Last weekend The Times ran a front-page article highlighting the duplicitous practice of estate agents deliberately overvaluing properties in order to win new instructions, with the underlying criticism being that the worst offenders are also those firms who have the highest fees.
There is real merit in this criticism but other than providing a database of the worst offenders The Times offered little practical advice to help vendors protect themselves.
So, with the benefit of twenty years’ experience valuing houses, here are my three suggestions for homeowners who are concerned they are being misled with an overvaluation.
Demand a short contract.
Overpriced houses tend not to attract enquires or viewings, so a deliberate overvaluation will normally only work for an agent if they can secure an asking price reduction before the vendor removes their house from the market or changes estate agent.
One way for an agent to hold an instruction for longer and to weigh the odds in their favour, is to lock the vendor into a lengthy sole agency contract. Such contracts can often last up to 20-weeks, meaning if the vendor is looking to move in a hurry, they will be forced to reduce their price whilst the duplicitous agent has control of the marketing.
With the above in mind, an elegant way to spot in advance if an agent is overvaluing is for the vendor to challenge them to work under a one-month contract with no notice period. This gives the vendor control, allowing them the option to change agent quickly if they are dissatisfied with the job being done.
Ask for comparable evidence.
The code of conduct that governs residential estate agents is clear that any valuation advice must be given in good faith and supported by comparable evidence.
A sceptical vendor should ask the agent for examples of the sales they have used to support their advice.
Check the Agent’s Portfolio for Price Reductions.
If the agent makes the argument for their valuation based on their abilities as sales people then it seems reasonable to expect them to have delivered similar results to previous clients.
A quick search of the agent’s portfolio on rightmove should give an indication as to how often they have reduced other vendor’s asking prices in order to facilitate a sale. This insight into their success rates elsewhere could be a platform on which to challenge their views on your house.
If an agent passes muster on all three of the above then their valuation advice, however ambitious could be a genuine attempt by them to secure the best price for their client – which is after all what they are obligated to try and achieve.