One of my pet hates within the Estate Agency industry is the dishonesty some agents show in order to achieve a signed contract from a client... We see it day after day and often leads to lengthy delays and it could cost you tens of thousands..
I am talking about... OVERVALUING
Firstly what is overvaluing?
Overvaluing is where an Estate Agent tells you your home is worth more than perhaps the logical market value. An agent may do this in an attempt to lure you into their services, which includes a lengthy sole agency agreement (which states a fee is owed to them within a set timeframe).
The unethical part is that the agent knows the seller is likely to sign up with them as they confidently say they believe they can help achieve a higher sale fee.
Naturally a home is only worth what a buyer is willing to pay for it but when viewings are minimal or non-existent, the agent will suggest a price reduction around 4-6 weeks in. Once you're in their trap of a lengthy contract it's very hard to back out of it so you end up doing what they advise despite the agent showing no accountability from the initial time you met with them.
If an agent is saying they will sell your home for more than another agent, charging a LOWER fee and somehow do this on little to no investment into a marketing launch, coupled with a lengthy agreement then PLEASE do more research into the agent.
Eg. Check how many properties they have reduced recently, look at the quality of their marketing, clarify around the lengthy agreements (if they're confident about a quick sale, do you need to be tied in for 12+ weeks?!).
A couple of extra points are below, as we look at why an overvaluation can be disastrous and how to avoid this costly mistake.
If your property has been overvalued, chances are it’s been seen by numerous potential buyers on various property portals. The more they see it, the less interest they’ll have and the harder it’ll become to sell.
As a seller, it may take months to realise what’s happening. And while a price reduction may start the ball rolling again, potential buyers will have the upper hand as they’ll know the property has been on the market for a while and may have more room to negotiate.
When people are browsing properties, they often use search criteria such as number of bedrooms, property type and price.
It’s possible that your overvalued property hasn’t even appeared on the filtered list of houses or apartments they’ve been searching for, so you’ve already lost out on a potential buyer. The marketing price does not need to take into account being 'knocked down a bit', there are lots of buyers who will pay more than the marketing price after walking round a property and falling in love with it...but first you have to get them through the front door so make sure your marketing price is appealing and realistic.
If you’ve overpriced your home to be able to afford your next property, then you’re probably in for a long wait and could also be stretched financially. An overvalued home may mean you lose out on another property as you can’t afford to buy without selling first.
Also, at a time when mortgage rates are increasing, overvaluing a property could cause you longer delays to the sale than normal.
Agents that overvalue properties have been accused of trying to win more business for themselves, but in fact they can be hampered by a seller’s unrealistic expectation.
To avoid the curse of an overvaluation, it’s important to do your own research. Look at similar properties on the market and what they’ve been valued at. Also, what have similar properties sold for?
Choose your agent carefully. Get a few agents round to value the property and choose the one with the most realistic price and clear marketing strategy. A good agent will be able to clearly explain why they’ve valued your property at a specific price point.
If you’re looking to sell your property or need to change agent, contact RedRoots Property today.
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