Nearly half of UK properties that come to market do not sell within three years, according to Zoopla, and overvaluing is a major factor. The question is whether this is a genuine mistake or a deliberate strategy by estate agents.
Market statistics and the price factor
Zoopla defines 'ever' as within three years, and the data shows that almost half of UK listings fail to sell in that period. In contrast, 85% or more of properties in the USA eventually sell.
Rightmove has highlighted three P's for selling a home: Price, Presentation, and Promotion. Price is the first because it is the most important factor in attracting buyers, as it signals value.
Valuation versus asking price
Perceived value is subjective and depends on the buyer's perspective. Most sellers request a 'valuation' from an agent, but some argue that agents cannot actually value a house—they can only advise on an asking price designed to generate interest.
A house is worth what a willing and able purchaser is prepared to pay. Despite this minority view, most agents believe they can value a property and share that view with clients.
The overvaluing debate
If the seller agrees with the agent's valuation, the property still faces the startling fact that only half of listings sell. A substantial number of agents place a value that is evidently too high, known as 'overvaluing'.
This is considered the single most important variable negatively impacting the fluidity of the housing market. The question is whether overvaluing is a mistake or a cynical tactic to secure instructions and tie clients into sole agency agreements.
Sometimes it may be a mistake, especially with unique properties lacking comparable evidence. Occasionally, 'testing the market' may be appropriate with a planned review strategy. However, some agents may intentionally overvalue to flatter sellers and secure instructions, then reduce the asking price during the agency period.
Whether intentional or unintentional, overvaluing is seen as killing the market and preventing buyers and sellers from achieving their objectives. The solution remains unclear.
