The Dark Side To Estate Agency
25th September 2020
25th September 2020
Some overvaluing estate agents are ruining the lives of their vendors just so they can hit a target and get a pat on the back from their bosses. A staggering 70% of East London homes put on the market in the last month have not sold.
Why do some estate agents over value?
Here’s a shady secret about many estate agency practices - sales are not the most important thing, it’s all about having a healthy register of available properties to stock to display in the shop-window.
Many years ago, I worked for an estate agency boss who told me “Simon, don’t give the sellers the right advice, get it onto the market and then we’ll work on getting the price right later.” This never sat well with me.
Everyone of course wants the highest price for their home. But overvaluing is low-skill, misleading and unethical. It can even make sellers question or be annoyed by the agent providing the lower but accurate valuation.
To make matters worse, agents using such tactics will attempt to tie a seller into a long term contract.
The idea is simple: to keep you on the books long enough for your move to become more urgent over time and provide sufficient runway to manipulate sellers to bring the price down later.
You see, there was never a plan to achieve the figure originally quoted. Many people see switching estate agents as a hassle, so go with what the agent advises.
But what if you get lucky?
But for the sake of argument, let say you did get lucky and secure a sale price 10% or more above market value.
The big obstacle is the buyer’s mortgage lender - they won't just simply accept the price without investigation. They’ll want to see evidence of similar properties that have sold locally at that price. If there are none, they’ll reduce the amount they are willing to lend to reflect local prices.
That could lead to your buyer renegotiating the price and leave your onward move plans in tatters if the onward purchase is dependent on achieving an overly ambitious price for your home.
Protect your sale from shady practices.
An asking price is purely about enticing buyer and getting enquiries.
In a rising market there is definitely an argument for trying a higher price than the last comparable sale, but property does not increase by 20% in a week or within a few months.
It’s prudent to look around at similar properties that have recently sold. If a comparable home to yours sold for £400,000 last week or last month, yours will not sell for £500,000 today.
If you still wish to chance your arm at the agent’s higher figure, there are some precautions you can take to ensure your move isn’t completely scuppered.
Don’t sign up for any longer than 2 weeks if you are being quoted an inflated price: Be wary of any agent reluctant to commit to an agreement of just 2 weeks. The good agents won’t as they’ve nothing to fear.
Reset your status on the property portals by switching agents. Your home going out as a “new property” alert is far better for you than a notification for a huge price reduction.
Let the agent know you’ll be leaving a review on Google and Facebook about your experience.
Well, that a lot in take in! It’s essential to arm yourself with all the facts to identify misleading advice and to remedy its consequences before they sabotage your move.
Does it sound inconceivable that an agent would overvalue your home simply to get it on the market? It should, but it’s happening all over the country and it’s abusing the trust that homeowners put in estate agents to help them move home.
So be sceptical, ask questions, and challenge any valuation that’s much higher than the evidence suggests (even if you’d love to believe it!).