Our biggest issue stems from fellow estate agents who deliberately elevate the vendor’s expectation of value, and this tactic is designed to outcompete their peers, some of whom dare to tell the truth.
In some cases, the overzealous evaluations can exceed the real underlying value by up to 30% and this serves to distort the direction as to where values are heading in the marketplace.
We all read press comments about the state of the market and price drops, but actually, if you ignore asking prices and just compare changes of real value to real value over the past twelve months, the change is not so dramatic. We would therefore deduce that unless a property benefits from a micro market (where values may not have changed that much) based on a broad average, we would have thought that real values could have eased in the last 12 months by a maximum of circa 10%, with activity down by at least 50%.
You would think that our problems now, in these challenging times, would relate to a shortage of unencumbered cash buyers, wouldn’t you?
Actually, whilst we are always short of buyers, our bigger problem is with sellers chasing a fanciful price (that they will never achieve) where certain agents and their ‘silver tongues’ have deviously put the vendors slap-bang ‘into promise land.’ This is a premeditated plan by the agents who are completely unashamed about this, as they work on the principle that once they have secured the sole mandate for the sale of the property, they will persuade the owner to take a lesser price, further down the track.
Given that feeding the seller’s greed is a very short term, ungratifying sport for some agents, it is nevertheless a fatuous strategy which can result in properties remaining unsold for a matter of 4-5 years (in some cases) which is ridiculous and a waste of everyone’s time.
We warn our clients beforehand that we are going to tell them the truth about value and get the job done to the best of our ability and they should trust our judgment in this respect.
In this marketplace the asking price for a property should not be any more than 5% greater than underlying value, in-order to provoke the best dynamic response.
We routinely tell our clients that the asking price is both an accelerator and a brake on the sale. If you are too ambitious, the gap between perceived value and the asking price is then too wide for some serious purchasers to bridge and you end up with few viewings, often no bids at all and a far less dynamic response from the marketplace.
We use the metaphorical vignette about two scenarios of a parent/teacher evening. One teacher waxes lyrical to the parents about a pupil in-order to curry favour with them but in the end, they fail their exams. The other teacher tells the brutal truth about the student’s prospects, which the parents don’t appreciate at the time, but at least it gives them a chance to get extra tutoring, before it is too late. Which one of these options would you prefer?
All our properties are exhaustively marketed, so there is no question about ‘ringfencing’ since we all need to live and work in the real world. Whilst the truth about value, at first, may be harsh to swallow (for some) if the sale needs to take place, particularly in this challenging market, there is little point in playing the game of ‘let’s fool each other as often as possible.’
You need to be forthright and courageous as a trusted agent, and you should never have to apologise for ‘telling the truth.’