buyer demand and the reality of what similar homes are actually achieving. If an agent cannot clearly explain how they arrived at their figure, that should raise questions.

Unfortunately, overvaluing remains a common issue within the industry. In many larger corporate agencies, valuers are often targeted primarily on the number of instructions they secure rather than the number of successful sales they achieve.

The job becomes winning the instruction first and worrying about the eventual sale later. This creates an environment where some agents are tempted to provide an optimistic figure simply because they know it is more likely to secure the business. Thier goal? To win the instruction, tie you into a lengthy contract and hit you with those reduction conversations later down the line.

The difficulty is that many sellers naturally hear a higher figure and assume it is the better option. We completely understand why. If Agent A suggests £500,000 and Agent B suggests £550,000, it is easy to conclude that Agent B must be the better agent. In reality, the opposite is often true.

A realistic valuation is not a reflection of an agent's ability. It is a reflection of the market.

One of the biggest misconceptions in property is that estate agents set prices. We don't. Buyers do.

An estate agent can provide advice, marketing, negotiation and guidance, but we cannot force somebody to pay more than they believe a property is worth. A home will only ever sell for what a willing buyer is prepared to pay on the day.

Abby often says she hates being referred to as a "salesperson" because it creates the impression that we can somehow convince someone to buy something they don't want. Property simply doesn't work that way.

"If we could force people to buy houses, every property would sell on day one at full asking price."

Says Michaela Sanders

The reality is that buyers have access to more information than ever before. They can see comparable sales, monitor price reductions and compare properties with just a few clicks. If a property is overpriced, buyers will often recognise it immediately and move on to the next option.

The danger of overpricing is that a property can become stale. The first few weeks of marketing are usually when buyer interest is at its highest. If a property launches at an unrealistic figure, it can miss the very buyers who may have been willing to pay the correct market value. By the time the price is reduced, the property may already have lost momentum.

The cost of overpricing as reported by Rightmove

Correctly priced home - 32 days average time to sell

Home requiring a price reduction - 99 days average time to sell

So what is the answer?

We were discussing this issue with our property photographer, and he wondered if there was a standardised solution here. Could a seller obtain an independent valuation of their property, and then choose an agent based on other factors?

Of course, we are aware there are Red Book Valuations carried out by a chartered surveyor who is regulated by the Royal Institution of Chartered Surveyors, this is a paid-for service that provides an opinion of value based on market evidence and recognised valuation standards. These are usually required for formal valuations such a probate, but are not used currently in the wider more standard marketing of a home.

Should this become standard practice, it would give sellers an independent benchmark of their property's value, allowing them to choose an estate agent based on factors such as marketing strategy, service, communication and reputation, rather than simply selecting the agent who provides the highest valuation. However, do we see this becoming 'the norm'? Probably not.

At Heart & Home, we appreciate that honesty is not always easy to hear. Sometimes the numbers in our Market Appraisal may be lower than another agent's. However, our responsibility is to provide advice based on evidence and experience, not simply tell people what they want to hear.

Our goal has never been to win the instruction at any cost. Our goal is to help our clients move. And in our experience, pricing correctly from the very beginning gives sellers the best possible chance of achieving exactly that.

If you would like to book an honest Market Appraisal of your home, book an appointment here.

Written by Abby & Michaela

Directors

Heart & Home