Tue 12 Dec 2023
Matt Bacon, Head of Valuations
Pricing your home IS the single most critical factor in determining a successful sale.
The Valuation Trap is when an estate agent intentionally overvalues a property to win your business, anticipating that they can later persuade you to lower the price. This can initiate a cycle of price reductions, creating a negative perception among buyers, causing prolonged market presence, diminished appeal, and eventually resulting in a sale for significantly less than if priced realistically earlier.
The Irreversible Consequences of OvervaluationUnderestimating the irreversible damage caused by the initial overvaluation in the 'Valuation Trap' is a critical mistake. Trying the market at a higher price leads to necessary price reductions, and even relisting or making changes doesn't fully replicate the initial surge of interest in the crucial first week. Savvy buyers can uncover the listing's history despite these efforts.
Listed at £450,000. Reduced after week 1,2,3,4 and 6. Finally, a sale was agreed ar £360,000 (a whopping £90,000 less). But worse still, the sale had since fallen through.
Genuine Case Study (with another local agent)
The owners of this property appear to have been advised badly and let down by their agent.
The first week is crucial for a property's visibility and best offers. In the 'Valuation Trap,' missing this initial interest makes achieving the property's true worth challenging, as depicted by the graph's initial surge followed by a decline that isn't recovered.
The First Week on The Market - See Graph of Interest Below...
Potential buyers, driven by market research and their own due diligence, tend to bypass properties that deviate from a reasonable price range, causing a substantial loss of immediate impact and reducing the chances of a sale.
In contrast to the perils of the 'Valuation Trap,' a well-calculated and precise property valuation can catalyse a significantly different outcome in the selling process. When an estate agent accurately assesses a property's value, it leads to a much more favourable scenario for the seller.
The Benefits of an Accurate Valuation: Stimulating Demand and Competitive Offers
Choosing the Right Approach:A reputable and competent agent, well-versed in local market dynamics, will conduct meticulous research. They should consider various factors to provide an accurate market valuation, ensuring you are reliably informed. You should expect to be shown:
- Comparative Market Analysis:
By examining the prices at which similar properties have recently sold in the neighbourhood, an agent can gauge the realistic value of a property and set a competitive yet reasonable price.
- Current Market Conditions:
Considering the prevailing trends in the real estate market and the economy, an experienced agent can adjust the valuation to align with the present demand and supply dynamics.
- Property Condition and Unique Features:
Recognising the distinctive aspects and conditions of the property can enable an agent to highlight its value proposition effectively, ensuring a fair and appealing pricing strategy.
- Local Knowledge:
A comprehensive understanding of the local area, including its amenities, schools, transportation, and upcoming developments, can further contribute to an accurate valuation that resonates with potential buyers.
Before selecting an estate agent to work with, we would strongly encourage you to ask the following questions:
1. Could you provide examples of similar properties sold recently in this area and their sale prices?
2. How do you assess the current market conditions and economic trends that might impact the property's value?
3. What unique features or aspects of this property contribute to its valuation?
4. Please explain how long similar properties have typically stayed on the market in this area and how their pricing strategies have influenced their selling time.
5. Do you consider the current demand for properties in this area when determining the value of this property?
6. What is your approach to setting the initial listing price, and how do you ensure it accurately reflects the market value?
7. Could you provide references or case studies of properties you have successfully sold in this area, along with their initial and final sale prices?
I hope this Article is helpful to you. If you are considering bringing your property to market, please don't hesitate to contact me directly.
p.s. Are you curious about what your property could be worth? Find out in around 53 seconds. Click here.
p.p.s. Download our eBook on how to get the best selling price for your property by clicking here.