Estate agents have an incentive to inflate prices and while a down-valuation can be frustrating if it scuppers a deal, it also means that your client has been saved from paying over the odds and this is ultimately a better outcome for them.
You can’t change the value of the property, but you can help to set expectations early on in the process, so that when you do submit an application it is based on a realistic property value.
This could help mitigate the impact of a down valuation and also serve to increase your conversion rates.
With this in mind, it is worth reviewing the latest market research to understand the state of the property market and how this is likely to influence valuations.
Subdued is a word that has made frequent appearances in property market reports so far this year.
Halifax says it expects annual house price growth to remain in the expected range of 0% to 3%, while Nationwide thinks that house prices will rise by just 1% over the course of 2018.
So, it is little wonder that the Halifax Housing Market Confidence Tracker shows optimism to remain at a five-year low.
According to the NAEA, 86% of properties sold under asking price in March, which is the highest since records began in 2013 and demand from buyers continues to be low.
It also says there were, on average, 308 house hunters on agents’ books in March – an annual decline of 22% from 397 per branch in March 2017 and 417 in 2016.
However, supply levels are also low.
As Connells Group estate agency chief executive David Plumtree has noted: “It remains a sellers’ market with an imbalance between buyer demand and stock – lack of stock continues to be an issue for our branches.”
Rightmove director and housing market analyst Miles Shipside added: “Lack of choice is nudging prices up to test the market ceiling. It’s not rampant price inflation and buyers can easily spot speculative prices and ignore property that is out of line with others nearby.”
Prices vs values
This means that sellers are, understandably, seeing what they can get away with.
The average asking price of a new-to-the-market property on Rightmove hit a new record of £305,732 in March, with only Greater London and the South East registering an annual decline in asking prices.
There are signs that demand will increase further in the coming months with Rightmove and Connells reporting higher activity.
Royal Institute of Chartered Surveyors economist Simon Rubinsohn noted: “The market typically tends to see a pick up at around this time of year.”
This increased demand could entice more sellers into the market, which would limit price inflation but stimulate activity.
However, if the imbalance between supply and demand continues to grow, we could see the sparring between asking prices and realistic values continue into the summer.