Agent suggesting guide price to generate bidding war..thoughts/experience?

[WaterBottle123]

My house was worth 425k pre pandemic. Zoopla now suggests it's worth 500k, but Zoopla doesn't know I've added a kitchen/diner extension and fourth bedroom, extra parking space, full redecorate, new bathroom.

Agent suggests a guide price of 550k, which feels low given Zoopla suggests 500k without all that work. 4 beds in catchement for our local outstanding secondary are like gold dust round here. His argument is it will create more interest and go to a bidding war in a hope to achieve 600-615k.

This feels like an odd strategy - I think he just wants to flip the house quickly, without getting the best price...

Thoughts?

We had our house valued recently and every single agent (5 in total) advised this. It seems to be the way things are done now in some areas.

We followed their advice but having now been in that position as a buyer, I don't think I'd do it that way again. It's awful for everyone!

Ours was listed as offers in excess of though, I always thought guide price meant the same as asking price. Does it not?

We did this in Scotland many moons ago, I was really unhappy about it, but the agent was right, it created a bidding war and we ended up getting way more than we thought we would.

But, it depends on how desirable your property is, if 550 is correct then it’s the max you’ll be offered.

Honestly. I’d put it on for the price you want. I suspect the agent really thinks it’s worth 550.

How many agents have you had value ask at least 3 round.

Oh god no. It would out me off viewing, however much I loved the housem moving is stressful enough without the added drama.

@ballsdeep

Oh god no. It would out me off viewing, however much I loved the housem moving is stressful enough without the added drama.

Yes but potential buyers don’t know. The thought process is effectively play to greed. People see the house and think it looks great for the price, they then go view. Offer, and a bidding war starts as they are emotionally involved. But 75 grand is a huge leap.

Hence why I suspect the agent is thinking it’s worth 550, maybe 575. And any higher folks won’t view.

@Bluntness100
I agree here but I still wouldn't touch it and it can massively backfire. This happened to my sister but worked out well for her as she was purchaser
She out offer in for original price, seller was expecting a flurry of offers and none were received. She wanted to sell so did quickly and my sister had a bargain.
I still wouldn't touch it though.

If other houses aren't taking the same approach, you may find people are suspicious of the reason for the low price. A house near me that looks very nice in the photos has just come on a good £75k lower than comparable houses, but hasn't sold in two months. I've therefore assumed that there's a problem with it, but you're making me wonder if the agent is trying this idea out and it's backfiring.

It would put me off buying. When I was looking I ignored properties with "offers in excess of" and requests for best and final offers. I hate bidding wars as I have no way of knowing if the agents are making them up and I suspect that half the time they are.

So this is why my poor grandson is visiting so many sellers and hoping with a struggle to get on the property ladder. They are pushing their budget and every time a let down. They have been saving for five years and have a good deposit.

I've just purchased a house which was massively undervalued and ended up paying well over the asking price. I've decided not to torture myself wondering if I'd have paid that price if that was what it was marketed at ... v common practice I feel but good for the vendors. This purchase went to full & final offers by a certain deadline. I wasn't the highest bidder but in the best position to move quickly through the sale.

Thanks all. As a buyer I would find it off putting too. What's bizarre is the agent recently sold a 3 bed in a very nearby, slightly less nice street for 580k. The house had a very nice finish downstairs but that was it..

It just makes no sense. If you are after a bidding war, price the property competitively, but not £50k under what the agent thinks its worth. I would get more agents round to value it first. I don't think undervaluing the property by at least 10% in a sellers market is a wise move. I would put it on at 550k

@HappydaysArehere

So this is why my poor grandson is visiting so many sellers and hoping with a struggle to get on the property ladder. They are pushing their budget and every time a let down. They have been saving for five years and have a good deposit.

@HappydaysArehere

Well yes, it's very hard for the young and I don't want to mislead anyone

Yes, @Londongent definitely get more valuations

I don't even consider those listed with a guide price as it's usually indicative of it going to auction round here which is far too stressful for me!

I'm not keen on guide price. What does it even mean. Usually means there's something awful wrong with the house.

The other thing to bear in mind is that any buyer you get will always think of that original price as the 'value' of the house, and feel they paid over the odds. So if the market starts to fall before conveyancing is done, you may find they are tempted to drop their offer down the line. Less likely if someone has paid around asking price, even if prices are going down.

@Viviennemary yup I agree. Why confuse things?

It should be ilegal.

Stressful and dishonest, and almost impossible for the seller to know if they can actually afford any of the houses they are viewing, like a PP's grandson. I would not view a house with a guide price.

The whole house buying process in England is toxic.

*I meant for the buyer, not the seller.

Half your problem is you’re taking into account what Zoopla says.

Every house is individual, even on the same road. Get a few more estate agents in and see what they say. You may find the 550:isn’t that far off

I’m in Bristol and every house is sold this way here, OIEO, viewings on a Saturday morning and best and final offers in by close Saturday afternoon.

Every house I looked at had about 5-10 offers, it’s bonkers. Occasionally it meant an offer would be accepted for silly money, way over what the mortgage co were willing to lend for it though, so can’t be too greedy.

But if you live in a desirable area it seems to be standard practice now.

We have dealt with agents who wanted to get the sold sign up asap.. theyre looking out for their own interests, having a lot of houses with a sold sign with their company generates more interest for them.

Get more valuations. I would also check rightmove in the price bracket you're looking at.. while areas do have a price cap I would still consider what you're offering compared to houses in that bracket and raise it accordingly.

You can always put it up for the price you think its worth and reduce it if needed. Cant go the other way!

Zoopla estimates are really quite widely accepted to be absolute shite so I’d ignore that completely

I would also be careful with zoopla estimates. It currently says my house is worth over a million, which nobody in their right mind would pay even in the current crazy market. I think that one sale can really skew the figures for the whole road.