With a slowing housing market, sellers are being urged to set realistic asking prices to attract buyers. However, the practice of estate agents over-valuing properties to secure business from sellers, known as ‘gaining instructions’, is creating issues for everyone involved.

Recent findings from GetAgent.co.uk, an estate agent comparison website, highlight the negative impact of this tactic. The study shows that only 36% of homes with reduced asking prices actually progress to being marked as sold subject to contract (SSTC). This suggests that initial over-pricing does not necessarily lead to successful sales and might actually deter potential buyers.

The Impact Across England

The research conducted by GetAgent looked at the current market stock levels and analysed the proportion of homes that have seen a price reduction. Interestingly, about 34% of homes for sale, not already under contract, have undergone a price cut since being listed.

Regional data reveals some variations:

• The East Midlands had the highest percentage of price reductions at 37%.
• The North West saw the lowest at 31%.

Despite these price adjustments, the overall effectiveness remains low with only a fraction of reduced-price homes finding a buyer. For example, the South West saw a slightly better outcome with 40% of reduced-price homes attracting buyers. In contrast, London lagged behind with only 30% achieving this result.

Colby Short, the co-founder and CEO of GetAgent.co.uk, offers a stern warning about the risks of inappropriate pricing. According to Short, not only does over-valuing dissuade buyers by making a property less attractive when its price inevitably drops, but it also often results in a final selling price lower than what might have been achieved with more accurate pricing from the start.

Short explains, “For a buyer, seeing a price come down makes the property seem less appealing and often leads to a lower selling price than if the property had been priced appropriately from the start. For a seller, these unrealistic expectations often mean disappointment with a result that may still represent a job very well done by the estate agent.”

He also touches on the dilemma faced by sellers when choosing an agent. Often, decisions are swayed by the valuation provided or the fee charged, rather than the agent’s track record and ability to price homes accurately.

Choosing the Right Agent

To avoid the pitfalls of over-valuing, Short advises sellers to select estate agents based on proven performance data rather than just competitive fees or inflated valuations. This approach not only helps in building trust from the outset but also ensures that the property is priced correctly, increasing the likelihood of a successful and timely sale.