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TODAY'S OTHER NEWS

Over-valuing: agents fight back after press allegations

There’s anger in the industry over an article in The Times which accused agents of overvaluing properties - although why this was happening was unclear in the story.

The accusation was based on an analysis of Zoopla listings showing how many properties had their asking price cut before selling.

The piece said the overvaluing took place in order to “mislead” and “dupe” sellers into paying high commission, but it omitted - or didn’t know - that commission is often paid on sale price rather than asking price. 

If the point was to say the high valuations were to secure instructions, the article didn’t say so. Nor did it give much attention to market conditions, Brexit uncertainty or mortgage constraints obliging some vendors to drop asking prices.

Instead it described Foxtons, Chancellors and Hamptons International as the biggest culprits according to its analysis of listings and subsequent price reductions.

The accusation, predictably, provoked a Twitter debate with Anthony Payne, managing director at LonRes, saying: “The valuation of property is not a precise science, especially in London. There is no harm, in fact it would be wrong for an agent not to try and if there’s no success, reduce. In my book that’s called good proactive agency.”

Ed Mead, a former agent himself and now the head of PropTech firm Viewber, commented:  “Most sellers would like to be ‘duped’ into paying a higher commission as it means a higher price achieved - or have I missed something?”

And Katie Griffin, former president of the National Association of Estate Agents, said: “Another estate agent bashing article - what about those vendors that think their property is worth more and want to list at a higher price?”

The article is behind The Times’ paywall but here it is for EAT readers:

Estate agent chains are overvaluing properties by up to a fifth in a practice that can mislead sellers into paying higher rates of commission, an investigation by The Times has found.

Analysis of more than 200,000 properties listed online reveals that overvaluations are rife, with the biggest agents the worst offenders.

The data suggests that agents with the highest commissions are over-valuing properties the most to attract homeowners. 

The properties then sell at lower prices, but the agents take big fees. 

Nearly two thirds of homes listed by Foxtons, the biggest agent in London, have to be reduced from their initial price before they can be sold, almost double the national average. Foxtons charges a commission of 3 per cent, which is more than twice the average.

When properties marketed by Foxtons had their asking prices cut, the average reduction was 10 per cent, or £56,000. Land Registry data on a sample of these homes shows that the sale price was lower still, falling 16 per cent or £85,000 from the original asking price.

The research shows that the ten agents that overvalue the most, including Hamptons International and Chancellors, charge twice as much on average as the ten agents who overvalue the least. 

Sellers using the ten worst offenders will pay the equivalent of £5,500 on a £300,000 home compared with only £2,200 with the best agents. However, some agents charge upfront fees rather than commission, so sellers would have to pay irrespective of whether their property actually sold. Commission in most cases is negotiable.

The National Association of Estate Agents said that not all price reductions were due to overvaluing, although it admitted that some “unscrupulous agents” would try to win business by quoting a higher asking price. Mark Hayward, chief executive of the trade group, said: “It may be the seller requires a quicker sale.” But he added: “These figures do not put the industry in a good light.”

Agents say that price reductions are also a function of falling property prices, the Brexit effect and sellers demanding that their homes are marketed at unrealistic levels. Property experts said that sellers were being flattered into using more expensive agents. 

Henry Pryor, a buying agent, said: “The scale of overvaluations is shocking. Some sellers are clearly being misled into choosing more expensive agents, but we need to remember that an asking price is not a valuation, it is just a marketing gimmick.”

The 200,000 properties analysed by The Times represent a snapshot of those on Zoopla that had been sold subject to contract in December. The vast majority were first listed last year, but some date back earlier.

The data shows that 32 per cent of properties were reduced and of these, the average adjustment in asking price was 6.9 per cent or £23,400. Actual sale prices are likely to be lower still.

Foxtons said: “We always price properties competitively in partnership with homeowners, helping them to get results that unlock what their property is truly worth. Data from surveyors and the independent consultancy TwentyCi shows that on average Foxtons is able to achieve a 6.3 per cent price premium after fees compared to our closest 20 competitors when the average house sale price is analysed. Foxtons is the best place to sell . . . despite a challenging London market where buyers are increasingly undercutting asking prices.”

Chancellors said: “We strive to get the very best price for every client and achieve record prices for the local area. We work closely with our clients on their marketing strategy and we are proud to say that we have achieved an average of 98 per cent of our clients’ asking prices so far this year and operate on a success-fee basis to achieve this.”

Hamptons International declined to comment.

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    In other breaking news.....

    Agents overvaluing!

  • Simon Shinerock

    Yes, it never ceases to amaze me how ignorant and un-insightful the popular press can be on the subject of estate agency. It’s almost as if they do it deliberately because it plays well to the readership. They could have looked at sold prices, they could have looked at market share, or sold rates but no, they publish the disaffected ravings of a so called industry insider instead. I know estate agents aren’t perfect but the good ones are fantastic and do an amazing and seriously underaged job. Right now the whole industry is under siege and there is little doubt it will be a long one, however my faith in the resilience and adaptability of the best players is unshaken, we will prevail

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    Overvaluing in my area by agents occurs soley to gain the instruction and is something i don't agree with. Has nothing to do with extra commission. Equally prevalent are vendors who increasingly ignore your advice and lump 5 or 10k to your appraisal. Although in some instances this is fuelled by the vendor seeing agents overvalued stock on the portals. The article is shockingly poor journalism.

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    Thanks for backing the industry/your members Mark Hayward, strong response- NOT.
    No mention of Brexit which is influencing the tough market conditions which is without a doubt is the biggest contributing factor to price reductions.
    Must remember to pay my subs on time next year!

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    Hard to defend when you know it's true. Keep paying your subs; Mark is very good at turning a blind eye to bad practice.

     
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    I’ve been an Agent for 17 years and the single biggest reason we lose instruction is due to other agents overvaluing. They do it to win the instruction, tie the vendors in for 20 weeks and then we watch it over the 20 week period reduce to the figure we quoted and the agent gets paid the fee for lying and we get zero for honesty! With corporates encouraging overvaluing it’s no wonder the sector has such a poor reputation! The second reason is cheap fees but don’t even get me started on this!

  • Babonday Brian

    If only the headline had read: some London agents overpriced to get higher fees.
    But no, had to lump them all together didn't they.

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    Agreed. But I do think it should have read "most" and not "some" as you suggested

     
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    If Foxtons charges 3% commission then my advice would be to go elsewhere. You could for instance use Purplebricks. Oops, sorry they prefer their money up front.

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    When you do your weekly shop at Poundstretcher, the stores losses from shoplifters are added to the price of your groceries. No sale, no fee only benefits the customers that decide not to sell and penalises those that do. As I understand it, customers that pay Purple bricks upfront can withdraw their property and relist as many times as they like until it's sold. Am I wrong or have you not bothered to research the company you detest so much?

     
  • Ed Mead

    Wonder if agents NOT on Zoopla will be heaving a sigh of relief?

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    I'm amazed at how little you all know about your industry. I have seen evidence of agents in my area promising to sell for higher asking prices and all they ask In return is a fixed fee based on 2% of the original asking price. Straight out of the the Del Boy handbook. "Alright matey, I'll get you £25,000 more than the online boys and all I want is £5,000 more than you're paying them"

    I accept that a few of you possess some integrity when selling your services; but don't pretend you know nothing of this and other practices. Your industry is dishonest. The NAEA know it and you know it.

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