In this current subdued market, new instructions have become even more valuable for estate agents, and the game of taking them on is even more competitive. But with the pool of sellers being much smaller, foul play is being seen as the tactic by some to win over new business.
A recent article by The Times has found that several large estate agent chains have been providing over-inflated valuations to sellers to win over their instruction, sometimes by up to a fifth higher than what is accurate, let alone a realistic sale price. The Times also references a source that some agents are “happy for the price to be too high for the first eight to ten weeks” of marketing where they have exclusivity for 12 to 16 weeks.
Unfortunate sellers are then misled into agreeing to contracts with higher fee-charging agents, by being given a very attractive valuation that in fact is grossly inaccurate. The deceptiveness of this is that the properties generally cannot achieve this exaggerated asking price, and so will go on to experience several reductions before they sell. The result of this on sellers who have signed contracts with these agents is that they are then faced with having to pay a higher fee than they would have otherwise, without achieving the promised price.
The Times pointed out Foxtons as a major example of this, where two-thirds of their properties have to be reduced from their initial price before they achieve a sale, but still charge a commission of 3% – almost double national average.
In addition to sellers being misled into paying higher fees, there are several other risks associated with marketing a property at too high a price.
Buyers won’t come through the door
Buyers can easily see on Rightmove & Zoopla the prices that properties are actually selling for, in comparison to the price that they’re initially listed at. The effect of this is that buyers can somewhat tell if a property has been overpriced. This can lead them to hold off viewing, or at least not considering the property as a serious option and showing significant interest until the price drops to a realistic level.
Future marketing is damaged
Generally, buyers are only interested in either the newest or cheapest properties on the market. After the initial few weeks of marketing on the open market, interest from buyers starts to drop off, and properties become pushed further down the list among the multitude on Rightmove & Zoopla. Marketing a property at too high a price further accentuates this risk through buyers being put off early on. However, this problem is not solved immediately price reductions. By the time that the agent has dropped the price, the property is already an old listing. Rather than this peaking buyers interest, it can actually have the reverse effect of as buyers wonder why the property hasn’t sold yet and wonder if there’s something wrong with it.
How Invisible Homes provides a solution
Invisible Homes enables sellers to try a higher, achievable price for their property without risking any future marketing due to everything being off-market. There’s no history of how long a property has been on the market or any evidence of price reductions readily available which ensures that buyers review the property on merit alone. Furthermore, properties always retain that ‘fresh’ feeling for new buyers that register since as far as they’re concerned, it’s a brand new property which they haven’t seen anywhere else.
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