Recent research by Yes Homebuyers states that Oxford is one of the top 4 places where properties advertised for sale are over-priced and suffer a price reduction. 38% of all Oxford homes have the asking price reduced.
Too often, estate agents are responsible for setting unrealistic price expectations by over-valuing properties to secure a sole agency agreement that assures them of a competition-free period of 16 to 20 weeks. Once sole agency is secured, the estate agent advises the vendor to reduce the price to the market level.
In any other industry this would be regarded as unscrupulous business practice, but in Oxford estate agency it seems to be winning formula. Vendors regularly select the agent that provides the highest valuation and several Oxford agents have a policy of over-valuing as a result.
Despite 38% of properties experiencing a price reduction, Oxford homes consistently sell for an additional 4% to 5% discount on the asking price.
So should vendors care about estate agents over-valuing their homes? According to Rightmove the critical period for a house advertised for sale is the first 4 weeks. Homes that fail to sell in this period typically spend much longer on the market before finding a buyer, delaying the vendor's move and often causing their sales chain to break down.
The first 4 weeks usually coincides with the period when an over-valued house is advertised above market value, directly undermining the vendor's chances of a sale in this critical period by presenting poor value to potential buyers. By the time the price is reduced to the market level, the critical 4 week 'golden period' has be squandered, consigning the vendor to a longer process than would have been the case had the property been marketed at the correct price from the word go.
And, there is no excuse for agents who over-value. All agents have access to the same sources of evidence to determine the true market value of a property.
Vendors should force estate agents to compete on factors other than their valuation - how they support their clients, communicate with them, actively participate to progress a sale from offer to completion, where they advertise and how they present the property. Those of the real factors that make a difference.
It is unfortunate that the biggest agent in the Oxford market is the one known to over-value most often. As long as that continues, vendors will be poorly served.