It’s an issue that most home sellers will have come across and that’s the pricing of your property, but why do estate agents’ valuations vary so much?
There is no doubt that finding the right price will attract buyers and that pricing too high will put people off.
Essentially, we choose to sell a home with an estate agent because they are the experts at selling property.
Over the years, they will have gained the experience in learning how best to price your property and then finding a buyer quickly.
How an estate agent puts a valuation together
However, it’s worth looking at how an estate agent puts a valuation together for you. This will include:
- The agent will carry out some research based on your area;
- The agent needs to understand what other houses have sold for nearby;
- They need to detail amenities and schools that are close to the property;
- They will measure each room.
All of this information is then used to put a valuation together – but obviously there are ‘grey’ areas because no two homes are the same and they won’t attract the same price.
A lot also depends on opinion and the agent’s experience – particularly if they have sold a similar home recently so they will know there is a demand for your property.
The agent will take into account the property’s quirks, its precise location and the amenities – and don’t forget that if you are close to a good local school, this will bump up the price.
Issues with an estate agent’s valuation
However, one of the big issues that will arise about an estate agent’s valuation is when a surveyor is sent by a mortgage lender to see how much the property is worth to them – and this figure could differ hugely from what your estate agent claims is the potential value.
One of the reasons is that the surveyor is working to stricter criteria when valuing and they will go into more detail than an estate agent will.
It’s the surveyor’s valuation that may throw up issues with damp and may highlight that the property is not worth what the seller is asking. They may then insist that the property’s value is reduced in a bid for the sale to continue.
So, if you’re looking for estate agent valuations, you need to:
- Get at least three valuations from estate agents;
- It might be a good idea to have one from an online-only estate agent;
- Do not automatically choose the highest valuation – the agent may be doing this to attract you as a client;
- Consider what the agent is offering along with the price, such as their commission rate and how they will promote your home.
As a home seller, you also need to appreciate that the estate agent has the responsibility of selling your home at the highest possible value on your behalf. They will also earn a higher commission if they succeed with this tactic.
However, you also run the risk as the home seller that you do not attract buyers because your home has been overpriced when compared with similar homes in the area.
Don’t forget that part of the estate agent’s job is to gauge what the demand will be from potential buyers and how much they are willing to pay for your home.
What a realistic market price will be
It may be a good idea for the home seller to carry out research to see what prices that similar homes in the area have been sold for. This will then give you a good idea of what a realistic market price will be for your property.
Property experts also say that a home seller should not be afraid or shy about challenging their estate agent to prove how they came to their valuation.
The agent should also be able to give examples of properties they have sold previously that are similar to your home. This will also give a fairly good idea of what a fair estimate of your home’s selling price will be.
Of course, you can also reject the estate agent’s valuation and insist that your home is marketed at a higher price. This may be a sound tactic for those who are prepared to negotiate since some potential buyers may insist on a discount.
Why estate agent valuations vary
For those interested in why estate agent valuations vary between each business, then this Q&A may help:
Should you get more than one house valuation?
Home sellers should always get more than one house valuation as this will give a better idea of what their property is worth and what potential buyers are prepared to offer. As mentioned previously, the tradition is to ask three firms of estate agents to value your home – you can ask as many agents as you like. It’s also worth asking an online estate agent since they will offer an inclusive package for selling your home and their incentive is to sell quickly.
Are estate agent valuations accurate?
Since estate agents are professionals, you should expect their valuation to be accurate. However, since they are in business, they will want to earn as much as possible from your house sale and may overprice your property. Having said that, estate agents who are local to the area will know what properties are selling for and, more importantly, know what the demand will be for your home. They will use this local knowledge and price your property as accurately as they can in a bid to find a buyer. This is the big difference between an estate agent and a surveyor valuing the property for a mortgage lender: the surveyor will be taking a more detailed look at what the property is worth should the buyer not be able to repay their mortgage.
Do estate agents overvalue properties?
There will be homebuyers who believe that estate agents overvalue properties, but the agent is acting on behalf of a client and is finding the price that the market is willing to pay. Whether that can be seen as being ‘overvalued’ is a moot subject since if the overvalued property finds a buyer happy at that price, then it has been priced correctly. There’s also the risk that one particular estate agent may overvalue a property in a bid to win the home seller as a client and if no buyers have been found within a few months, then they may decide to reduce the home’s value price.
How do I know if my house is worth the asking price?
If you need to know whether your house is worth the asking price that an agent has suggested, you could:
- Do some research and find out what other homes in your area sell for;
- This data should reveal whether the buyer paid the asking price;
- If your research points to the fact that your asking price is about right for the market, then that is what an expert believes it is worth.
Estate agent valuation and surveyor valuation
One of the big issues for those wondering why estate agent valuations vary so much may come down to this issue of the surveyor’s valuation. It may be that the surveyor – after closely examining your home – agrees with the estate agent’s valuation and everything will progress smoothly. While an agent will use their expertise and local knowledge, a RICS surveyor is working to a standard to ensure that the buyer is getting a property that is worth what the market says it is. The mortgage lender is also looking to recoup its money should the buyer fail to pay the mortgage. For some house sellers, it may be a sound tactic to have a RICS surveyor value their property as this process will highlight potential issues that may need to be fixed, rather than having to negotiate on price for the buyer to then pay for the problems to be resolved.
How to choose an estate agent
Finally, the process of choosing an estate agent is an important one, and it’s not just about selecting the agent on the valuation they have put together.
If you have asked at least three agents in your area to value your home and you need to choose one to sell it, then these tips on choosing an estate agent may help:
- Ask family and friends for recommendations;
- Check the agent’s industry credentials – are they a member of the National Association of Estate Agents;
- Find out how they will market your property;
- Consider visiting an estate agent as a potential buyer to see how they deal with you;
- Read the terms and conditions in their agreement very carefully;
- Read reviews of your estate agent’s performance.
The bottom line when selecting an estate agent is to choose one that is going to be fair and honest and has not overvalued your property because they will set themselves up to fail in finding a buyer.
You also need to find out how many viewings they get for the properties they promote and where these potential buyers have been found.
You want your estate agent to effectively market your property and work hard for their commission – there’s also a lot to do with personal relationships and if the agent you like is also professional and friendly, then this will go a long way to you signing up with them because potential buyers will like them as well.