Estate Agent Today

Preparing for a Downvaluation

The RAT (Rawlings’ Agency Tip)

Preparing Clients for a Downvaluation

We know that valuers habitually downvalue in order to protect their backs and their client - the lending institution. But how do we as agents handle this? My guess is that many take on the property and simply hope that it doesn’t get downvalued when a buyer if found. How many sales have fallen through recently because the seller ended up quoting less than they had hoped, and then accepted an offer for even less, and then ended up pulling out rather than letting the price fall further on valuation?

So why not prepare the way, and prevent this from happening in the future. There are three elements to the following technique. Firstly, when you take on a property, make sure that you explain the problem to the seller and inform them that when they accept an offer, they take into account the fact that the property may well be downvalued on valuation, and they should factor this into their calculations.

Secondly, when they accept an offer, remind them of your conversation so that they are prepared to reduce further if necessary. Of course, if the figure is not subsequently renegotiated, you look good, and they probably have more in their pocket than they expected they might!

Thirdly, explain the issue to the buyer as well. Tell them that downvaluing is common in this market, but that it does not necessarily mean that the seller is prepared to renegotiate, nor that the property is overpriced. The buyer knows that the price is not only right for them, but that the property represents the best value (in their eyes) in the market – or why else would they be buying it if there was something better available?!

Only ever renegotiate the price following downvaluation if not doing so would prevent the mortgage from being granted.

Keep it rolling!