Should an Estate Agent market a house they know is not worth the asking price?

Cannon_Fodder

Always surprised that the 'undervaluing EA' gets much trade, as people generally know to get 3 EAs in and pick the middle figure. The commission must be very attractive. Which for some will matter, (especially at a time of higher deposit requirements, negative equity etc) as immediate cash flow is a bigger issue than the selling price - especially if think they can negotiate on the next place as well their buyers negotiate on theirs, so the price differential on moving is what matters to them, I guess.


What about the HIP factor ?

Once paid for, the seller might as well sit on the market, as leave it and go back on later, to avoid paying for another HIP. So why not 'have a punt' is what goes through their mind, probably. Then it becomes about how quickly they re-adjust, and lop off the 'punt' portion, to avoid languishing there and risk having to chase the market down.

On Rightmove this month, new properties have appeared and within two weeks lopped £10k, £15k, £20k off...who does that first will sell, the ones who don't might still be there after the summer - and then its the pre-winter discounting sprint.


There will be some sellers who truly believe in a very high figure, in which case the only option is for the property to sit there and have zero interest for 3+ months. I don't suppose you can blame the EAs totally for getting it on to their books - they might hope to talk them into re-pricing after the first month is dead quiet - if they don't agree, the EA might be best offering a free exit from the contract to make the point!

Agree with CloudCuckooLand that from a statistical point of view there will be a skewing effect, which it would be nice to iron out. Probably ambitious.


Reputation. You've picked up on other's reputations, so of course there will be a factor. An odd one here or there, amongst many reasonably priced, is ok. Start doing it to all, and unless they sell for close to it, the sellers will start to broadcast your tactics.

mbga9pgf

Estate_Agent wrote: »

Interesting thread so far guys.

I'm not particularly bothered about whether we can get viewings on these overpriced properties. And Mbga I'm glad I amuse you. My own wife said the same this morning.

Some of what has been written has given me food for thought, but my origional concern still remains and I shall try and be a little clearer about it.

We have a local agent - a chain - who have the reputation of undervaluing property because they are more interested in selling a volume of properties and getting multiple income streams than selling a property at the right price. I know this reputation because I'm only in week ten as an EA so have been tarnished yet by all the negativity. On the other hand - as has been mentioned here - there is an agent who overvalues just to get the instruction. I don't particularly want to follow either of these examples, but is there any harm in taking on the overpriced(which the vendor is pricing) just to swell our buyer numbers? Will we get a negative reputation because of this?

Or do we already have a negative image because we're EA's?

Sorry Ea, didnt mean you amuse me, not that at all. Overpriced properties that have been put on the market to meet seller expectations rather than reality amuse me. Sellers forget, there are a whole host of tools that exist these days, in particular local house price indicies and actual sold prices online that can be referred to.

case in point. In our village, house bought for 250K in 2006, newbuild. so, bearing in mind the home had a "newbuild premium", and we are below 2006 average prices in our area, why put it on for 330? was he hoping for a "cheeky offer" of say 10% off the list?

the problem is, buyers are wise these days. they know about salary multiples and they of course know how much they can borrow at the moment (not much) so why completely overvalue a property and slowly drop a few percent off the price as he is doing at the moment instead of marketing it for the correct price? If he had marketed it at say 270, I would have gone round, and perhaps offered 240, we could have haggled, and he could have probably got me up to what he paid for it. Unfortunately, he is greedy, and sees his house like an ATM machine. unfortunately, I refuse to pay his cash card bill! :rotfl::rotfl:

You mention another EA and his supposed tarnished reputation. i would see it otherwise. Why are you an ea? to please everyone, or sell houses? You are a business, you exist to make money. i bet the EA locally that has a "reputation", has a reputation with all those greedy sellers that see their home being "worth" far more than it actually is and have had their sale undercut at realistic sellers, who, funnily enough, have managed to sell. What sort of client do you want on the books? The sort that is going to cost you a fortune in advertising revenue stream, or one that is going to lead to conversions and make you money, even if this does annoy a couple of NIMBYs in your area? I had a family member who had a rant at someone for selling their house on their street for what they saw it was "Worth". Sellers need reminding that homes are 'worth' what someone will pay, not what they want.

Do you think those on your books for 12-18 months that cant sell will be saying you are a great EA, or blame you rather than looking to themselves as to why they cant sell? You may be pleasing them now, but you can guarantee the sorts of characters that these people have will mean they will take it very personally once they cant sell their little 3 bedroom semi-detached "palace" that is only worth 70% of what they have it on the market for.

first time buyer, quick point for your friends on mortgage support...
http://www.communities.gov.uk/housing/buyingselling/mortgagesupportscheme/

It means that eligible homeowners will be able to make smaller mortgage repayments for up to two years, without the risk of losing their homes.

All mortgage support has done is save up a massive bow wave of repos which i am waiting for. there are over 200,000 on this scheme, and I cant wait till it runs out. 200,000 properties coming on the market over the space of a year is going to do wonders for prices!

olias

I haven't read this whole thread, but just to add my tuppence worth. The EA doesn't always get it right re valuation. My last property was valued by two agents at 209k and 220k. I believed it to be worth more (this was through research, not just as an owner believing my home is worth loads!)

I wanted to put it on the market at 240k with the second agent who were initially dismissive and tried to talk me out of it, but I stuck to my beliefs. First viewer offered full asking price (240k) and went all the way to exchange. Sale fell through on day of exchange through a matter nothing to do with price. Second viewer offered 237k, I told them I wanted full asking price and they came back and offered the full 240k and house sale went through within a couple of months.

Both agents were long established and experienced local agents.

Olias

surreybased

Hi,

I'm in a area where there is competition for houses and lots of EA's in the high street. A friend was telling me about an EA who was advising her friend to lower the house price as it wasn't attracting viewings. I rightly believe that the house was over priced however the EA was being blamed for being lazy, not marketing it enough, but in our area if a house is well price viewers will be queuing so as a prospective buyer I would side with the EA.
I often see houses overpriced - not sure I do blame the EA as I realise they want a sale. I tend to realise it's probadly an over zealous vendor.

There are 2 in my area that spring to mind.Both are on for 100k more than they should be..Both have had a change of agent as I'm sure the vendors feel it's the agents fault. I guess this is the down side for the EA, the agent spends money marketing only to lose the instruction because the vendor feels it's the EAs fault. Guess that's the balance to weight up..if it's not on at a realistic price will you lose the instruction anyway?