The PropTech service, launched by Agent Software, has showed that continued overvaluing of properties could have financial implications for consumers and may affect negatively the public’s perception of estate agents.
Almost 153 estate agencies have gone out of business in the past year with more than 7,000 showing signs of financial distress, according to recent research from Moore Stephens.
HM Land Registry has recently reported that the official number of sales recorded in England in March was down nine per cent on the previous month and almost 22% down on the same month in 2017.
These challenging conditions could be put down to a combination of increased government regulation, business saturation, commission fee erosion and the rise of online and alternative competitors.
The problems associated with overvaluing properties for vendors are clear. A lack of buyer interest due to a high price could mean a property is left on the market for much longer than is necessary, while the subsequent need to reduce the price could put vendors on the back foot when it comes to negotiating.
Heather Staff, co-director of Agent Software, said: “These factors combined mean that property sellers whose homes are overvalued could end up selling for significantly less than if the property was marketed at the right asking price from the beginning.
“This scenario represents a financial cost and loss of time for consumers as well as a negative impact on the agent’s final commission fee.”
Estate agents’ public reputation
If an increasing number of consumers have the negative experience of an agent overvaluing their property and this impacts on their eventual sale, it could damage estate agents’ public reputation.
Heather Staff added: “The vast majority of agents value properties correctly and offer fantastic customer service, but it’s those who don’t that cause problems for the industry as a whole.
“Agents should resist the temptation to follow suit when faced with a competitor who is regularly overvaluing. Instead, they should recognise the value of second instructions, which tend to command a higher fee and sell more quickly.
“Vendors are increasingly aware of their ability to switch, particularly if they feel misled by their existing agent. The key is to keep in touch with them, so that when they do decide to switch, you’re front of mind.
“Our aim is to give agents the best possible chance of getting the second instruction thanks to smart automated marketing. If agents in your area are overvaluing, Spectre can help you to target these properties to win the instruction and market them more effectively if the vendor does decide to switch agents.”