It’s a real challenge for owners when they are looking to sell. The advice they get from agents is highly likely to offer very different figures. Whilst Underquoting has faded as an issue as prices have come back to earth, overquoting to owners is still ever present. This is because agents know that sellers want to believe their property is worth that little bit more, so they figure if they raise their price range, they have a better chance of winning the business. Once the listing is secured, the conditioning can start, to lower the price expectations. Cynical and misleading, but if they don’t do it, somebody else probably will and the business will go to that competitor.
Honest agents face this dilemma every day and frequently miss out on securing the job primarily because of the lies agents tell. And the honest agents know who the consistent liars are but criticizing them publicly comes across as self-serving. So, owners keep getting tricked and the cheats frequently get rewarded.
One way for owners to get a better grasp of value for themselves is to consider some of the main factors in determining value. These are primarily:
- Buyer expectation
- Property condition
- Immediate surroundings
- Convenience to shops, education & transport
- School zone
- Land size
Of these, the most relevant for houses, in most instances, is land size and buyer expectations. Unless a home has been recently fully renovated or is fairly new, the land size will determine what buyers will pay. So, the best evidence to determine value is recent sales of similarly sized properties. A quick analysis will demonstrate a strong pattern of $/m2 of land. Providing the sales are current, the likely sale price can be predicted with high confidence. When market prices are changing quickly, as is currently the case, a sale from 6 months ago is not reliable without adjusting for the change in values over that time.
So, if you are given comparable sales by an agent, make them explain why they believe they are useful and how they compare these properties to the one you would like to buy or sell. And hold them accountable. If you are selling, insist on a written guarantee that if your property doesn’t sell for the price they are advising is achievable, you are not obliged to pay either the fee or the advertising. Insisting on this will quickly establish whether they really believe what they are telling you. The well-known expression for this is “Put your money where your mouth is”. It’s the best way to protect yourself from the cheats of our industry.
If you want a copy of a suitable guarantee to use, email me on firstname.lastname@example.org and one will be sent without obligation.