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Why do some estate agents over value property ?

03.01.2012

The short answer is to gain instructions.

Most agents will go to a property prepared with their recent comparable, personalised vendor rightmove reports, and give a balanced and honest opinion on what they think that property will achieve in current market conditions. Some agents (the one's with the dodgy ties) will value the property a little higher than they really think it's worth or even a little higher than the other agents they're competing with. The latter group will do this because, let's face it we all know vendor's love to hear how great their home is and how it's one of the "best houses in the street". For most agents this will be like taking candy from a baby. The temptation to please the vendor and gain the instruction is always there and I fully admit in the past ( pre 2007 !) I may myself have been a little optimistic shall we say, but my ethos has always been to price honestly as I don't see the point in having an instruction I'm not going to sell. I'm confident that if I've priced correctly yet the vendor has chosen another agent with a higher valuation, eventually the odds are they will come back to me and I will sell it.

With the advent of the Internet and all the tools we have at our disposal, as Estate Agents it's really easy to analyse statistically if a property is over priced or not. It's a lot easier to judge than just waiting for the phone call from a buyer who's just seen your board outside the property and proceeds to hang up on you just before screaming "HOW MUCH" ! .From an Estate agents point of view though it's tempting to try a higher price at first because that's what the vendor wants and you're scared they will instruct another agent. I truly believe in this Market you more often than not get one shot at getting it right. If you tried a higher price pre 2007 you could get away with it and more often than not the market would catch up. Try the same trick now and your asking for trouble. If the property remains unsold for too long you risk the property getting the fatal "why hasn't it sold, there must be something wrong with it " stigma. So many properties on the market are initially overpriced and by the time the agent bothers or the vendor has their "eureka" moment it's usually too late. The property is now reasonably priced however most potential buyers have seen this property for some time, it's gone stale and it suddenly gets a lot harder to shift.

Overall it's difficult to say you are going to eventually achieve a lower price if the property is initially over priced but the odds will most definitely be stacked against you. You can however bet your mortgage it will take a hell of a lot longer to sell. In this market it's a very dangerous game to play and you need to ensure your agents valuation is realistic. I don't believe there is a margin for error or over optimism and if an error has been made the sooner it's corrected the better your chances are. The only person that loses out is the vendor, yes the agent with the dodgy tie may lose the instruction, however there will always be another vendor round the corner who will fall for the same trick. Make sure it's not you, as this candy can leave a particularly bitter after taste.

If you liked this blog and you are not already following me on twitter you can at https://twitter.com/#!/anthonypepeea.

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