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realistic selling price?
Comments
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HAMISH_MCTAVISH wrote: »OK, let's clear this up.
One of the biggest myths on the various house price discussion boards is that there is a large 20% to 30% "gap" between average asking prices as measured by Rightmove, and average selling prices, as they mistakenly think Halifax/Nationwide measure an average of actual sold prices.
Whereas the reality is that this is absolute nonsense, and the indices are just measuring totally different things.
Rightmove is a simple average of the asking price of all properties listed. It's usually in the 200K plus range.
Halifax and Nationwide are measuring something entirely different.
They don't measure average sold prices at all, but rather they derive an average price of the "typical 3 bedroom house" via a hedonic regression methodology. Which is usually in the 160K range these days.
The gap between the two is irrelevant. It's the gap between apples and oranges.
There is only one index which lists the gap between average asking price and average selling price.... Hometrack.
Which currently shows that gap is 8% on average.
Are you suggesting Nationwide only publish the average sold value of 'typical 3 bedroom' houses? Seriously?
What about the less than typical ones?? what about three bedroom flats are they counted in the figures? who determines how typical the three bedroom house is that it makes its way into nationwide's figures?
Nationwide themselves commented in the March release that
"The introduction of a 7% stamp duty threshold on properties
purchased for over £2 million is also likely to have a
dampening effect on activity, albeit a modest one, given the
relatively small number of transactions involving properties
over £2 million. In 2010 there were 4,000 such transactions,
accounting for just 0.5% of total residential property
transactions in the UK"
4,000 'typical three bed' houses costing over £2million?
Genuine question do you have any links to back this claim up?
Cheers
Wig0 -
However it does represent that estate agents are overvaluing to get business and then haggle them down latter once the contract is signed. This practice is widespread and anyone buying should ignore asking prices and look at sold prices only.
Completely agree!!
Sold prices would definitely be the first place I look for information on determining 'fair prices' ... bearing in mind that properties may be overvalued, but not putting too much weighting on published % differences between marketed & sold prices (which will in part depend on how over valued, or not, houses are to begin with...)You were only killing time and it'll kill you right back0 -
townendwig wrote: »Are you suggesting Nationwide only publish the average sold value of 'typical 3 bedroom' houses?
No.
Nationwide (and Halifax) don't publish average sold values at all.
They each use proprietary variants of a statistical modelling technique called "Hedonic Regression" to create a fictional "typical house".
They then publish an index of the average house price of this "typical house".
This approach has a number of benefits, by the way, as it means they can adjust for the type and quantity of different sized houses selling in any local area or nationally and so avoid skewing the index because of sales mix changes. (Which gets rid of another myth about house prices, ie, that more large houses selling skews the figure upwards)
It is statistically sound, but it's completely irrelevant to the average house price figure quoted by Rightmove.Seriously?
Yes. Seriously.What about the less than typical ones?? what about three bedroom flats are they counted in the figures? who determines how typical the three bedroom house is that it makes its way into nationwide's figures?
All property sales (well actually in the case of Halifax and Nationwide, all of their own mortgage offers) are counted.
They then break down the properties by constituent parts, so number of bedrooms, bathrooms, living rooms, etc, and create a fictional "typical house" which they then report the price of.Nationwide themselves commented in the March release that
"The introduction of a 7% stamp duty threshold on properties
purchased for over £2 million is also likely to have a
dampening effect on activity, albeit a modest one, given the
relatively small number of transactions involving properties
over £2 million. In 2010 there were 4,000 such transactions,
accounting for just 0.5% of total residential property
transactions in the UK"
4,000 'typical three bed' houses costing over £2million?
Again, you misunderstand what hedonic regression does. They don't publish the actual sold prices of 3 bedroom houses.
They publish the price of a fictional but typical house.Genuine question do you have any links to back this claim up?
Yes.
The following is a good read that explains the different methodologies used by the various house price indices.
http://www.acadametricstest.com/House%20Price%20Indices%20Fact%20or%20Fiction.pdf“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
girl_withno_name wrote: »I think the main point for the OP here though is that these are averages and won't necessarily represent the situation for this particular property...
In the case of Halifax and Nationwide, they're not even average sold prices.
They're the estimated average price of a fictional "typical house".
Whereas Rightmove is an average of asking prices.
As I say, apples and oranges, so the gap between the two is meaningless.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
Average Asking Price = £240k
Average Selling Price = £160k
How many times Brit....
Neither Nationwide or Halifax give an "Average Selling Price" in their index.
They are not reporting the average selling price. So the comparison is pointless.However it does represent that estate agents are overvaluing to get business and then haggle them down latter once the contract is signed.
The gap between the two indices doesn't represent anything. It's meaningless.
Totally agree that overvaluations to get business are common by the way. But the gap between rightmove and the haliwide is no indication of this or anything else.This practice is widespread and anyone buying should ignore asking prices
Absolutely correct.and look at sold prices only.
Which, according to the only report that does publish the gap, are 92% of asking prices on average.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
HAMISH_MCTAVISH wrote: »Which, according to the only report that does publish the gap, are 92% of asking prices on average.
There are asking prices and there are asking prices. Official Rightmove asking prices are for when the property is put on Rightmove for the first time. They do not include asking prices for properties which later drop their price. Now that is where the 1/3 difference higher comes in. I'm pretty sure the asking prices you must be talking about will be more likely reduced asking prices and not initial asking prices unless you are talking about the high end market before stamp duty changes last month.:exclamatiScams - Shared Equity, Shared Ownership, Newbuy, Firstbuy and Help to Buy.
Save our Savers
0 -
There are asking prices and there are asking prices.
True.Official Rightmove asking prices are for when the property is put on Rightmove for the first time. They do not include asking prices for properties which later drop their price.
Also true.Now that is where the 1/3 difference higher comes in.
False.
There is no 1/3 difference.
The indices are just measuring totally different things.
Once again, as obviously you failed to understand when it was explained to you the last few times....
Rightmove is a simple average of asking prices first listed on the site.
Halifax and Nationwide are the estimated price of a fictional "typical house", and bear no resemblance to the average of all prices.
They are not a sold price index.
They don't claim to be a sold price index.
They do not tell you the average of sold prices.
So a comparison with asking prices is totally meaningless.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
By the way Brit, there is one index that does use the actual sold price data from LR and ROS to give an "average" selling price of all houses.
Acadametrics, which in Feb this year was £219,000, versus £233,000 for the same month on Rightmove.
Whilst not using absolutely identical methodology, they are at least both providing an average house price, and one is asking prices versus the other being actual sold prices.
As you can see, the gap between the two is around 6%, which is fairly close to Hometrack's reported 8%.“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0 -
townendwig wrote: »Hi split, thanks for sharing the anecdote
always a tricky one this, but we need to get out of the mindset that asking prices mean anything. Unless of course a willing and able buyer pays that amount.
This is a good example of price discovery. As it stands the true value of your parents home is currently £140,000 and even then only IF the buyer who has offered that amount is proceedable. It may additionally be the case that the buyer isn't able to raise the funds to that amount on that property (ie mortgage valuation comes up short) and that they are only proceedable at £120,000 in which case that is the market value of the house.
You could then raise the asking price to £265,000 it wouldn't alter the market value of the house from the £120,000.
Then a cash buyer may come along and offer £125,000 which would reset the market value of the house to that amount. If you were to negotiate with the cash buyer to increase but no further offer was made, £125,000 is the market price until the market decides otherwise.
Estate agents are guilty of misleading vendors with unrealistic valuations. The fact that multiple agents stick on a similar price tag, does not mean that the price must be about right. It just means they all over value houses.
This can be backed up by statistics albeit very crudely if you take the average initial asking price on rightmove, compared to the average sold price published by nationwide, the asking price figure is somewhere in the region of 30% higher than sold price. I'll try and dig this out as I've seen a monthly graph on this somewhere. This proves estate agents value houses massively above market value.
So you could very crudely say that the market is currently sat at somewhere around £115,000 on a house an estate agent says you should price at £165,000. This is the stark reality of today's housing market and the general mindset of vendors needs to change to wake up to this new reality.:eek:
Obviously with each individual case there are mitigating factors but ultimately the market as a whole is nowhere near the level of initial asking prices.
To sum up, yes the offer is very realistic, ANY offer is realistic in the absence of a higher offer. The offer is the reality!!
The true question should be:
"I have had a (proceedable) offer of £140,000, is the asking price of £165,000 realistic??"
Cheers,
Wig
???????? so if someone offers 50k thats the asking price,seems like rubbish to me0 -
undetterred wrote: »seems like rubbish to me
Indeed.
The true value of a house is determined by the price that both a willing/proceedable buyer and a willing/proceedable seller can agree to.
I could run around offering a tenner for every house that hasn't had an offer yet, but that doesn't make £10 the value of those houses.
Without a vendor wiling to sell it to me at that price, there is no sale, and hence no price discovery.
It's not just buyers that set market prices....
Without willing vendors the market price must inevitably rise until someone is tempted to actually sell.
Only then is there price discovery...“The great enemy of the truth is very often not the lie – deliberate, contrived, and dishonest – but the myth, persistent, persuasive, and unrealistic.
Belief in myths allows the comfort of opinion without the discomfort of thought.”
-- President John F. Kennedy”0
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