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Human Nature and the Valuation Delusion

The main thing that potential sellers want to know when it comes to selling their home is ‘what’s it worth’? The irony is that in many cases they probably already have a very good idea, and this usually isn’t the question that matters most.

The UK is a nation obsessed with property. The popularity of home improvement television now means that your home and what it’s worth is common vernacular. Even if you’re not considering selling, chances are you watch very closely the houses that get sold around you and as a result have a fair idea of your own home’s value.

Until an agent has actually seen your property and had chance to make detailed market comparisons, you will probably have a far better idea than most. It’s human nature to be swayed by the agent who seems most confident about securing the highest price for your property. As such, when competing for your business, it may be in an agent’s interest to be overly optimistic about the price that can be achieved. Of course if you are not in a rush to sell, you may be happy to price ambitiously and see if anyone bites.

Motivated vendors would be advised to remove emotion from the process and focus on tangibles when choosing between agents. Can the valuer evidence the valuation being provided? Agent reviews are often a good resource from which to draw, as are the quality of live listings. Often overlooked, but valuable indicators might include contract length. If the agent is confident that they’ve given you a realistic value then why would they want to lock you in to a contract above 8-12 weeks? Yes it costs time and money to market a property, but if the price is realistic, then a property is likely to get a sale agreed within this timeframe.

Other key factors that vendors should consider is the number of price reductions that an agent has made on his listed stock – this can be an indicator of systematic over-valuation. Sales progression is not sexy and rarely a business winner, which is why it is often under-resourced or outsourced, but with 36% of sales falling through prior to completion, good sales progression is worth its weight in gold.

Landlords and homeowners wanting to discuss their property sales or investments are welcome to visit our offices on Mutley Plain or visit our website.

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