EYE would like to ask our readers for advice.
Not having moved from our current home for 40 years, we have not personally had business dealings with estate agents other than when we sold an aunt’s home when she moved into care a few years ago.
That was unproblematic (thanks Howards, Norwich).
Now another relative has moved into care and needs to sell her property.
It is a two-bedroom retirement flat in a southern town.
Three agents were asked to value it – one a well known name across much of the country, the second a regional chain and the third a local firm.
And the problem? The valuations are from £180,000 to £250,000.
Agent number one suggests a guide price of £180,000.
Agent number two has valued it at £195,000.
Agent number three has valued it between £200,000 and £240,000 which in itself seems a huge range, but says it would be happy to stick it on at £250,000.
A £70,000 discrepancy seems enormous for what can only be described as a very modest flat.
Strikingly, the valuation letters all tell us at some length how great each of the agents are, but not one tells us how they arrived at the valuation, what other similar properties are going for, what the demand is like for retirement flats in the area, or gives us any indication as to their track record in selling this type of property.
So, what do we do now?
Comments (42)
“retirement flat”, I assume over 55 year only allowed to live their.
The problem is there may be one person that is willing to pay the higher price once every 2 years….. For some properties “time to sell” must be stated along with the valuation to make any sense.
As smile says retirement home selling is not the most straightforward; you have a limited buyer pool from the word go, often have to ‘sell’ the over the top fees payable by the residents, and quite often it is a case of ‘is there actually anyone out there at this time that can buy?’. It can take months to sell these things, so taking a price v timescales view is very important.
The two lower valuations were probably pricing at around what others have sold for in the past, the pie in the sky guy was sent out last minute with no comps and ballsed up! None seem to have factored in the timescale element; with retirement homes this can put the price fluctation far wider than with a normal house. imho.
For Sales you can do your own research by Googling Mouseprice. It will show you what properties in the same retirement block, or similar ones nearby have ACTUALLY been sold for – not what they were advertised for sale at. Since the recession, we Brits seem to have got ‘the Haggling Gene’ (remember the Alexi Sale advert?). So to get the owner the best price Agents do ‘ask up’ a bit, in order to be haggled back down, and the purchasers feel they’ve ‘got a deal’. However, less scrupulous Sales Agents will value overly high – just to get you to sign up and tie you into a contract. When viewings are non-existent they’ll then suggest you drop the price BACK to the real market value. ALSO Retirement properties are not the same as normal properties – Key Locations has a lot of experience of these and the basic rule is they are cheaper to buy & sell as buyers have to be older, fancy living in such a block, and pay substantial maintenance fees (for all the additional services offered on top of normal flats). However, they DO make great investments – rents are high on them in our area (Brighton & Hove, South Coast). Many people rent them out – to offset Care Home fees, or as a source of income for the Beneficiaries. The property continues to gain value and you can always sell at a later date. I hope that helps you.
Andrea
Thankfully you didn’t suggest Zoopla valuation tool. Phew that was a close call.
OK Everyone listen up !
The property is only worth what someone is prepared to pay for it.
If you use only comparable evidence then you are quoting from past/historic sales.
If you are working with a live database of active buyers you should know what they might pay up to for any property on your books.
We all know buyers come and go so when you offer a market price it should be based on the two.
Historic sales and recent activity/demand from buyers on your database.
And here is a perfect example.
I am marketing a retirement property at £125,000 the property was purchased 7 years ago for £275,000.
Now if you work on past historic you would have been tempted to suggest £275000 or even more. But if you did you would have been very, very wrong.
How do I know this ?
Because every person who might want to buy this property was canvassed for their potential interest prior to the market appraisal (you might call this speaking to your buyers, which you should do weekly and or monthly depending on how you manage your database) from this I deduced correctly that the property in question wasn’t ever going to get any interest at £275K, £250K or even under £200K. The reasons why would take too long and it’s only relevant to this particular property. When I went to the MA I repeated the comments I had gleaned from the database to the vendors and they agreed. They knew there were several others unsold offered for sale and didn’t want to wait.
They are still waiting due to the severe problems this retirement development has but it proves my point. Does it not?
£200-£240!! for a flat that’s quite a uncertain valuation! surely they must be able to pin it down to a much more reasonable figure with in a £15,000 bracket? Also why did they not bring any comparable evidence to their appointment to justify the price? I’d say scrap all three and start again if all they did was turn up give a figure and then sell themselves in a letter… I also would always go to a good reputable local agent not a national, I would consider regional as open more doors because they can discuss with applicants registered at their other branches too!
That’s the standard today, they don’t bring anything with them to support their valuation. There are corporates who do and others that don’t. The latter tell their staff not to, because they will value it at anything the vendor wants to hear to get the instructions (some independents do this to) and of course that information wouldn’t corroborate the valuation given!
Maybe one was the Purple Bricks local agent?
DEFINITION OF MARKET VALUE
The probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) Buyer and Seller are typically motivated; (2) both parties are well informed or well advised and each acting in what he/she considers his/hers own best interest; (3) a reasonable time is allowed for exposure in the open market; (4) payment is made in terms of cash in pounds sterling or in terms of financial arrangements comparable to; and (5) the price represents the normal considerations for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.
Why not an internet based estate agency? At least they can qualify the valuation by applying a boilerplate percentage increase!
I don’t think it’s the vendors job to explain what an actual valuation is.
I can see why Ros hasn’t bothered; It’s just as easy for her to look up the figure on the internet and save herself the bother of an appointment to hear what she already knows.
Hopefully despite the lack of evidence in their letters they justified the price to you with comps at the meeting?
As much as we hate RM the back office system on RM plus is superb, coupled with land reg figs and what else the agent currently has for sale they should be able to competently offer a price.
Age restricted apartments are usually hard to shift so i would air on the side of caution, and also it depends on timescale vs Monetary gain. Do you have a period in which you want to complete or is it about achieving the very best price? (i assume you have a hefty service charge you are having to cover?).
And then you also need to factor in. “Who do you like” finding a buyer is in essence the easy part, the agent will be part of your life for the next 3 – 6 months. Make sure you like and trust them.
It sounds to me none of the agents have done a good job in advising of price or building a working relationship with you. I would suggest another valuation. I would also let the agent know you have 3 very differing prices (not the figures) and ask them for an honest price on the property they can achieve within 6 – 8 weeks and ask them to justify it.
Good luck in sale, as we say to all our valuations, careful how long you sign in for. 8 weeks is plenty. You can still stay with them after that point if you feel they are still the correct agent for you.
If the agents haven’t supplied comparable sales and are TPOmb members ask them why…
4. Market Appraisal
4a When you give advice to someone selling their property, any figure you advise, either as a recommended asking price or as a possible selling price must be given in good faith and must reflect available information about the property and current market conditions and must be supported by comparable evidence. You must never deliberately misrepresent the market value of a property.
4b Any evidence relating to comparables of similar properties in a similar location must be retained on file for future reference.
4c You must keep your marketing strategy under regular review with your client.
Link to full code: http://bit.ly/1NRzmS4
Straight forward basic agency here.
Comparables of what has sold with average price per square foot will tell you who is closest. You cant compare ‘valuation’ with the ‘winning business’ approach often followed by a 16+ week sole agency – you know what comes next… 🙂
Interesting comment Eric about sq footage, do you use this? – I know in Europe and the States its basically the rule stick to your price.
However here in the UK i do not see it as prevalent. I can say i have never valued a property on square footage. More on the internal fittings, location and condition of course space plays a part but i never refer to it in pricing.
Do any other agents compare this on vals?
Where there is a huge disparity in valuations, it makes for a great sense check. It’s perhaps a throw back to my London days, but it works well. It helps value extended properties and also supports valuation for the surveyor. With post properties having floor plans, it’s an easy method to support your opinion and adds a little science to the process.
Interesting,
We are not based in London, but always good to see what others do.
It would be an interesting experiment to go through our completed sales in similar roads and look at footage to see if there is a coloration.
Well spoken Eric and at a guess your like me from the old school and this is where things went wrong with current market valuations ……. young guns guess!
There was a time when every valuation was done on the square footage with a little adjustment for defects etc.
But when the 1990’s came along it became that wild west scenario with mortgage lenders and insurance companies buying up estate agent networks, and EA went through a period of evolving into todays process. The 10% rule (mortgage lenders used to use 5% but now seem hell bent on down valuing by 15% at times!) became the norm to win the instruction only to see price reduction follow quickly behind.
The agent has to justify their valuation and is part of EA regulations and PO code of practice. Clearly one, if not two of them are wrong. Ask them to put in writing how they came about their valuation (that is what the PO will do when investigating a complaint) it should include current market asking prices (not just their company), sales and land registry records of comparable properties sold. Icing on the cake would be to confirm market trends and expectations and recommendation of asking price based on the sellers expectations of time scale.
I was recently asked to investigate a valuation when one agent said £475,000 and another said £325,000 !!!!!!!!!!!! It didn’t take long to work out the correct value at £425,000. And guess what the higher agent dropped to £425,000 while the lower raised to £375,000. The vendor thought the £425,00 was spot on and the other agents have never been aware of my involvement or valuation.
totally agree with you smile,sometimes but not often people ask about £PSF but like you I have to explain why this isn’t the right or best nor accurate enough way, sorry eric but no way unless of course you are talking to a developer and then you are really talking pie in the sky prices
Interesting one, Ros
There is only one Agent who needs to justify anything here in my opinion – and that’s the £250k guy/gal.
If he/she is in any way right, then the others can achieve their figures with their hands tied behind their backs.
Challenge the highest. It’s up to them to win your confidence to then win your business.
Could it be that the 2 lower agents didn’t want to sell the property? they valued it low because they thought that this is the only way that THEY can sell it.
Personally i’d only consider an agent who has sold something similar (retirement properties) in the recent past as they may be the best placed to sell the property. They will have more knowledge with the recent experience.
BUT… i’d now start on the calls to other local agents. Ask their opinion on the property values given I’m sure that they’d be happy to help when you are dangling the carrot of a property ready for market.
just don’t ask the opinion of an online agent it wont be worth your breath!
Tell the highest agent they have two weeks to sell the property without using the internet or a for sale board to do so.
Why ?
Because if they have buyers registered they can phone them up and offer the property.
At the end of two weeks if they haven’t provided a single genuine viewing then you know it was too high. If they produce 3 or more viewings and the buyers all agree it’s too much money then you can use the feedback to determine whether the 2nd or third valuation was closer to the truth.
If they get you an offer starting with £200K then you need to go full hog with the estate agents (again assuming they are reputable agents).
Any one got a better idea ?
Unless Ros is at the home for the viewings and hears the feedback directly, the agent is unlikely to report back that the viewers said the agents haven’t valued it correctly.
Also, will an agent agree to a two week contract?
Really? – We always advise the sellers if the price is ambitious.
We always advise the seller we will test that market at XXXXX You the seller and I the agent agree on testing the market at the price but ultimately the market will decide.
If the feedback is that price is too high you need to tell the seller, how else will you sell it?
Give them the s**t sandwich, They loved the location but for the money they felt like they needed a larger garden, They felt a figure of X was more inline with what they have seen. But again the area was perfect for them.
Half a dozen constructive feedbacks like this they will happily drop the price!
The highest agent sounds like a dumb **** so why trust them to test the market?
If you look further down i am not saying go with the agent that offers the highest price.
You or I do not know what price a house will sell for. The above is just good business practice
I did recently have to rescue a seller who had elected to use an “online” agent who had suggested £200k more than the evidence suggested. We finally worked out they’d used zoopla to value it in their capacity as a local expert.
“Finally” ? It is the first thing that I would expect from these muppets in their bedrooms!
That’s some fantastic local knowledge displayed by the high street estate agents.
Sliding scale fees!!
Think we can ignore agent 3 pretty quickly. My children could pin it down closer. I’m continually amazed, when gently probing how competitors arrived at their valuation, that absolutely no comparable evidence of any kind was used. Not sure if I’m out of touch and either a wet finger raised in the air or a bingo machine are now the tools of the trade?
Wrong answer.
I went out to see a property with me being the lowest price at £400K, the highest was £500K. Vendor went for agent at £450K.
But my figure was pushing the boundaries at £400K as I knew she had other agents out I didn’t want to lose out over £10K (or so I thought) difference.
The vendor agreed my figure was sensible. And she agreed £500K was outlandish. So tempted as we all are she plumped for the £450K.
9 weeks later still not a single viewing and the agent tells her it’s because the market is a little quiet.
This isn’t a one off problem as we all know. But surely the vendor should be aware of house or retirement flat prices in their neighbourhood, aren’t they ?
People hear what they want to hear. Perfectly intelligent people manage to suspend reason where money is concerned. Certainly in the retirement sector, the good Lord in his infinite wisdom usually provides a fair supply of current comps.
‘Sticking’ it on is something often done with blue tack and sellotape. Maybe not the best way.
Ask all to justify why they valued as they did. If one if ‘Pie in the Sky’ its not fair to ask the others to play a fools game. Equally, if highest value can justify, then disregard the lower ones.
Poss call in a couple more agents. The WHEN you have three your happy with and good details that help sell the property, rather than just list it.
Have 3 agents battle it out and all market. If between them you get RM, Z and OTM and more outlets then you’d have max exposure to max prospective buyers.
There is no reason to just use one agent, other than if they sub the property out for you.
Trevor,
I’m shocked you’ve suggested that your advice is to have three agents ‘battle it out’, this is the UK property market… Remember the huge disadvantage a seller is at when its displayed three times on rightmove or any other portal!? Buyers instantly ask the question ‘why’? And more often than not they then neg on the price because of this.
Ros, simply ask them for comparible information and the current demand for that property type but most of all choose an agent that you get on with, as you know it’s not a straight forward or quick process so this is important. Certainly not slapping it on with three agents!
HEAR, HEAR, Mr Rowe!
That was possibly the worst ‘advice’ I’ve seen or heard for I don’t know how long.
Come on RR, don’t tell me you don’t know how to find out the answer??
I think you’re being mischievous! 😉
Or you’re 14 days late with this post….
That sounds like the sort of challenge I enjoy and would be a good test for our latest bit of tech. Accurate, local and honest is what we are trying to promote so even though I won’t sell it for you 1’d welcome the opportunity to advise.
1d? Turning into a teenage girl Mr May?
You’ll have to explain that, I’m guessing it’s either attempted humour or attempted insult but can’t be sure which.
I’ve been reliably informed that 1d is how popular beat combo One Direction is sometimes referred to by young people
Thanks Lee. As a dyslexic I don’t know why I would type a 1 instead of shift i. At least it gave Frown and a few others a right old giggle.
I’ve worked with people who have that sort of weak humour & mentality, it’s not endearing.
Problem there Robert is that they say they want sensible and honest but what they mean is they want the highest price for the cheapest fee and I don’t care how well you sell yourself and your company it just doesn’t work like that in this market, so at the moment and probably for quite some time yet all the public wants is cheap but they will deny this and say they want quality,honesty and a friendly service and so your new bit of kit in this market and with this band of client will fall flat, sorry bud.