Here are some essential truths about overvaluing a property that every seller should read before putting their home on the market.
If it sounds too good to be true, you probably know the rest of the saying. You may even have said it yourself when offering a friend or family member advice about money or business.
But even if you are usually quick to spot when something does not stack up, you could still be tempted into overvaluing a property when it is your own home. Selling a home is an emotional process. It is something we do infrequently and often at pivotal life moments, so even the savviest seller can get caught out.
In this article, we look at what overvaluing a property means, how it can derail a sale, and what you can do to avoid it.
What is an overvaluation?
Overvaluation happens when a property is priced significantly higher than the true market value. This can occur if an estate agent deliberately inflates the figure to win your instruction or if market comparisons are not used correctly.
BBC Radio 4’s consumer programme You and Yours recently discussed the issue, using a real-life example.
Wendy’s mother moved into a nursing home, so Wendy and her brother (who have power of attorney) needed to sell her house to cover the fees. Three agents valued the property at £500,000, £550,000 and £670,000.
Wanting the best return for their mum, they chose the highest figure. But after three months, they had just one viewing and no offers. Even after dropping the price by £100,000, there was no interest. They are now switching agents and returning to market at a more realistic figure.
The risks of overvaluing your property
1. Wasted time on the market
An inflated asking price can leave your property sitting unsold for months. In Wendy’s case, three months passed with no serious interest, but some sellers lose six to nine months. This delays your plans and can cause frustration.
2. Unrealistic budgeting
A high valuation can distort your financial planning. Sellers may begin looking at more expensive homes, assuming the inflated figure will be achieved. When the property fails to sell, those plans collapse.
3. Damaged buyer perception
When a property sits on the market too long, buyers start to wonder what is wrong with it. In most cases, the only problem is the asking price, but the stigma can be hard to shake.
4. Competing homes look better value
Buyers have instant access to recent sold prices and comparable listings. If your property appears overpriced, they will move on to others that represent better value for money.
5. Risk of a lender ‘downvaluation’
If a buyer’s mortgage lender believes the price is inflated, they may downvalue it. This means they will not lend the full amount, forcing the buyer to either renegotiate or withdraw.
6. Fewer buyer enquiries
Many buyers filter their property searches by price. If your home is priced far above its true market value, it may not even appear in their results.
What sellers should consider
If an estate agent is confident in their valuation, they should not need to tie you into a lengthy contract. Long tie-ins are often a sign they know the price will need to be reduced.
If a valuation is higher than expected, ask for clear evidence, such as recent sold prices for similar properties and market trend data. Challenge long-term tie-ins and ensure the agent’s strategy aligns with your needs.
Remember, when it comes to overvaluing a property, the short-term thrill of a big number can cost you more in the long run.
Our approach
At Ensum Brown, we are committed to achieving the best possible selling price while maintaining honesty and professionalism. We provide accurate, evidence-based valuations so you can make informed decisions about your sale.
If you would like a free, no-obligation valuation, get in touch today.
Do you know someone thinking about selling their home? Share this article to help them avoid the pitfalls of overvaluing a property.
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