A mistake to base prices on ads

Upmarket properties are currently more likely to be overpriced than properties in the medium and low price brackets – and not just by a small margin.

So says Anthony van der Riet, MD of Realty Executives, who notes that the most common reason for luxury properties to be overpriced is that owners tend to set their asking prices in line with the advertised prices of similar homes – many of which are also overpriced and may have been on the market a long time because their owners are unwilling to "lose face" by lowering their original estimate.

"Adverts are, however, not a proper indicator of the market. They do not show how long a property has been on the market – and they don't reflect actual selling prices. Sellers should rather ask their agent to give them a realistic market evaluation based on actual recent sales of similar properties in their area.

"These statistics are likely to be similar to those used by bank assessors when evaluating a property prior to granting a home loan."

Van der Riet also says the agent is as much to blame as the seller when a property is overpriced. "Often the agent has not given the seller the correct information to make an informed decision, and taken on the mandate just so that he or she does not lose the property to other agent.

"On the other hand, if the seller insists on only giving the mandate to the agent who gives him the highest price estimate, then unfortunately there's going to be an expensive lesson to be learnt for both parties. There will be no sale for the owner and no commission for the agent, plus the property is likely to become 'stale' and uninteresting to any buyer."

It's time, he says, for sellers to accept the simple fact that buyers are increasingly well-informed and will not pay more than a property is worth, no matter what the adverts say.

And it's time for agents to take a stand against overpricing, by providing the correct information and advising sellers honestly that they will not get more than the market dictates, rather than bidding against each other just to get mandates.

For more information on property prices in all areas, visit Property24 to get a PropertySPI report and find out what the real selling prices are in your area. Reports are available online.

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