Are estate agents deliberately overvaluing properties?

I’m very fortunate: I’ve never had to sell a house in my life (yet), but I must say that the intro to this thread rings loud bells for me.

My dear next door neighbour died 3 years ago in May. Her two daughters put the house on the market, just about as the “Credit Crunch” was starting to bite.

They got three estate agents in to value the property and all suggested asking prices of around £250,000. Because they wanted to try to sell quite quickly – certainly within 6 months to avoid the house being empty over winter – they decided to put the house on the market at £205,000, £41,000 below the lowest estate agents’ valuation.

It took over a year to sell in the end and they finally had to sell for just £167,000.

My house is identical (being a next door semi it would be I guess!) and although I will never sell up I would be amazed if these houses are worth over £195,000. Even houses at the top of the street, where they have garages and bigger kitchens are currently selling for about £200,000 or less.

So it seems to me that Estate Agents artificially raise people’s hopes, with equally artificially raised valuations, for no good reason that I can see.

Dunno – not being a vendor I guess I am not really qualified to comment further, but I do think Alice’s intro makes a very good point.

Although neither buying nor selling at the moment I am very interested in how the property market works and have been thinking on and off about this disparity for some time. The reality is that properties are not selling – the property websites show hundreds for sale in all brackets, at all levels, and in all areas, and the photos give the game away [last year’s daffodils and roses in bloom, or snow on the roof from last November]. Asking prices are way too high which is falsely keeping sellers’ expectations at too high a level. Even though some properties have to be sold within a finite period – executor sales, repossessions, job relocations – this does not seem to be feeding into the advertised prices. Agents are desperate to maintain the differentials between different classes of property and as soon as an agent lowers the advertised price on one property they are intrinsically cutting the price of all the other properties in that area at and above that level, so they won’t go there. The last housing market recession saw estate agencies close branches and entire firms went to the wall [the banks and building societies which had piled into estate agency got their fingers burnt and made a hasty red-ink exit]. This time that is not happening because of the buy-to-let business which is enabling agencies to hang on, making a living out of managing rentals and lettings. Even then I do not see how some agents can survive on three sales a month if they have a high street branch to run and higher advertising/promotion costs per property because they are on the market longer. I have no idea whether agents have been quietly and collusively raising their commission rates to compensate for the reduced throughput. Quite a number of the more recent landlords are having to dispose of bundles of properties through the auction route as the economics no longer stack up yet the low prices achieved at auction do not appear to be having any influence on advertised asking prices for property generally. This is a bubble that has to burst before long I think. As to the service that agents provide, it remains abysmal – very few of them have raised their game to suit the circumstances of today’s market. Although they are not instructed by the buyer in most cases, they do have a professional duty of care towards them and they could do a lot more to assist them without compromising their primary engagement to the seller. Their response to potential buyers’ enquiries is generally characterised by one or more of the following: slow, unhelpful, ignorant, incompetent, lazy and misleading. Not for nothing is one of the larger regional firms known as Bovine, Droppings & Co. around these parts. And apart from the slap-dash viewings and the inadequate particulars, their newspaper advertisements have all the graphic appeal of a 1960’s pools coupon. With their unintelligible abbreviations, lack of property addresses [“North City”], blurred postage stamp-sized pictures, prices “available on application”, high-charge phone numbers, no service on Saturday afternoons or Sundays [haven’t they heard of homeworking?], what chance do they have of enticing buyers and giving their clients what they pay for? The stuff the agents put on property websites is little better with no floor plans, useless maps [“the flag marks the centre of the postcode”], photographs of owners’ beds and sofas – even the best could do much better, in my opinion, to justify the fees they charge. When you sell and buy a property most of the work seems to be done by the solicitor/conveyancer whom you have to pay at the outset just to get them going on it; the wily agent, who eventually sells your house for far less than they told you they would, somehow manages to get their fee [at least twice the legal fees in my experience] without actually asking for it because it mysteriously emerges in the completion statement as a deduction. But does the solictor not carry far more responsibility and need higher qualifications and competence than an estate agent? It’s about time this surreptitious practice was outlawed so that clients could see more directly how much they are paying for what they’re getting.