Zoopla have recently published a list of the places with the biggest price reductions on property asking prices. Surprisingly their results show that almost 40% of homes for sale have been reduced in price. The average reduction for the whole of the country is 8.52% or £26,131. Doncaster has been named as fourth in the list of places with the biggest reductions with an average price of 7%, which is the equivalent of £13,915.
Top 5 places for price reductions according to Zoopla:
But do these figures actually match the reality on the ground?
Certainly at Galley Properties we are surprised to see these figures. Over the past year, on average, we have successfully secured sales prices at over 97% of our asking prices. This means that we are experiencing less than a 3% reduction of price compared to the figure published by Zoopla of around 7%. We believe there are a number of factors which are skewing these figures and buyers and sellers should look upon the figure of 7% lightly.
So what factors could be skewing the figures to make it look like price reductions are higher?
At Galley Properties we are seeing market evidence and trends which appear to be fuelling overpricing from a small number of sources. Although many of the reputable agents within the town are pricing properties accurately we believe there is a small minority of listings which are heavily overpriced and have made the figures for Doncaster seem a lot worse than they actually are. We certainly work hard to price our listings accurately and we base this on hard evidence with actual comparable of what has sold and how the market is performing. Unfortunately it would appear that not all listings coming to market have been so thoroughly researched and we believe that this is where the problem lies.
So who is to blame for overpriced listings?
The price of a property listing can be dependent on a number of factors. Of course a vendor will want to secure the best price for a property but some vendors may have an unrealistic expectation of the price they can achieve. We also wonder if all agents are putting in the same level of research and providing vendors with accurate information. Another point worth considering is if changes to the estate agent process, certainly since the arrival of online only agents and the promotion of upfront fees, has reduced the incentive for some agents to work as hard for their clients.
Is it the vendors fault?
The answer is almost always no! It is the job of the agent to advise a vendor how to best market their property and what price is achievable. After all, the estate agent should be the expert and not the vendor themselves. As previously mentioned, a vendor naturally will want to make the most money from the sale of their property but without quality accurate advice it is unlikely they will know the actual value of their property. There are a number of reasons why a vendor may have an unrealistic value in mind for their property. They may have bought it before the peak of 2008 when the property market crashed which may mean it is worth less than they paid for it. They may also have paid out a lot of money for renovations to the property but they need to keep in mind that not all renovations add value to a property despite spending a lot of money on them.
Is it the agents fault?
An accurate valuation of a property will always be based on hard evidence of how the market is performing. A good agent would provide someone who is looking to sell their property with actual comparables of what has sold and for what price. These comparables will inform the price that a property should be marketed at what a vendor should expect to achieve.
Not all agents will follow this same process, some may go on a ‘gut’ feeling or simply list a property at the price the vendor requests. While some agents may be so experienced their ‘gut’ feeling isn’t too far from what the evidence suggests a property can achieve, we would personally be wondering why that agent didn’t put in the work to back up that feeling. An even worse scenario is the agent simply listing for a price that the vendor suggests, we would wonder what the agent is getting paid for here because a good agent should be providing quality advice. The final tactic used by some agents is to purposefully overvalue a property so you sign up with them expecting to see a huge return. Once you are signed into a contract the agent later suggests lowering the price.
If an agent is not willing to put the hard work in when valuing a property then we would suggest yes it could be the agents fault a property is overpriced. However anyone looking to sell their property should remember that the property market can change quite fast so what can be an accurate valuation from a good agent one month may need adjusting the following month if a dramatic shift in the property market was to occur.
Did the agent have an incentive to accurately value in the first place?
Many agents are now offering an upfront flat fee service. This type of service is particularly prevalent with online only agents such as Purplebricks or Yopa. However many experts are warning vendors to be wary of these deals or avoid them all together. GetAgent, the estate agent comparison website, warn that paying an agent their entire fee up front could be a mistake. They explain: some agents work on the model of paying an up-front fee. In some cases, it’s the only option on offer, and in others as a cost-effective alternative to paying them on completion. With this model, the estate agent has no incentive to sell your property, or to progress the sale as quickly and efficiently as possible. Instead they suggest the sensible option is to pay the majority of the fee at the end of the property sale based on result of the agent actually selling your property.
If an agent has little incentive to sell your property because they have been paid already then they also have little incentive to value it accurately or achieve you the best price. An agent using this model makes money if the property sells or not. In the worst case scenario you could pay such an agent up front and never achieve a property sale, this would mean you have essentially paid for nothing.
Some agents offer both an upfront fee service and a pay upon completion service. But you will often notice that there is usually a huge difference in the final costs of these options. Almost always the upfront fee will be cheaper to make this option more attractive, but as the experts warn, picking this option gives that agent very little incentive to work hard to sell your property.
Thinking of selling? Five tips on how to get an accurate valuation:
Why not give us a call?
If you are thinking of selling your property why not speak to us. At Galley Properties we are confident we can give you an accurate valuation and we will be happy to provide the hard evidence of how we came to our valuation. All our valuations include actual comparables and we never work in an ‘off the cuff’ way. In the past year we achieved, on average, over 97% of our asking prices so if you need an accurate valuation then we could be the right agent for you. Give our sales team a call on 01302570470 for a friendly no obligation chat.
Grab a property bargain! We reveal pockets of Britain seeing the biggest price reductions on homes for sale: https://www.dailymail.co.uk/property/article-6307101/We-reveal-pockets-Britain-seeing-biggest-price-reductions-homes-sale.html
10 places with the biggest house price discounts: https://www.mirror.co.uk/money/10-places-biggest-house-price-13471062
Which? Estate agents who overprice properties cost sellers £4.3bn: https://www.which.co.uk/news/2017/02/estate-agents-who-overprice-properties-costs-sellers-4-3bn/