OFT Looks At Estate Agents Over Valuing Property

This morning I spotted a story about how the Office Of Fair Trading are looking into how estate agents run their businesses. More specifically, they are in consultation regarding their ‘conduct’ and misleading marketing techniques. These include, over valuing property, omitting information which leaves the buyer unaware of potential issues, and misleading leaflet information.

The overvaluing of property in order to get an instruction is high on the list. Some vendors are still unaware of this sales tactic used by agents whereby the property price is valued in the region of 5-10% more than the property has the potential to reach. In the upper end of the market the ratio can be much higher than this.

Agents do it so they can:

1. Pretend to the vendor that their property is the best in it’s class, thereby pandering to the vendors vanity.
2. Say they have the most properties on their books.
3. Say their sales team is the best.( ie: “look at the high price we can achieve.”)
4. Occasionally get lucky when someone pays the inflated price, hence gaining them a higher commission from the sale.

However, over valuing property leads to many issues further down the line. Firstly, there is a very good chance that an over valued property will remain unsold until the price is dropped. Poor agents will balme this on “market conditions,” which, ironically they have contributed to by overvaluing in the first place. Of course it’s true that some vendors will insist on a higher price because they have done research and compared their property with others sold in a different time frame-which does not help either.

It’s a fact that the highest level of interest you will get on your property will be in the first couple of weeks it is on sale. When I was an agent, in the sales training it was always drummed into us that “viewings equal sales.” If the agent is good at their job you will get lots of qualified viewings when the property first hits the market. If you get little or none it is often a sign that the roperty is over valued. Once the initial ‘buzz’ about new property listings is over the property gets more difficult to shift.

When you put your home up for sale, if you really want to sell, put it on at a realistic price. One where recent comparables prove that those values have been achieved. And by recent I mean in the last couple of months, not years. Never forget that agents are sales people. Above all, what they want is the highest possible commission for the sale.
On the whole it’s a good thing that the OFT are attempting to clean up the act of estate agents. But really, all they can do is apply a fine to a company, which does not stop the practice. Isn’t it time we had a proper school or college and strict rules & regulations surrounding agents? And by that I mean letting agents too not just sales. One where all agents need to be fully qualified before they can trade so that we can eliminate the fly by night operatives that give good agents a bad name. What do you think? Your comments appreciated as always

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