Are valuation errors real reason for shrinking property sale prices?
Much has been made of the disparity between the original asking price and the final sale price of properties recently, but new research suggests the issue might not lie with the housing market itself.
News of sellers having to reduce their asking prices to make a sale has made headlines in the past few months as a focal point for the latest housing market struggles, with London and the south-east in particular struggling to get buyers to make on-point offers.
However, a new study compiled by estate agent Andrews, looking at their own data in terms of asking price and selling price in the first half of this year, shows a very different situation. In fact, the figures reveal that 70% of completed property sales through the agent either closely met or exceeded the original price the property was marketed for.
What does this mean?
According to chief executive David Westgate, the key is having an accurate valuation made in the first place, taking all market factors into account in order to manage the expectations of both sellers and buyers – which will also make sellers less likely to see themselves “gazundered“, which has been happening more frequently in recent months.
He said: “Simply, a well-priced property will sell fastest. We’ve seen in the first six months of this year that properties which sold either at, or above, the asking price spent just 49 days on the market which compares favourably with the industry average of 96 days.”
The study shows that there is a correlation between the price difference and the time it takes to complete a sale, with a smaller gap generally meaning a faster sale, and a larger gap leading to a slower sale. In Andrews’ data, a 5% or less difference means the property sells in an average of 69 days, while homes which ended up with a 10% asking price versus selling price disparity were on the market for an average of 118 days.
“This is all about successfully managing expectations and unfortunately there remains a significant percentage of agents prepared to provide a high valuation simply to secure the listing,” Westgate added.
“When this is coupled with a vendor flattered by the news that their home is worth a seemingly favourable amount, the property is placed on the market with unrealistic expectations and consequently hangs around for longer and sells for less.”
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