New research from online estate agent eMoov.co.uk has shown that there’s a huge gap between property asking prices and final selling prices.
The average UK asking price on property portal Rightmove is £281,000, but the average price of a sold property is currently £207,000. That’s a gap of £74,000 – why is this happening?
What’s my property worth?
Valuing a property is not an easy task, as we detailed in What's your property worth? An estate agent or online calculator might come up with a figure, but really a property is only ever worth as much as a buyer is willing to pay.
There are loads of factors to take into account, including but not limited to the location, size and previous selling prices of the property. The initial asking price will not always be the same as the offer the seller finally accepts, and that's not surprising. Both parties will try to get the best deal.
[SPOTLIGHT]But when the difference between the average asking and selling prices is so high, it’s worth taking a look at what is actually going on. eMoov has argued that as high street agents are paid a percentage fee, they are overpricing properties on purpose.
This tempts people onto the agency’s books, as the agent is implying is that a price is plausible in the local market. If one agent says they can sell your home for £20,000 more than any other agent, it's very tempting to sign up with them. From there they are likely to try to convince you to sign up to an exclusive contract so that your business is secured.
So the first asking price is way too high, and interest in the property is low. In order to close the deal and pick up their share of the money, the agent now says that the price should be dropped. This will have significant ramifications for the seller, as they won't get the amount they anticipated, but makes a minimal impact on the agent’s fee.
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Common practice
Russell Quirk, founder and CEO of eMoov, said this strategy is common among high street estate agents
He added: “Understandly the seller opts for the agent that claims they can get the highest price, as we are all motivated, to some extent, by money. Then as regular as clockwork the agent will ring them a few weeks down the line and ‘advise’ on a lower asking price in order to sell.”
Agents have a duty of care, and are therefore compelled to work in the best interests of their clients. Russell said that their valuations should be “realistic” and “truthful”. It would be very difficult to prove otherwise, simply because there is not one fixed value attached to any given property.
What has been your experience with estate agents and the pricing of your home? Let us know in the comments box below.
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