This is not going to make me popular with a huge number of estate agents.
But they are causing the market to stall as much as any other reason out there.
Property industry Eye recently reported that: “Some 48% of the homes that left UK estate agents books in February were withdrawn unsold. Main cause – blatant overvaluing supported by long sole agency agreements of 20+ weeks”.
Please note, this is not a diatribe against estate agents. The good ones are worth their weight in gold which is why I only acquire properties for my clients. I won’t sell for them because I know who the good agents are and how they will outperform on the sales side.
Unfortunately, a huge percentage of estate agents believe that market share is more important than anything else, i.e. “winning the instruction” at any price is more important than giving sellers good advice.
But this is hugely counterproductive. Yes, they might sell one or two at an inflated price – and I can give you lots of examples of unwary buyers having a shocker. However, in a weak market like this, owners will turn down good offers because their expectations have been heightened unrealistically by the valuations.
So three things can happen. The owners:
– aren’t desperate to sell so the property eventually gets removed from the market
– keep the property on the market for years
– agree to one or more price reductions over a period of several months if not years and eventually sell. More often than not for a lot less than they would have achieved if valued correctly in the first place.
But it’s not just the owners of overpriced properties who suffer. It affects the whole market because it gives buyers the impression that:
A. There is more choice than there actually is (because most of the sellers aren’t serious)
B. Multiple price reductions feed into the rhetoric of a weak market and make it look a lot worse than it actually is by creating a negative feedback loop that multiplies with every social media post…
C. It slows down the market in general
Now agents can blame the war in Iran, the non-dom fiasco, Liz Truss and so on. But the one thing that is very much in their control is, unfortunately, being handled with the same incredible ineptitude that Rachel Reeves et al displayed in the handling of the last Budget.
Quite simply, the market would gain momentum if all the pointlessly overvalued properties were taken off the websites if the sellers won’t accept price reductions to what is much closer to fair value.
Yes, the odd sale at an extraordinary price might be missed but far more sales would happen at sensible prices which would benefit buyers, sellers and the estate agents.
As I only represent buyers, my advice is this: be actively looking (relying on just the websites is not actively looking) but remain patient and selective. There are opportunities out there but they are often not immediately obvious.
