Let’s face it, everyone loves a bit of shameless flattery. Whether it’s about your looks (“Darling, you look FABulous in that size 30 fluorescent bell tent) or your abilities, a compliment is intoxicating with accompanying rewards, yet it costs nothing, unless, of course, it is misleading and puts you in the promised land and here’s the rub…let me explain.
When you want to sell your property and you call an estate agent, you rely on them to give an honest impression of value. However, we inhabit a property owning culture where, not content with merely seeking shelter from the outdoors, owners now expect their home to perform beyond the call of duty, functioning as a quasi-pension as well as a tax-free savings scheme. There’s every expectation that upon a sale, it not only pays for the next property, but in later life, helps the children with their own deposits and then finally, refurbs the family retirement nest egg.
The whole process is driven by our most viscerous emotions. Similar to children or pets, our rosy views of our own home sometimes cannot be challenged. Everyone thinks their place the best in the street and any quirks, faults and shortcomings are ‘features’ rather than drawbacks. Even if the front garden abuts the M1 and overlooks a sewage farm, the owner would talk up the ‘excellent transport facilities’ and ‘views of a sustainable organic eco-facility’.
Sellers not objective
The problem stems from the fact that the seller is too close to their own home to be objective. Invariably, the truth about the real value may feel like a slap; that’s why there’s an inherent desire to favour the agent who gives the highest valuation.
Some agents have realised that flattering the seller is far more likely to engender a better relationship which could lead to a valuable instruction. They drag out the hackneyed selling trick of ‘bait and switch’. This tactic started life in America and has migrated to the UK, years ago.
The hapless seller is lured (or baited) with an exaggerated figure of value. Once the mandate for sale has been granted, the unscrupulous agent subsequently leans on the owner, to take a lower price that reflects its actual value.
It’s no different from the parents who only want to hear praise about their little darling at ‘meet the school teacher’ evenings. The weasel teacher colludes with the fiction that the pupil is a cross between Newton and Plato. The issue is that by only giving a shiny, happy version of a child’s progress, the parents feel they don’t need to improve their child’s plight, for instance, with extra tuition. An honest teacher on the other hand, doesn’t spare the truth. Although the parents may be uncomfortable with a brutal and honest appraisal, at least they know the situation and have a chance to take action to correct it.
In my humble opinion, there is no formal, prescribed ratio, between a higher fee and a higher valuation, other than the obvious human response, where the seller is more likely to agree an enhanced fee if they are given a fuller appraisal of value by the agent.
By now, I’ve acquired an unvarnished view of my industry and I’m afraid that some sellers willingly collude in this deception.
When Glentree takes on a property for sale, we forthrightly ask the owners, if they would like the truthful version about underlying value or if they prefer to be idly flattered. Feeling confident in their own assessment, some ask for the truth. And when they hear the figure, you can see their faces drop. It’s the equivalent of telling an amateur artist that they should try another pastime since their work is not up to scratch. The result is that the instruction is only received in around 50% of the cases.
Other agents, are willingly lured into playing the ‘deception game’ on the basis that ‘unless you are in it, you’ll never win it’.
However, by over pricing, the marketing process becomes ever more elongated with few appointments to inspect and hardly any offers to purchase. If you are trying to buy another property, the delays could lose you the opportunity.
This inefficient scenario is exacerbated in quieter markets where there may be more supply available than demand and realistic asking prices will therefore achieve a far more enthusiastic response.
Value of ‘impact’ underestimated
Many of our clients underestimate the value of ‘impact’ when their property is released on to the market. Since the asking price is the greatest accelerator, or attenuator of positive sentiments expressed from the potential buyers, it’s vital that the agents pitch it exactly right.
Launching a property at an asking price of say, more than 10% of value is the proverbial ‘sock in a trumpet’ …the sound is muted.
Once a property has become stale and ubiquitously seen on all the portals, you have the unedifying spectacle of price easing, as you are marched down the slippery staircase of price pain.
Potential sellers need to understand that asking prices are simply the froth and shouldn’t be considered actual value. It is just a marketing ploy which allows for a margin for negotiation.
In quieter markets, we strongly recommend to sellers that the asking price should be set as close to value as possible. This will evoke the most responsive effect from prospective buyers who maybe spoilt for choice.
Conversely, in a rampaging bull market, you can get away with commercial murder, where asking prices maybe far more curvaceous and more adventurous.
The above illustrates that both sellers and agents are just as culpable as each other. Personally, I would far rather be honest with a seller, but in this industry, honesty doesn’t always pay.