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Has your property ever been overvalued by an estate agent?

estate agents' for sale sign

If an estate agent overvalues your property and you put it on the market for that price, it could be the worst thing you do.

When you’re trying to sell your home, it’s hard to know what price it should go for.

You might get several valuations from estate agents all trying to get your business.

One suggests it can sell your house for a bit more than the others, and you’re delighted – you’re going to end up with much more money than you thought you would, right?

Well, our research suggests that if you go with a higher valuation that’s been overinflated, your property could end up selling for much less and it may take you a lot longer to move.

List for more, get less

Take the experience of one member who put their property on the market in 2011.

The estate agents’ valuations on their home were spread between £480,000 and £650,000, and they naturally settled for the top one.

Despite querying the price with the agent, they were assured that it was an appropriate starting point.

However, it took a staggering four years for the property to sell and when it did, it went for £482,000.

In that time, they changed agents twice, and the price of the property was reduced several times.

The long game

This isn’t uncommon. Our research suggests that nearly one in five properties sold in England and Wales last year had to be reduced by 5% or more in order to sell.

We also found that heavily reduced properties took, on average, up to two months longer to sell than all other properties.

What’s more, while these properties went on the market for £6,000 more than others, on average, they ended up selling for £20,000 less.

Some members we spoke to even missed out on their dream homes because the property they were selling had been overvalued.

Getting the price right

We think it’s your estate agent’s job to get the best price for your property. However, there are several steps you can take to stop being caught out by an overinflated listed price.

Firstly, make sure you get at least three valuations on your home. Then check those against what similar houses in your area have recently sold for.

You can do this by looking at properties that have been ’Sold Subject to Contract‘, or search sites such as Zoopla or Rightmove. These use Land Registry data to show you what houses in your area actually sold for.

Then, once you’ve found an agent, avoid accepting sole-agency agreements with tie-in periods of many months. There’s no reason why an agent should need six months to sell your house.

Have you struggled to sell your house because it was overvalued? Did you lose out because of it?

Comments
Member

When we sold my father-in law’s flat, the prices in the area were controlled and kept low by one estate agent.

From what I remember, the agent promised to sell your property within a month or he would sell it for free. His selling fees were much lower than other agents, he valued properties at well below similar surrounding areas, buyers snapped up cheap properties and prices were kept down.

Member

Would whoever gave me a thumbs down explain themselves please?

We lost money on selling the property as prices were kept low.

Member

All sorted…

The thumb thrasher

Member

Thank you Ian. 👍🏻

Member
A N Agent says:
15 February 2017

As an estate agent I can quite assure readers that estate agents do NOT want overpriced prioperties on their books, taking longer to sell and skewing the local market. I looks like this journalist hads simply number-crunched and come up with a set of figures which do not, in any shape or form take into consideration any comments from either agents or vendors. I know from my own 32 years experience that at least 50% of vendors instantly disagree with agents valuations and insist that their house be marketerd at a higher figure. This is by no means the fault of the agent, who then has to carry the cost of a failed marketing campaign.

Perhaps if the journalist actually spoke to the stakeholders here rather than just crunching numbers the article would have some form of validity. As it is Estate Agents are taking the blame for a situation that is not entirely their fault. It must be said that of course there are some agents that clearly have an overpricing policy but the majority are hard-woking realists.

Member
An Other Agent says:
15 February 2017

Also as an estate agent I would strongly say that SOME estate agents do over value and actually go out intending to over value. A lot comes down to things such as Sole Agency or Sole Selling Rights and also the length of any agreement. A large local agent to us has a 24 week agreement and a two year tie in on a Sole Selling Rights Agreement meaning that they are able to go out and over value as to them it is about market share and working on the principle that boards breed boards, and with the length of the agreement they in theory have no option but to reduce over time. We carried out some analysis at the end of January, this agent has over 370 properties listed of which only 26% were sold, this was the second lowest in the area. I would be really interested in finding out what percentage of the original asking they achieve, that may be something I look into moving forward. As a comparison we achieve 98.46% of the original asking price with a sales pipeline of 46% which is the highest in our area.

I do agree with the point that often vendors do have their own inflated valuation in mind but that is where us as agent have a moral and professional obligation to value the property honestly and use evidence to portray our experienced view.

Member
Peter Hendry says:
15 February 2017

The housing market is inefficient and broken, with prices being forced up beyond most people’s ability to pay. It’s not simply about building more houses to try and balence supply and demand. It’s about making the housing market efficient.

The way to do this is to reform the way in which estate agents operate and this is long overdue.

[Sorry Peter, we don’t allow content that could be promotional on Which? Conversation. Please refer to our Community Guidelines for further info on commenting. Thanks, mods]

Member
Mrs J Roberts says:
15 February 2017

Near where I live are several almost identical two bedroom apartments for sale. They all have the same view, some have been on the market for many months. The newest is priced at £305,000, but the lowest which has been on the market for a while is £219,000.
I cannot decide whether it’s the agents or the sellers who are at fault, surely if a property won’t sell at the lower price, there is no point in asking more.

Member

As this report shows, the housing market is inefficient and broken, with prices being forced up well beyond most people’s ability to pay. This is patently on account of estate agents and their current methods and it’s not good enough for estate agents, who hold themselves out to be ‘professionals’, to blame their clients for forcing themselves into asking the excessive prices!

And, neither are unrealistic prices simply based on the need to build more houses in order to balance supply and demand. That is a spurious argument that bears no depth of scrutiny from the point of view of economics. Instead it is about improving the housing market up and down Britain so that it may become more efficient.

The way to do this is to reform the way in which estate agents operate and such reform is now long overdue.
I would be happy to provide more information about how best to do this if required, as a retired surveyor having more than 30 years experience in the landed profession.

Member
Ex estate agent says:
16 February 2017

I used to work for a large high street agent, part of a national group. We were encouraged, no, told to go out and over value properties to make sure they came on the market with us, not just a few thousand, we’re talking 20 grand, and ‘we’ll get them to reduce after a few weeks’, knowing they were tied in for 5 months. Disgraceful and its why I got out.

Member

I can believe it, the agent which I refer too actually employ someone whose role is to stay in touch with vendors i.e. over a period of time work on them to reduce, this is a targeted role so they earn additional pay and bonus if they hit a target on number of houses reduced and also % reduced by.

I lost out on an instruction to the said agent around 2 weeks back, it was a very simple valuation – 3 bed semi ex council house in need of general updating, partially double glazed 1970’s kitchen and bathroom but being ex council a good size with large garden and nice views, in this area £125-£130,000 all day long. I spoke with the vendors (Family members with power of attorney in this case) as a follow up, they liked our agency but they had decided to go with the other agent as they valued ‘a lot higher and want to give it a go at that price’ (£150-160,000) My two options as I saw it would be to agree to market at the other agents valuation, but then I am no better then them or allow it to go and watch it reduce every couple weeks. I chose the second option. I loose the instruction but keep my integrity.

We believe in this area that there are two agents who are going to appraisals with the intention of over valuing to gain the instruction, both coincidentally are nation wide chains, one a corporate and the other an independent,

Member

I commend your integrity, but your post just goes to show how estate agents are controlling and pushing up the cost of property. You have 2 agents in your area over-valuing properties and possibly with reduced fees so they are setting a new higher average price for that type of property.

Likewise, when we sold my father-in law’s property, an estate agent kept prices down in that area.

Member

They aren’t setting a higher price necessarily, they are artificially inflating the prices to gain the instruction and then working on the vendor over the long period of their agreement to reduce the price, arguably to a level they were advised to market at by other agents in the first place. I have the intention to carry out a similar report to this Which one for our area and find out the price achieved against the original marketing price.

I have not come across instances where agents would systematically ‘under value’ in an area once they have gained market share to control the market. We are in an industry where it is about supply and demand so you would assume that the prices are kept low to to the demand for each property other wise you would expect several people competing for each property thus pushing up prices. I am not saying it wouldn’t or doesn’t happen but I don’t see how you would continue with your market share if this was the case. But you know that area far more than I do obviously.

Member

Thank you for your honesty and integrity – this is appreciated.

Member

It’s sadly an often stated situation. I have developed proposals for fully resolving this situation and these would benefit all agents in the field. They are set out online if you search,
but guidelines preclude me from giving you the link currently.

Member

When we sold our previous house towards the end of 2012 we invited four local agents [of which one was part of a national chain] to value the property. We then asked them a number of standard questions about their valuations and marketing process. We missed a trick – we should have had them all come at the same time and fight it out over the dining table.

There was quite a range from top to bottom on the valuations but the two middle ones were the same so we chose one of those agents to have our instructions. It was the only firm that sent a professional qualified valuer and his valuation proved spot-on. We had five viewings but sold quite quickly at 98% of the asking price. There is always a bit of froth on the asking price of any property – as buyers need to believe they’ve struck a deal – so we thought this was a good result.

Member

We have had a nightmare with our estate agents.
It was put on the market in the summer of 2015. The price was agreed. Within 2 weeks they were telling potential viewers that we were desperate to sell and would take a lower offer. The property was being sold as part of a divorce and they also claimed my ex husband was obstructing viewings… at the time neither of these statements were true.
In the December we were in court to finalise financials for my divorce and the agent was asked to provide a marketing appraisal and his view on potential sales price of the property for the courts. He stated that the property would not sell for the asking price but did not give a figure. This letter was written in the second week of December just before their offices closed for the Christmas break. As soon as they came back from their break and after the court hearing, we received an e mail from the agents that unless we reduced the price of the property by just over 40% they would no longer be prepared to market our property. No indication of this had been given to the courts not even 2 working weeks earlier. In the time between the writing of the letter nothing had happened to warrant such a reduction in such a short period of time. My children and I are reliant on the equity in the property as our financial settlement. In the summer of 2016 we had two potential buyers at the new level imposed by the agents. One buyer dropped out , leaving the agents ‘preferred buyer’ in the running to buy…at the level he had suggested the previous January. We also had another party interested that I asked repeatedly to be contacted ( her initial proposal was linked to other plans that would have suited my children and I) I was explicit in my instructions I wanted him to contact her and get full details of her buying proposal..
The agent did not contact her at all.
I met her at a later date, initially she was quite off with me as she thought we had ignored her proposal. By the time we met, we were already talking proposed exchange dates with the agents preferred buyer. As she had to sort her finances in order to buy our property she was not able to compete with them and reluctantly had to back away. In the end she found and completed on another property before the agents preferred buyers even exchanged on our sale.
Since October the agents have ignored my e mails ..
I have received one e mail from them, early this year claiming how it was a privilege and honour to sell my property, after my conveyancer had informed them that I had reported them to the Ombudsman . Once I confirmed directly to the agents, that I had reported them to the Estate Agents Ombudsman, and had to go straight to the ombudsman because of their non acknowledgment of my e mails, they again will not even reply to confirm the correct address of whom I should send my complaint to. (the agent I am dealing with has given the name of an Admin staff member, The Ombudsman has given a different name). Because of their refusal to provide me with even a name to complain to at their firm I cannot follow normal protocol. I have asked them to open a dialogue and have asked them to confirm the correct name of their complaints officer so that I may correct the ombudsman and finally put my complaint in writing in to the firm.. and again my e mail has been ignored.
There were other issues too. these are just the major ones.
Any advice would be gratefully received….

Member

You seem to have been treated badly by your agent. How did you come to select the agent?

It seems that the initial valuation might have been out of line with the market. How did the agent justify it to you? And, more to the point, how did they explain the 40% drop in their valuation some time later? In the eighteen months while your property has been on the market house prices have been moving slowly upwards in most areas so such a large reduction in less than a year seems abnormal.

It seems odd that you have not been given details of how to deal with any problems during your sale process. This would normally be set out in your agent’s contract document when you confirmed your instructions. I am also baffled that you have apparently been locked in to a sale with this agent and yet at some point they were prepared to withdraw if you did not go along with their reduced valuation.

It must have been difficult trying to deal with your agent while in the middle of a divorce process. You have done the right thing in reporting them to the Ombudsman. I am surprised the Ombudsman cannot deal with the firm as an entity rather than having to deal with a named individual. You might have a case for legal action against the estate agent so it could be worth contacting Citizens Advice to see how best to proceed. Estate agents do have a duty of care towards their clients which includes diligence in following up all potential sales leads; they are also under an obligation to report all offers received to the seller.

Member

thank you… the ombudsman has told me I have to deal with the firm before they take up my case as I cant seemingly get the correct contact at the firm to report my complaint to I have felt as though my hands have been tied. I will try Citizens advice. What I did not put in my initial comment was that my entire financial settlement was based on a best estimate sales price for the property at court. Whilst wed factored in a drop in value it had not been anywhere near as much as we eventually sold for.
we had other agents who had valued the property, and it had been previously marketed at that level although by an agent who was not used to the type of property we were selling… ours had a lot of land. and they were more normal house sales
unfortunately when they pulled the price down my divorce had reached a stage where it was just another problem. On the internet the price of the property did not drop, I did not reply to their e mail trying to force the drop on price.. By that time my ex husband was their main contact and its where I let things slip.

Member

Sam, my view is that you should able to write to the managing director of the estate agency at the address of the office which accepted your instructions, or alternatively to the person who signed the document or letter accepting your instructions and setting up a contract between you and the firm. I presume that, in accordance with the Ombudsman procedures, you have to set out your complaints in writing, give the firm a reasonable period in which to respond [I would suggest twenty-one days in the absence of any specific directions], give full and fair consideration to the firm’s response, and – if you are not satisfied – notify the firm formally that you cannot accept their response and are therefore left with no alternative but to place the case in the hands of the Ombudsman.

As I see it, on the basis of what you have told us, the key issues are (a) the false valuation placed on the property at the outset; (b) the delay in finding a buyer ready, willing and able to proceed and yet not coming back to you with a price adjustment recommendation; (c) failing to value the property for the purposes of the court settlement of your divorce and failing to provide a professional realistic market appraisal at that time; (d) mishandling the relationship between you as the seller and various parties as prospective buyers thus depriving you of a timely sale; (e) making a drastic downwards revaluation of your property without prior consultation and without justification of the difference; and (f) not acting in a professional manner at all times, not placing your interests as the client at the forefront, and not showing the required duty of care towards you as the client under the terms of the instructions they have accepted and the contract they have entered into with you. I am assuming that you and your ex-husband have been acting jointly and unanimously throughout your house sale process. It is probably best to give the Ombudsman the full grievance because you will not be able to add to it later, and, depending how things go, you can ease or concede some of your concerns if necessary to reach a satisfactory outcome.

The question arises of what kind of settlement you are looking for. I would say you are entitled to seek a refund of all fees and costs you have paid in view of the substandard service and also to a compensation payment to represent the loss of value due to missed selling opportunities coupled with the delay in achieving a sale due to the firms unsatisfactory performance. I would expect the firm to have professional negligence insurance but that might not be applicable in the case of settlements determined by the Ombudsman rather than as a result of a court action. In that event you might need to moderate your expectations. I hope that Citizens Advice can help you to take this further and it would be interesting if you could let us know the outcome.

Member
Peter Hendry says:
24 February 2017

The above comments say it all really.
It’s time all these shenanigans were dealt with by improving the way estate agents operate and serve their local housing markets.
My experience tells me that the best way to achieve that is the way set out in “The Hendry Solution”.

Member

I have to disagree with you Mr H.

I suggest that all houses for sale HAVE to be put on an open register which is searchable by area/price etc and the agent dealing with it and or if it is going to auction. By this method the buyer and seller have a proper market view of what is available on the market,

A record of price drops will provide a track and this should be linked to the estate agents profile on the site. An agent with a large number of dropped prices will look rather suspiciously bad at doing his job if the percentage is markedly out of kilter with his competitors in the area. Funding it should be simple as £25 from every seller and buyer would seem to be sufficient to run a database.

I have some experience of estate agents and there are some good ones , some mediocre ones, and some crooks. Passing exams does not alter this profile of the profession.

I can think of a case in Henley were the agents deliberately kept a property from viewers as the distantly related beneficiaries were resident in abroad. Some friends of the deceased even asked for properties on that particular road that might be for sale but received no details. Eventually the property was sold for a substantially lower price than was normal for the area. As to who bought it – I do not know the end of the tale – yet.

We also have the recently reported case of an estate agent cartel at Burnham on Sea:
burnham-on-sea.com/news/2017/estate-agents-fined-02-03-17.php
I believe these sorts of cartels have operated for at least the last 20 years in some areas.

In the South-East the use of a percentage on commonly expensive houses has highlighted the bizarre fact that one can pay , in my case , up to £12,500 to an estate agent who will place it on an Internet site and do accompanied viewings. That is quite a lot of money for doing what for a cheaper house would mean a charge of £4000.

A large number of properties in Australia are sold by public auctions and my gut instinct is that this avenue would be a sensible one to pursue and educate the public to its benefits. One might even require that houses of deceased always go to auction to expedite the settlement of estates and quicker disbursements.

Legislation in itself never solves everything as enforcement could be in the hands of a lame duck quango. Consumers must be vigilant and prepared to get stroppy.

Member

Turning to over-valuation.

When we were selling a property in 2008 at the time of the crash the agents were all over the shop as to the correct price with one AFAIR nearly £100k above the rest. As it happened the move was paid for by my wife’s employer and after 6 months they bought it from us at a price that was bearable but £75k lower than first marketed. The firm kept it for another 18 months and recorded a further £75K loss.

I am sure that within pockets in the UK there are some areas where closing factories can affect the local market and even down to types of house. A new estate may also depress the prices of equivalent styles of property.

Therefore I think you need to make an intelligent appraisal as to the circumstances in force to possibly explain anomalies.

I know of a recent case of selling a house the consensus of three local estate agents and Purple Bricks was £750,000. The owners decided that it was marketed at £775,000 in anticipation of a lower offer being received. Two days later received an offer of £750,000 and then agreed the sale at £760,000.

SO was this a case of under or over valuing, or the owners anticipating the way the selling process works.

The bottom line is the price is a function of your property fitting the needs of the buyer and this includes schools and stations. Estate agents are basically relying on what other similar houses have gone for and if there are no similar properties to guide them they are slightly plucking in the air.

Somethings that effect price /desirability is aspect to the sun, being overlooked, size of plot, surrounding properties and the chances of all these factors being replicated in another recently sold property are slim – unless you live on a large estate of similar houses.

Buying and selling is a very fundamental way of establishing a value and the canny person will do the research to get a reasonable feel of the market before seeing agents. That way you will see through those who are waffling.

Member

That’s a good point you make about supply in relation to selling prices, Patrick. As soon as a new development gets going in our area the prices of existing properties are devalued to some extent, even before the new homes are released. Many are being bought off-plan because of the general shortage of houses. Developers are constantly being criticised for not building enough ‘affordable’ homes but I reckon they know what sells; even their ‘affordable’ homes are outside the price range of many prospective buyers, even with Help to Buy and other incentives. Buyers of new homes release a chain of cheaper properties down the ladder so as far as I can see there is no particular merit in building lots of ‘affordable’ homes unless – as in some places with a large proportion of second homes – there are particular difficulties for local people who wish to carry on living within their own area.

Member
phil watts says:
28 April 2017

So our little house which I estimated to be worth £95,000 was valued at £115,000! Naturally I nearly fell through the floor but of course we went along with it and to date haven’t had a single inquiry! I’m just about to ring the estate agent and drop the price to £99,950 which is far more realistic! Scumbags!