Do estate agents push up prices?

[estatenonestate]

I never bought into this idea before but now that I am house hunting, I am floored at the supposed increase in house prices. We live in a village about 1hr10 south of London. We don't have a train station. But we are about 10 mins drive to the nearest. We are not in some super catchment for schools.

House 1: bought 2012 - 2 bed bungalow in need it gutting £250k. Renovated into 5 bed and sold for £470k. Being sold 2 years later - no additional changes for £565k and it is 100 yards from a dual carriageway- tbe noise is crazy.

House2: 4 bed house with decent garden. Not really overlooked but on a reasonably busy road. Sold 2017 for 525k and 3 years later, some paint and an extension to the garage and now on for £635

What is going on?

Supply and demand I supposed

I am not sure it is that. We asked what the interest in house 2 was and there was one other request for a viewing and that apparently was it. I don't know if they would play down the interest

I bet estate agents wish they had the power to push up prices! A property is worth whatever a buyer is prepared to pay for it, not the price tag an agent puts on it.

It's supply and demand. If the prices were not rising you would say that estate agents were keeping them down.

I think it depends on the area, I'm in London and myself & family & friends have always bought & sold under the asking price (except for that crazy year - maybe 2014).

So most sellers price over to allow for a offer however on MNs offering lower seems to be the devils work so who knows. My neighbours just accepted an offer 30k under which they are very happy with & my friends had an offer of 45k under accepted in March. I know people who have offered & got 200k under.

Agents will sometimes overvalue to get business because homeowners understandably want to get the most money they can for their property and many who haven’t looked very closely at the local market and average asking / selling prices in their area will go with the agent with the highest valuation - who at a later date when there hasn’t been much interest just recommends the seller reduces the price.

Houses round here really shouldn't be going up 50k a year. If you remortgaged the bank wouldn't revalue that much. Just seems crazy.

No, estate agents aren't doing that. It's in their interests to market a property realistically and prospective buyers will want to negotiate anyway. I have a place on the market at the moment so I do take an interest, have done for months.

The nationwide house price index said prices had gone up 2.7% but they are the market for 20% more. Even giving a little wiggle room I just can't get my head around it

Listed price won’t equal sold price, so slightly comparing different numbers. Expect right now they have pushed prices up, but they will sell for less. May be wrong and we may be in some extreme market, but doubt buyers are that desperate.

Record low interest rates on mortgages, as well as the desire to get out of city centers are both boosting demand. I'm seeing it in New York too.

NY is interesting apparently lots are leaving.

God knows!
My neighbours put theirs on at 460k last year and didn't sell due to a new road being built.
Just put it back on for 495k and road still happening!

I think they try to up it where they can to get more commission. We had an offer accepted then got told two other parties also offered full asking price. It felt like the estate agents were trying to get a bidding war going but thankfully we held fast and noone else upped their offer

@dozzyf

NY is interesting apparently lots are leaving.

About 5% so far, but it's hard to tell how much is temporary. The trend was poor even before CV due to a general decline in city services and policing, thanks to the current Mayor, who actually fancied himself a candidate for President for a time.

Hopefully, a vaccine will bring some of them back. I'm in the suburbs/exurbs, where they all want to move.

Yes I read the mayor was driving some of it. Was there a wfh culture before Covid? DH was offered 2 jobs ly, 1 by UK firm, 1 US. He asked about remote working & the US one said not an option so he turned down that offer.

@dozzyf

Yes I read the mayor was driving some of it. Was there a wfh culture before Covid? DH was offered 2 jobs ly, 1 by UK firm, 1 US. He asked about remote working & the US one said not an option so he turned down that offer.

There was a wfh culture, but it was highly dependent on the company. Some were keen on it, others weren't.

This is interesting! I live on an estate that is about 20 years old. We bought our house for £345k at the and of last year (on the market for £350k) and the same houses in the estate, but with no changes (original kitchens and bathrooms, original carpet still in the bathrooms) are being listed for £395k and selling. I can’t see the sold prices yet as the sales haven’t completed.

Blows my mind!

ok @MissConductUS that was the first company he ever had interviewed for that had resistance to remote working. His job is basically sit on a computer so very easy to wfh.

The estate agent merely does a valuation in their professional opinion. Any house is actually worth what someone is willing to pay, be that more or less than the asking price. I'm no where near at the 400k plus region but I just sold my house for 5k under the asking price and 5k over what I would have accepted for it and I bought a house for the asking price that I would have paid 20k more for had it come to it but thankfully didn't need to because they accepted an asking price offer.

Well, to some extent, of course they do. That is literally their job - to sell your house for the most money they can get you for it. Overwhelmingly they are on commission, so it is in their own interest to sell it for the highest price possible, for each sale, as well as for their reputation in the locality.
Against that of course, they get nothing if it doesn't sell, so they have to price it realistically too. No point in pricing something high if it is too high to sell.
So many other factors come into play.

It’s not in an estate agent’s interests to artificially inflate a price. Yes, a higher price means more commission, but too high a price means it doesn’t sell, hangs around on your books for too long, starts to look like a dog and generally means more work. Commission starts from as little as 1% - an estate agent isn’t going to push a vendor to put a £380k property on at £400k in the hope of earning an extra 200 quid.

Round here two properties have been on the market a month, then the agent has UPPED the price by £25-50k!

IMO it must be the vendor's getting greedy in on the stamp duty reduction, because otherwise it makes the agent look unprofessional...

The increase also pushes the properties into the next brackets so maybe gets viewed by a new, wealthier, audience.

Neither have sold yet though .

No estate agents can't dictate the housing market. They are of course keen to get the best commission on sales.
But they can't dictate the market.
It's much deeper than that.

House prices went crazy from 2014 onwards due to the government introduction of help to buy where builders increased new build prices by 20% because they knew buyers were getting extra money as well as maxing them self's out on the mortgage as well, then the bank of mum and dad came along as there houses they brought all them years have gone up three fold, 2 bed starter homes in my area have gone up 50-60% in past 4-5 years, when the crash comes due to all the job losses it is going to get messy, obviously no one will take any self responsibility for maxing them self's out to the max on mortgage and help to buy and only putting down a 5% deposit and ending up in negative equity and houses get repossessed