Sellers losing money on overvalued houses
Owners hit for an average of £20,000 if estate agent is forced to reduce selling price, study shows ‘By overvaluing properties, estate agents are costing sellers nearly 8pc of the value of their home’
HOME SELLERS are losing an average of £20,000 because “greedy” estate agents are overvaluing their properties, according to a Which? study.
The consumer watchdog analysed more than 370,000 property sales in England and Wales and found that one in five (19 per cent) had been heavily reduced from the initial asking price.
Most estate agents earn commission on top of their salary, which is based on a percentage of the value of the properties they have sold, meaning they have a vested interest in achieving a high price.
According to the Home Owners Alliance, estate agents usually charge between 0.75 per cent and 3.5 per cent of the agreed selling price.
This could translate to as much as £7,800 commission for the sale of a £260,000 home.
Which? found that homes which were sold after being reduced by more than 5 per cent of their asking price had an average final sale price of £241,000.
Those that were bought for a price which was within 5 per cent of the original asking price sold for an average of £19,000 more, at £260,000.
This indicates that by substantially overvaluing properties estate agents are costing sellers nearly 8 per cent of the value of the home.
Unsurprisingly, the study also found that properties which had been reduced by more than 5 per cent took an average of 64 days longer to sell than those which sold without such a significant reduction of the asking price.
There were more than eight agents in London and south-east England who had reduced at least 25 per cent of their properties despite the average being 12 per cent. In the case of Marsh & Parsons, it was 34 per cent.
Chestertons and Marsh & Parsons told Which? that the EU referendum and stamp duty changes were to blame as they had affected the London market.
Another firm, James Pendleton, added: “The agent is doing the customer a service by reducing the price to achieve the sale when markets are falling”, while Fine & Country said it “often deals with cash-rich sellers happy to start at a higher value”. Richard Headland, edi- tor of Which?, said: “When selling your home, make sure your agent can provide evidence of similar sales to back up the valuation. If the valuation is not realistic, you could end up thousands of pounds worse off and wasting a lot of time.”
Paul Higgins, chief executive at the Homeowners Alliance, which represents homeowners, said: “The problem is that greedy sellers attract greedy estate agents. If an estate agent tells a seller they can get 10 per cent more than other agents for their home they are likely to choose them.”