In this three-minute read we look at why setting an unrealistic asking price can damage and sometimes derail your house sale.
Agents know that all sellers want the best possible sale price when they sell. Inevitably this leads to and some agents potentially overselling in order to get a seller’s instruction. They can do this by saying they have buyers lined up; that they can sell it for £X amount over a realistic sale price and they will push that if they do not sell, there is no fee to pay – what have you got to lose? They know that sellers are unlikely to move agents, despite their chosen agent not finding a buyer, let alone at the price suggested. People do not like to admit they were wrong so will unfortunately keep faith in underperforming agents.
So, just what are these negative impacts of an overvaluation?
- The first thing will be the inevitability of lengthy delays to the sale. Selling and buying property is already something of a convoluted process, particularly for people in a chain. This is increased if your property is listed at too high a figure. Consumer watchdog ‘Which?’ has reported that overvalued properties will take two months longer to sell on average than a correctly priced property. Usually, in these instances, the seller only becomes aware that their property has been overvalued after a month of marketing, at which point they end up altering the marketing price to something more realistic. All they have achieved is a lengthy delay.
- The second casualty of an overvaluation will be the buyers themselves. Having the property listed at too high a price will slow down viewings, enquiries, and ultimately offers. Primarily, property buyers will search via sales portals such as Rightmove, Zoopla, and Onthemarket. They will search under specific criteria in terms of area, number of bedrooms, style of property, and of course price. Not only do you run the risk of missing out on a whole host of buyers just because the property doesn’t match their search criteria for being too expensive, but it also means that buyers will spot the higher price compared to other similar properties on the market. They will either enquire and drive a hard bargain or they will spot the rip off and steer clear altogether.
- The third major risk is the effect it may have on your new purchase. Imagine this; you find your dream new home and you have your offer accepted by the seller, great! Now all you need to do is sell your own! Once again though, your overinflated asking price deters buyers pursuing your property, leaving you in limbo. After a couple of weeks go by, the sellers decide to ditch you for someone else who’s enquired and is chain free.
- You may decide that after a month or two on the market with minimal interest, you need to change agents. In Edinburgh, many estate agents operate with an in-house legal team and charge you upfront to ensure that they handle the conveyancing of the sale too. If you have paid an upfront fee then this money will be lost if you do decide to change agency. All you can hope is that your new agent lists at a better price and does a better job, the money you lost to the other agent could be recovered if you achieve a higher sale price with your new agent.
- Finally, as we enter winter, some properties, particularly over-priced ones, may hang around the market longer than 3 months. A buyer may accept an offer, above the original HR value – that sounds great. However, Home Reports are required to be kept in date by three months for lending purposes at the point of sale. With lenders being more cautious, they will require a “refresh” of the Home Report and, in light of an ever-changing market, they may find that the new Market Value is below what was expected and agreed. This may lead to the lender changing what they are willing to lend, the buyer having to find more money and eventually withdrawing from the buying process.
With these inherent risks surrounding such a large financial transaction in your life it’s important that you choose well. You must take some personal responsibility for doing your own research around your property and a realistic expectation of what it might achieve. It’s essential to use someone you trust; not someone who will throw a high valuation to coax you into a lengthy agreement. Word of mouth recommendations go a long way, prioritise professionalism and honesty over flashy claims and a high price.