Value of flats

eddddy

kiwi07 said:

It's on every EA interest to value at the lowest end so it's gets sold quickly. 

Potentially, yes.

So that's one of the reasons why you invite 3 or 4 agents to do market appraisals - to generate competition.

(You could equally say that if you need a new bathroom fitted, bathroom fitters will quote high prices so they make more profit. So you get 3 or 4 quotes from different fitters, to generate competition.)


I know that using the word 'value' is useful shorthand in these circumstances, but it might make things clearer in your mind if you think in these terms:

• The estate agent isn't valuing your property
• The estate agent is telling you what they think they can sell your property for

(But bear in mind that estate agents will often quote an overly optimistic figure, to get your business)


What do you think would be a better way for a seller to decide on an asking price?

eddddy

Caz3121 said:

are their fees not a % of the selling price? It would then be in there interest to sell at the highest price as they will make more money.

No - not really.

For example, assuming you were selling your flat and the estate agents charge a 1% fee...

• If the asking price is £300k, maybe this would happen: They might have to spend 2 or 3 weeks calling prospective buyers; doing 10 or 15 viewings; negotiating low offers etc. And they get a £3000 fee.

• If the same flat has an asking price of £250k, maybe this would happen: They might only need to make one call, do one viewing, and the property would be snapped on the first day. And they get a £2500 fee.

So that's a choice of

• 2 or 3 weeks' work for £3000
• 1 day's work for £2500

The estate agent would usually prefer 1 day's work for £2500.

That's an extreme example, but in general, the lower a property is priced, the less work needed to sell it.

kiwi07

kiwi07 said:

eddddy said:

kiwi07 said:

So the agents are working for buyers but not for sellers? If they set the price they want, so do they really work for the seller? In America it's for how much the seller want to sell the property for but here the estate agent set the price they want? 

In simple terms, in the UK, it works like this:

A sensible seller would invite 3 or 4 estate agents to do a market appraisal. The results might be...

• Agent 1 says "I believe I can achieve a selling price of £300k for your flat"

• Agent 2 says "I believe I can achieve a selling price of £325k for your flat"

• Agent 3 says "I believe I can achieve a selling price of £280k for your flat"

The seller interviews the agents, and decides which one they believe, and which one they want to hire.

(Some agents will quote an unrealistically high price, in order to get hired. And then put pressure on the seller to reduce the asking price.)
 

The seller is free to say

• "I want the asking price set at £360k"
• or "I want the asking price set at £250k"
• or whatever

But an agent might refuse the job if the buyer insists on an asking price of £360k - on the basis that it won't sell for that, so it's a waste of their time.


But I've also heard stories of vulnerable, unsophisticated sellers inviting just one agent to do an appraisal, and essentially the dodgy agent 'grooms' the seller into agreeing to a stupidly low asking price.

(There are house buying companies that seem to work like that.)

It's on every EA interest to value at the lowest end so it's gets sold quickly. 

How to recognise those house buying companies? I would imagine they would pretend they are just normal traditional. There is one big national chain EA which straight away sign you to use their Conveniyancing direct online company which literally start harassing you to prepare your sale ready contract document even before your property is on the market? They are saying it will speed up the selling process? Red flag?

kiwi07

eddddy said:

Caz3121 said:

are their fees not a % of the selling price? It would then be in there interest to sell at the highest price as they will make more money.

No - not really.

For example, assuming you were selling your flat and the estate agents charge a 1% fee...

• If the asking price is £300k, maybe this would happen: They might have to spend 2 or 3 weeks calling prospective buyers; doing 10 or 15 viewings; negotiating low offers etc. And they get a £3000 fee.

• If the same flat has an asking price of £250k, maybe this would happen: They might only need to make one call, do one viewing, and the property would be snapped on the first day. And they get a £2500 fee.

So that's a choice of

• 2 or 3 weeks' work for £3000
• 1 day's work for £2500

The estate agent would usually prefer 1 day's work for £2500.

That's an extreme example, but in general, the lower a property is priced, the less work needed to sell it.

eddddy said:

Caz3121 said:

are their fees not a % of the selling price? It would then be in there interest to sell at the highest price as they will make more money.

No - not really.

For example, assuming you were selling your flat and the estate agents charge a 1% fee...

• If the asking price is £300k, maybe this would happen: They might have to spend 2 or 3 weeks calling prospective buyers; doing 10 or 15 viewings; negotiating low offers etc. And they get a £3000 fee.

• If the same flat has an asking price of £250k, maybe this would happen: They might only need to make one call, do one viewing, and the property would be snapped on the first day. And they get a £2500 fee.

So that's a choice of

• 2 or 3 weeks' work for £3000
• 1 day's work for £2500

The estate agent would usually prefer 1 day's work for £2500.

That's an extreme example, but in general, the lower a property is priced, the less work needed to sell it.

Agree, that supports my saying it's in EA interest to value for lower just to get their commission quick and take on another property so they spend less on advertising, their work etc. 

TroubledTarts

Is this just a thread having a pop at Estate agents?

If so, just do your own research for what properties sell for in your area.

Even better market the property yourself you will potentially save thousands on Estate Agent fees as well as getting away from your "trust" issues.

As for your first post just because 10 years ago a property is worth £100,000 and rents out for £500 it doesn't mean if 10 years later when rent is £1000 that the property is worth £200,000. This is mainly due to the fact that the supply of rentals will have decreased so supply vs demand issue not a property price rise link.

kiwi07

TroubledTarts said:

Is this just a thread having a pop at Estate agents?

If so, just do your own research for what properties sell for in your area.

Even better market the property yourself you will potentially save thousands on Estate Agent fees as well as getting away from your "trust" issues.

As for your first post just because 10 years ago a property is worth £100,000 and rents out for £500 it doesn't mean if 10 years later when rent is £1000 that the property is worth £200,000. This is mainly due to the fact that the supply of rentals will have decreased so supply vs demand issue not a property price rise link.

That's not correct, supply of tenants has hugely increased, the flats are flying out even at increased rent rates. Not saying the price of flats has doubled for the last 15 years but surely not just had increase of 25% in value? The houses has doubled in price. So lets say, the house was bought for 150k, 15 years later its worth 300k, at the same time 100k flat only gone up to 125k? So 100% house increase versa only 25% for the flats?

TroubledTarts

kiwi07 said:

TroubledTarts said:

Is this just a thread having a pop at Estate agents?

If so, just do your own research for what properties sell for in your area.

Even better market the property yourself you will potentially save thousands on Estate Agent fees as well as getting away from your "trust" issues.

As for your first post just because 10 years ago a property is worth £100,000 and rents out for £500 it doesn't mean if 10 years later when rent is £1000 that the property is worth £200,000. This is mainly due to the fact that the supply of rentals will have decreased so supply vs demand issue not a property price rise link.

That's not correct, supply of tenants has hugely increased, the flats are flying out even at increased rent rates. Not saying the price of flats has doubled for the last 15 years but surely not just had increase of 25% in value? The houses has doubled in price. So lets say, the house was bought for 150k, 15 years later its worth 300k, at the same time 100k flat only gone up to 125k? So 100% house increase versa only 25% for the flats?

Did you read what I said?

I said the amount of rentals (properties has decreased) so supply and demand meaning the supply is low/demand is high. As in lots of tenants and not many properties........

Flats are not as sought after as houses is the simple answer and they generally do not keep pace with house prices.

Stop talking generic and see what flats in your areas have sold for

https://www.zoopla.co.uk/house-prices/

Check for yourself if the estate agent is doing you a disservice then complain to them if you wish.

Tabieth

There are two ways to determine how much flats are worth where you are. 1) check and see what similar flats to yours have sold for recently. 2) sell your flat. Ultimately the local market determines how much your flat is worth. As others have pointed out, flats don’t appreciate in value the same way that houses do. You can make assumptions based on the local rental market but they’re just assumptions. 

ReadySteadyPop

Albermarle said:

kiwi07 said:

daveyjp said:

kiwi07 said:

Edi81 said:

Depends on where in the country it is. 

The price is only what a buyer is willing to pay - so many variables….

So the agents are working for buyers but not for sellers? If they set the price they want, so do they really work for the seller? In America it's for how much the seller want to sell the property for but here the estate agent set the price they want? 

No they work for the seller.  However they can ask whatever they want, in reality its the lender which generally decides the value.

Also remember a property can be valued for income or for living in.

A holiday cottage may be £2,000 a week to rent to holidaymakers, to rent to a permanent resident could be £2,000 a month.  What is the value of the property?

As regards flats.  Some could be ten times what they sold for 15 years ago, some could be half the price.  All down to local supply and demand and occupational costs.

In our area flats are snapped up really quickly by renters and the price of rent has doubled. So market dictates to sell the flats for low at the same time increasing the rent for the tenants. 

The rental market has its own dynamics. In the last three years ( or more) there has been a shortage of available rental property. In some areas a year ago there were long queues to view any new rented property that came on the market. So inevitably rents went up a lot.
However new legislation and tax has made it more difficult for many landlords and although rents have gone up a lot, profit margins have not done the same.
In fact it seems many smaller landlords are selling up due to it being too much hassle for not enough reward.
So it is not as simple as you make it sound.

https://www.property118.com/buy-to-let-companies-hit-record-401000-as-rents-stall/

“Londoners, in particular, have seen rents go backwards, with inner London rents now falling at about half the pace they did during the pandemic.”

She adds: “This means some tenants who moved relatively recently may be able to find themselves a better deal by moving again.”

ReadySteadyPop

TroubledTarts said:

kiwi07 said:

TroubledTarts said:

Is this just a thread having a pop at Estate agents?

If so, just do your own research for what properties sell for in your area.

Even better market the property yourself you will potentially save thousands on Estate Agent fees as well as getting away from your "trust" issues.

As for your first post just because 10 years ago a property is worth £100,000 and rents out for £500 it doesn't mean if 10 years later when rent is £1000 that the property is worth £200,000. This is mainly due to the fact that the supply of rentals will have decreased so supply vs demand issue not a property price rise link.

That's not correct, supply of tenants has hugely increased, the flats are flying out even at increased rent rates. Not saying the price of flats has doubled for the last 15 years but surely not just had increase of 25% in value? The houses has doubled in price. So lets say, the house was bought for 150k, 15 years later its worth 300k, at the same time 100k flat only gone up to 125k? So 100% house increase versa only 25% for the flats?

Did you read what I said?

I said the amount of rentals (properties has decreased) so supply and demand meaning the supply is low/demand is high. As in lots of tenants and not many properties........

Flats are not as sought after as houses is the simple answer and they generally do not keep pace with house prices.

Stop talking generic and see what flats in your areas have sold for

https://www.zoopla.co.uk/house-prices/

Check for yourself if the estate agent is doing you a disservice then complain to them if you wish.

That sounds optimistic, as does the claim that rents have "doubled"?

 https://www.property118.com/no-need-for-rent-cap-as-scottish-rents-rise-slower-than-incomes-call/

"Zoopla noted that rent demand is falling across the UK with immigration falling for study and work, while first-time buyer demand has risen.

Available rental properties

Alongside this shift, Scotland has seen a boost in available rental properties, with a 29% rise in supply – the largest jump anywhere in the UK."

So much for the Great Landlord sell off that people were trumpeting about a few years ago?