Why would an estate agent over-value your property?

smiling and friendly estate agents

Have you just seen a property that seems far too expensive? Think estate agents waltz around making values up? Not exactly.

Agents are often held soley responsible for hikes and falls in the property market. How does a property hit the portals at an ingeniously inflated figure? Does this sort of thing make agents and their clients rich?

Estate agency is more transparent today
The truth is this: a good estate agent will advertise a property at the highest price the market will bear. If the value is too high, it simply won't sell. If something doesn't sell, the price should be adjusted as soon as possible. There is also a strong chance that an over-valued home won't attract viewings. Serious buyers don't have time to look at homes they don't want to buy—everything they are looking at is directly comparable, which means they know the market too.

Those tempting £££s...
What an agent advises a seller to do is not always what the seller decides to do.

A couple of relevant and not entirely usual scenarios might be:
1. Mr Brooks, your estate agent, tells you an acheiveable price range for your property. You tell Mr Brooks to advertise at a much higher price. After all, you'd like to make more money. Your property doesn't sell and you end up dropping the price to a more reasonable figure after months of getting nowhere.

2. A charming chap called Mr Shark tells you your home is worth loads more than those other ignorant agents that came. You felt nervous signing a contract tying you into Mr Shark for three months, but hey since Sharksie spoke up, you've been Googling Carribean boltholes....Over the next few weeks whenever you speak to Sharksie there are no offers, hardly any viewings and you're being told to drop the price. Eight months' later, you sell your £250k flat for £50k less than Mr Shark's original valuation. Which is funny because that's what Mr Brooks said it was worth at the beginning.

3. Mr Twit curbs his alloys outside your front door. Inbetween numerous calls on his mobile, he informs you that your home is worth far more than the other agents you've met. Twit isn't able to tell you about any similar properties he's researched or sold and hasn't bought any paperwork over to back up his valuation. He gives you a very cheap fee so you feel you've got a great deal. Fast-forward a couple of months and you're certain your wife will forget about that 'surprise' viewing—the bathroom was quite misty anyway. Then an offer comes, it's not nearly as good as Twit suggested, but it's the only one. Your wife starts looking at houses. At survey, your home is undervalued and your buyers can no longer buy it. Not only is this very disappointing but your wife certainly won't forget any of it... Where did you put Mr Brooks' card?

There's really only one outcome—an over-valued property won't sell, particularly not in today's market. Count up how many homes like yours have been sitting on the market for months.

It's easy to check the figures from Mr Shark or Mr Twit:
If you'd like a fast idea of your home's worth, an online valuation tool can be pretty handy.
Look at what properties similar to yours have sold for in the area and check monthly price rises/falls across the market. You can measure your home's square footage, look at floor-plans of properties for sale in your area and work out an average price per square foot. Compare properties built around the same time as yours and in the same condition and add value for selling points like long leases, balconies, refitted bathrooms, proximity to train stations and that kind of thing. Of course, you're welcome to call us and we'll give you a straight-talking idea of what you're home will actually sell for 020 8299 3021.