The consumer body Which? claims that 19 per cent of properties sold in the year to September went for prices five per cent or more below their initial asking price - and it claims this was the result of “estate agent over-valuations”.
Which? analysed more than 370,000 property sales in England and Wales, finding that one in five had been - in its words - “heavily reduced” which, it says, “implies an initial valuation that was too high.”
The study also found that properties which had been reduced by more than five per cent took an average of 64 days longer to sell and had an average final sale price of almost £20,000 less than properties that sold without such a significant reduction of the asking price.
In a key part of the analysis - which forms a four-page article in the next issue of Which? - it claims that the average listing price for properties that weren’t heavily reduced before being sold was £261,000 and the selling price was almost identical, at an average of £260,000.
“Heavily reduced properties started with a higher listing price of £266,000 on average and [had] a much lower sale price at £241,000, leaving the seller £20,000 (to the nearest thousand) worse off than the rest. It adds up to an estimated loss of £4.3 billion a year to these sellers in England and Wales” claims the article.
The piece suggests that it may not seem to be in agents’ interest to overvalue but adds ”it’s worth remembering that a £20,000 drop to the price of your property is just £200 less for an agent on one per cent commission.”
In another section of the article the consumer body names those agents, by region, that it describes as the “worst” for having to reduce the initial asking prices of their inventory in the period under discussion (October 2015 to September 2016).
These are Redferns in the south west, Nick Tart in the West Midlands, Boxall Brown and Jones in the East Midlands, Aldreds in the East of England, Whitegates in Yorkshire, Proctors in the North West and Property Plus Wales in Wales.
In terms of online agents, Which? said Purplebricks was the best and easyProperty was the worst.
During the 12-month analysis by Which? some 1,141,620 properties were sold in England and Wales. The consumer body analysed 370,331 of them, using data from property portals - Scotland and Northern Ireland were not covered. Which? used Land Registry data to calculate the difference between list price and sold price.
Here is the full article, including responses from some of the agents named in the report.